This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Dell's Compellent Deal Looks Compelling

Stocks in this article: DELL CML HPQ PAR EMC CSCO

ROUND ROCK, Tex. ( TheStreet) -- Dell's (DELL) $876 million attempt to acquire Compellent (CML) may have sent the storage maker's shares into a tailspin, but could ultimately prove to be crucial to Dell's long-term enterprise strategy.

The two companies announced on Thursday that they are in advanced discussions about a possible merger, with Dell looking to pay $27.50 a share for the Eden Prairie, Minn.-based outfit.

Compellent's stock, however, plunged $4.61, or 13.70%, to $29.94 on Thursday. Dell shares rose a penny, or 0.08%, to reach $13.69, as the Nasdaq gained 0.03%.


The move is a positive for Dell. "I feel like it's been a long time coming -- it is a good deal," said Vanessa Alvarez, an analyst at Forrester, in an email to TheStreet. "Compellent, from a technology perspective, has what it takes to move Dell forward in the storage market."

A combination of servers, networking and storage is the tech sector's must-have trifecta, and chatter about about a Dell buy of Compellent has swirled in the months since Dell lost out to HP (HPQ) in the battle to acquire 3Par (PAR).

Compellent, which competes with HP and EMC (EMC), touts tiered storage products that shift older data onto less expensive storage media.

Forrester's Alvarez predicts that this technology will help Dell compete more effectively in large enterprises. "The biggest challenge enterprises face today is the large amounts of unstructured data they are sitting on, and in order to effectively manage it, technologies such as those from Compellent (and 3PAR) are needed," she said.

Compellent recently posted strong third-quarter results and has successfully tapped into growing demand for virtualization.

Dell has made other plays in storage M&A, spending $1.4 billion to acquire EqualLogic in 2008 and snapping up Exanet for an undisclosed fee earlier this year.

Alvarez, however, thinks that we're unlikely to see a repeat of the tug-of-war which saw HP walk off with 3Par. "There will be no bidding war, because although I've said and continue to say that Cisco (CSCO) needs storage, they are not there yet," she explained.

--Written by James Rogers in New York.

>To follow the writer on Twitter, go to

>To submit a news tip, send an email to:

Readers Also Like:

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,790.90 +12.75 0.07%
S&P 500 2,066.68 +5.45 0.26%
NASDAQ 4,761.8450 +13.4490 0.28%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs