The Street has become obsessed with the question of what Dell (DELL) might have on its shopping list.
Bernstein Research analyst Toni Sacconaghi took a look at Dell’s M&A strategy Monday morning, and offered his own thoughts on what the company might or might not buy. He thinks the company is not that likely to a giant sized deal, but instead is likely to target small-to-medum sized businesses, with a particular focus on software and services, or possibly storage.
Sacconaghi previously laid out a case for Dell buying Acer, and he still thinks it would be a good idea. But he sees some other possibilities.
- In services, he thinks the company could focus on niche players, and in particular cites Perot Systems (PER), although he says they might not be willing to sell, and adds that a 50% concentration in health care might make Perot too narrow a choice.
- In software, he thinks Salesforce.com (CRM) “would be strategically consistent with Dell’s efforts to drive business at mid-to-large enterprises,” but also notes that it would be expensive, given a current $4.8 billion market cap, and would have limited top-line impact, with revenue of $1.1 billion in their late fiscal year.
- In storage, he cites several potential targets, including Compellent (CML) and ComVault (CVLT).
- Sacconaghi thinks a networking deal is less likely, but nonetheless said that “purchasing someone such as 3Com (COMS) and attempting to commoditize the networking space would not be inconsistent with Dell’s stated enterprise strategy.”
Dell Monday is up 21 cents, or 1.5%, to $13.89.