Dell Inc.: Perot Systems Adds Punch

Sept. 24, 2009
Acquisition of company founded by former presidential candidate should bolster services business

Dell Inc.'s agreement this week to acquire Perot Systems Corp. for $3.9 billion should boost the computer maker's growing services business.

Over the years, the Round Rock, Texas-based company has been adding to its offerings of IT services, including consulting and software-as-a-service. The purchase of Plano, Texas-based Perot Systems is expected to propel Dell into the health-care IT business. Nearly half of Perot Systems' sales in 2008 were from the health-care sector, according to the company's annual report.

"This significantly expands Dell's enterprise-solutions capabilities and makes Perot Systems' strengths available to even more customers around the world," said Chairman and CEO Michael Dell in a statement released Sept. 21. "There will be efficiencies from combining the companies, but the acquisition makes such great sense because of the obvious ways our businesses complement each other."

Perot Systems employs approximately 23,000 people worldwide. In the second quarter the company reported revenue of $628 million, a decrease of 11% from the year-earlier period, while profit was up slightly at $31 million from $30 million in second-quarter 2008.

Former presidential candidate H. Ross Perot founded the company in 1988 and currently serves as chairman emeritus. His son, Ross Perot Jr., serves as board chairman and is expected to join the Dell board.

Dell Inc.
At A Glance

Dell Inc.
Round Rock, Texas
Primary Industry: Computers & Other Electronic Products
Number of Employees: 78,900
2008 In Review
Revenue: $61.1 billion
Profit Margin: 4.06%
Sales Turnover: 2.31
Inventory Turnover: 48.99
Revenue Growth: -0.05%
Return On Assets: 8.99%
Return On Equity: 66.35%
Dell and Perot combined accounted for $16 billion in enterprise-hardware and IT-services revenue over the past four quarters, with about $8 billion coming from enhanced services and support, Dell reported in its Sept. 21 statement.

The deal is expected to close later in the year or in early 2010. Once the $30-per-share cash acquisition is complete, current Perot Systems CEO Peter Altabel will lead Dell's services unit.

Dell expects the deal will begin to positively impact the companys earnings by 2012.

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