What Will Dell/Perot Mean to Dell Reseller Channel Partners?

Dell’s acquisition of Perot Systems won’t have a major impact on Dell’s
reseller channel partners in its PartnerDirect program.

That’s according to Greg Davis, Dell’s global channel chief, who was quick to
issue a statement of his own to reassure the company’s channel partners in the
wake of Dell’s announcement of the $3.9 billion acquisition of the enterprise
services consulting company.

Click
here for ‘A Tale of Two Services Acquisitions’: Dell/Perot and HP/EDS

“The Dell-Perot acquisition is an important step for Dell, and illustrates our
continued focus on enterprise computing,” says Davis
in his statement. “The acquisition expands Dell’s enterprise services
offerings, while minimally impacting our PartnerDirect registered and certified
partners and the deals they register with Dell. We remain committed to
providing the best portfolio of products and services for our channel partners
and their customers.”

Dell announced Sept. 21 that it planned to acquire Perot Systems, and that the
deal was approved by the boards of both companies a day earlier.

Dell’s move follows a similar deal by Hewlett-Packard last year when it
acquired IT outsourcing and consulting firm EDS.
And while EDS hasn’t delivered the big
returns that many had hoped for in the wake of the recession, analysts say that
the deal has insulated HP from taking an even bigger hit to revenues during
tough economic times.

“EDS is considered to be a successful
acquisition at this point; it serves the purpose of a hedge in a down market,
and financially it hasn’t dropped as much as other units, showcasing that it is
performing this service,” says Rob Enderle, principal analyst with the Enderle Group.  

“Services revenue tends to move slowly up or down, and that can be a big
advantage in a declining market like we currently have,” he adds.  “It
could be problematic during a recovery, but it often gets factored out by
investors, who like to focus on more high-profile products, making it a
stronger benefit in a down market than it is a liability in an up market.”

Dell’s acquisition of Perot Systems is likely to help Dell in a similar way,
and shores up deficiencies Dell had in its portfolio against IBM
with its IBM Global Services and HP with its
EDS acquisition.

Last year before the recession began, HP paid $25 per share for EDS,
while Dell’s acquisition of Perot Systems calls for a price of $30 per
share in a market where so many company valuations have dropped.

Observers point out that Dell needed the services business, and the number of
likely acquisition targets that could fulfill that had dwindled.

“Perot is really the last big property that likely can be purchased,” says
Enderle. “I imagine either or both HP and IBM
helped drive up the cost."

Dell says that over the past four quarters Dell and Perot Systems had a
combined $16 billion in enterprise-hardware and IT-services revenue, with about
$8 billion from enhanced services and support.

Dell says the deal is expected to close in Dell’s November-January fiscal
quarter.
Once complete, Perot Systems will become Dell’s services unit and be led from Plano,
Texas, by Peter Altabef, Perot Systems’ CEO.
Dell directors are expected to consider Ross Perot Jr., Perot Systems’ chairman
of the board, for appointment to the Dell board, according to Dell.

Dell expects the transaction to be accretive to Dell’s GAAP earnings in its
fiscal 2012.