Five Candidates for a Dell Takeover Michael Comeau Oct 14, 2009 10:15 am |
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The PC business is being revolutionized by two trends: growing market share by Apple (AAPL) at the high-end of the pricing spectrum and the boom in cheap netbooks. Dell's caught in the middle. And like tech giants ranging from Xerox (XRX) to Hewlett-Packard (HPQ), it's caught the services bug about a decade after International Business Machines (IBM) made it cool.
So what could Dell go after next? Here are five potential candidates:
1. Allscripts-Misys Health Care Solutions (MDRX)
Allscripts provides IT solutions to doctors and other medical professionals, including electronic health record and practice management solutions. Dell wants to increase sales to health-care customers, and Allscripts would position it to benefit from the eventual adoption of electronic health records. In the past, General Electric (GE) has been rumored to be an Allscripts suitor.
2. Quality Systems (QSII)
Like Allscripts, it helps automate medical and dental practices with electronic health records and other applications. With $20 billion allocated for health-care IT in the recently signed American Recovery and Reinvestment Act, it only makes sense that Dell starts buying its way into health care. Allscripts and Quality Systems would both fit the bill.
3. Computer Sciences Corporation (CSC)Goldman Sachs just highlighted the IT services and outsourcing specialist this morning as a potential takeover target. With over $16 billion in annual revenue, CSC would make Dell a services giant overnight, dwarfing the impact of the Perot deal. Give it some time, but this one could happen once Perot is integrated.
4. Cognizant Technology Solutions (CTSH)
Another possibility is the New-Jersey based outsourcing juggernaut. While Cognizant's heavy dependence on the financial sector is a bit of a hindrance, it also has significant health-care exposure, working with eight of the top-10 US health-care plans. It's also seeing revenues expanding by double-digit rates in a tech-spending recession.
5. Citrix Systems (CTXS)
Dell could look to take out this company, which would break it into virtualization -- one of the biggest trends impacting enterprise IT. Virtualization will permanently impact corporate spending on traditional servers and PCs, so getting in the business would act as a perfect edge for Dell.
One thing's for certain: It's a good time to be a tech banker. Calling Frank Quattrone...
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