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Dell Buying Perot Systems For $3.9 Billion

Posted by CmdrTaco on from the thats-a-fat-bankroll dept.

alphadogg writes "Dell has agreed to buy Perot Systems for around $3.9 billion in cash, and intends to make the company its global services delivery division, the companies said Monday.The deal will allow Dell to expand its range of IT services, and potentially allow it to sell more hardware to existing Perot customers, it said. Dell's rival Hewlett-Packard expanded its own global services unit with the acquisition of EDS for $13.9 billion in May 2008. Over the last four quarters, Dell and Perot together had revenue of $16 billion from enterprise hardware and IT services, with $8 billion coming from enhanced services and support, Dell said. Perot's contribution to that is relatively small: In 2008, the company reported total revenue of $2.78 billion."

23 of 92 comments (clear)

  1. fake by Anonymous Coward · · Score: 2, Funny

    this is obviously photoshopped

  2. I'll believe it... by damn_registrars · · Score: 4, Funny

    ... when I see the pie charts presented to show it happened.

    --
    Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
    1. Re:I'll believe it... by Thing+1 · · Score: 2, Funny

      My favorite moment from the 1992 debates: "And if you have a better idea [waitforit] ... I'm all ears!"

      --
      I feel fantastic, and I'm still alive.
  3. Hmm... by Mad-Bassist · · Score: 3, Interesting

    If I only had .0256% of that deal!

    It would have been more entertaining if Perot bought Dell, then maybe I'd like them. After all, he caused the world's largest jailbreak that appears in the Guinness Book.

    --
    "The only legitimate use of a computer is to play games." - Eugene Jarvis
  4. Obligatory political joke by dkleinsc · · Score: 3, Funny

    I think workers at Perot Systems just heard a giant sucking sound.

    --
    I am officially gone from /. Long live http://www.soylentnews.com/
    1. Re:Obligatory political joke by Old97 · · Score: 2, Funny

      The heard that when they were hired.

      --
      Very often, people confuse simple with simplistic. The nuance is lost on most. - Clement Mok
  5. The acquisition negotiations... by Tetsujin · · Score: 3, Funny

    Dell: So, we were thinking we'd like to buy-
    Perot: Can I finish?
    Dell: Yes, but-
    Perot: Can I finish... Can I finish can I finish can I finish?
    Dell: well, naturally-
    Perot: Can I finish?

    --
    Bow-ties are cool.
    1. Re:The acquisition negotiations... by nsanders · · Score: 2, Funny

      Negotiations were followed up by a nice serving of broccoli. Freshly chopped.

  6. Interesting Buy.... by idiotnot · · Score: 4, Insightful

    ...and somewhat a reaction to HP's buy of EDS, I think.

    Perot has some penetration inside the federal government, though I've never encountered one of their workers. Most of the job adverts I've seen require TS/SCI, so, probably some interesting stuff.

    The question is whether Dell will be able to leverage it into other areas. I'm not sure how bright the future is in government IT services these days, following the monumental clusterfucks that HP and NG have chaperoned last few years (NMCI, and VITC).

    1. Re:Interesting Buy.... by DarthVain · · Score: 2, Insightful

      Government Healthcare. In the medium/long term there are going to be some big contracts to be had. This is likely Dell positioning for these potential contracts. Having a global footprint doesn't hurt. Also HP did it so it must be a good idea. 4B is nothing to shake a stick at so one must think this was a very carefully thought out acquisition.

  7. I can just hear by ubermiester · · Score: 2

    the giant sucking sound of IT jobs being outsourced to India and China.

    1. Re:I can just hear by Creepy · · Score: 3, Interesting

      Good luck on that.

      H Ross Perot Sr owned companies were already big on outsourcing before outsourcing was even popular - when EDS (also started by Perot - he was on the board of directors for part of the time I was there) bought a company I worked for the first thing they did was gut benefits and lay off 20% of the US workforce (and in the next two years layoffs were roughly 40%, even though the division I was in grew by 6x) and move those jobs to India - and that was in 2000. If anything Dell moves people from India to China where people are even cheaper to hire.

          The best day of my life was leaving EDS - the constant fear of layoffs, the downward spiral of their stock, their stupid moves like selling profitable divisions and keeping unprofitable ones so their stock wouldn't go junk (what I call the Control Data spin, and yes, I worked for them, too, albeit briefly).

    2. Re:I can just hear by Red+Flayer · · Score: 2, Informative

      I've met a few people who worked for Perot Systems, and I turned down an offer from them in 2005.

      My understanding (from this limited exposure to them) is that Perot Systems operates quite differently from EDS, in that offshoring is limited. Apparently (according to the mid-level managers I'm friends with) Perot Systems is leagues ahead of EDS wrt treatment of employees, keeping jobs onshore, etc. It's possible that the people I know just drank the koolaid, but that's what I've heard.

      On another note, Perot Systems lost a lot of jobs in the financial industry in the past year or so. I think it's spin that the press release on the acquisition stresses the healthcare industry jobs... Perot Systems' margins have been shrinking, as have their revenues. I wonder if Dell hasn't bought a ship that's starting to take on a lot of water.

      --
      "Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
  8. Re:$3.9 billion in cash by smaerd · · Score: 2, Informative

    It's "cash" as in "not in shares of stock".

  9. Sounds good for Dell by shaitand · · Score: 3, Insightful

    Generally speaking buying any company outright that made 2.8bil last year for only 3.9bil is a steal. That's less than half what the company is worth on paper based on earnings alone.

    1. Re:Sounds good for Dell by Arthur+Grumbine · · Score: 4, Informative

      "Total Revenue" does not equal "made" in the normal sense. General Motors, now Motors Liquidation Company had Total Revenue for the last twelve months of 129 billion dollars. Yet they lost money overall (gross profit = $-1.6B) over that same period of time. What's their worth on the market right now, if you wanted to buy all their shares? 467 million dollars. Perot Systems did turn a gross profit of $487 million over the last year, but that puts the buy price at 8 times the yearly profit, maybe a good deal (there's a lot of other factors that are important, though) but not as much of a "steal" as you might have thought.

      Generally speaking, speaking in generalities about a particular case is not always the wisest thing to do. Especially in something as complex as buying a multi-billion dollar corporation.

      --
      Now that I think about it, I'm pretty sure everything I just said is completely wrong.
  10. Hmmm; this is REALLY Unhealthy by WindBourne · · Score: 4, Interesting

    The reason why MS beat out Apple was never about MS, but about the many PC builders. They were fast and limber in building new systems and designs.

    Likewise, the Big 3 car companies were disasters because there was only three (that is why I have been arguing that we needed to break up GM and Chrysler).

    Now, you have IBM, HP, Oracle and Dell all doing the same thing. That is they are exporting the jobs to Asia and there is really very little innovation (though in time, both China and India WILL be innovative) due to such few companies. What is needed is not to block this, but the West desperately needs to encourage small companies in all these industries. That means that if Obama, Brown, Sarkozy, Merkel, Harper, Rudd, etc want to bring back manufacturing to the west, they will need to start small companies, and buying from them.

    --
    I prefer the "u" in honour as it seems to be missing these days.
  11. From a former Perotista by MrWin2kMan · · Score: 3, Interesting

    I've never worked for a more dysfunctional, management-laden organization than Perot Systems. God help Michael Dell.

    --
    Nothing to see here but us trolls...move along...
    1. Re:From a former Perotista by Jeng · · Score: 3, Interesting

      Back when I worked at Dell, the department head of logistics or something emailed out copies of this article.

          http://www.forbes.com/1999/04/21/feat2.html/

      I think back to it now and then. Dell took all that was good in the company and sold it out to MBA's and exported the rest out of the country.

      It was better when Dell didn't give a fuck who it employed as long as they did the damn job.

      --
      Don't know something? Look it up. Still don't know? Then ask.
  12. Interesting... by chipset · · Score: 3, Insightful

    I have been to both Dell and Perot headquarters.

    I ran into Ross (Sr.) in the lunch room. The entire HQ on Plano Parkway might as well be a history museum.

    Contrast that with Dell's clinical feel.

    It will be interesting.

  13. Pretty funny by ArhcAngel · · Score: 4, Insightful

    H. Ross Perot starts a company (EDS), grows it into a huge business and sells it to GM in 1984. He presumably gets bored spending his billions on trivial things like yachts and mansions and uses it to start Perot Systems in 1988. HP, looking to pick up some of that IBM Global Services kind of action, purchases EDS in 2008 and to counter Dell acquires Perot Systems. Looks like Perot is nothing but an IT services arms dealer!

    --
    "A person is smart. People are dumb, panicky dangerous animals and you know it." - K
  14. Please read up before commenting, by Anonymous Coward · · Score: 2, Interesting

    Let's not forget he was the guy that attempted a Soldier of Fortune-type rescue of the Iranian hostages.

    Delta Force "attempted" the rescue that was unsuccessful.

    Ross's was the one that was successful.
    For two employees.
    Will your boss do that for you?

  15. This deal is about health care by 1sockchuck · · Score: 3, Interesting

    This is all about Dell buying service revenues in health care and government, two areas that are getting s huge boost from the Obama stimulus package. In today's conference call, Perot Systems said it gets 48 percent of its revenue from the healthcare sector, and 25 percent from government. That's a strong footprint in two key growth areas, which is why Dell is paying a 65 percent premium to Friday's share price for Perot.