Is Dell shopping for a networking equipment company to buy?
Canaccord Genuity analyst Paul Mansky thinks so. In a research note this morning, he notes that Dell “has been busily assembling a full IT stack aimed at realigning the company away from secularly less attractive legacy businesses (like PCs) and incrementally toward future growth in the enterprise.” But he adds that “given networking will most likely be among the most critical source of intelligence” helping to reshape the stack, “not owning this technology puts Dell at risk of simply hopping from one commoditized business into another.”
Ergo, he thinks Dell will be shopping for a networking company, and soon, for several reasons:
The PC market is arguably headed into an accelerating secular decline (units and ASPs) at the hands of tablets – Dell’s cash engine.
Dell has clearly been seeing success cross-selling Ethernet switching with servers and storage, evidenced by reported results and qualitative commentary from Dell executives.
Dell’s this week made a shelf filing for a potential $3.5 billion debt filing; the company also has $7 billion in net cash.
Mansky says his bet is that Dell with bid for Brocade, a company he rates a Buy with a $7.50 price target; he thinks Dell; could pay as much as $10 for the company.
Canaccord Genuity analyst Paul Mansky thinks so. In a research note this morning, he notes that Dell “has been busily assembling a full IT stack aimed at realigning the company away from secularly less attractive legacy businesses (like PCs) and incrementally toward future growth in the enterprise.” But he adds that “given networking will most likely be among the most critical source of intelligence” helping to reshape the stack, “not owning this technology puts Dell at risk of simply hopping from one commoditized business into another.”
Ergo, he thinks Dell will be shopping for a networking company, and soon, for several reasons:
The PC market is arguably headed into an accelerating secular decline (units and ASPs) at the hands of tablets – Dell’s cash engine.
Dell has clearly been seeing success cross-selling Ethernet switching with servers and storage, evidenced by reported results and qualitative commentary from Dell executives.
Dell’s this week made a shelf filing for a potential $3.5 billion debt filing; the company also has $7 billion in net cash.
Mansky says his bet is that Dell with bid for Brocade, a company he rates a Buy with a $7.50 price target; he thinks Dell; could pay as much as $10 for the company.
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