Bigger Isn't Always Better At Dell

By The 451 Group: Inorganic Growth:
By Brenon Daly
Bigger is better, right? That is often the rationale used by tech heavyweights who write multi-billion-dollar checks in their quest for ‘scale.’ Not so with Dell Inc. (DELL) in its recent M&A activity. In each of the company’s acquisitions so far this year, Dell passed over large, publicly traded vendors that the company knew well in favor of much smaller (and much less pricey) rivals. To add to its security portfolio, for instance, Dell on Tuesday reached for unified threat management (UTM) provider SonicWALL. While the acquisition brings significant UTM business to Dell, the $260m in trailing revenue is much smaller than the $440m or so UTM giant Fortinet (FTNT) produced last year. But then, Dell only had to pay a reported 4.5 times trailing sales, compared with Fortinet’s current market valuation of 10x trailing sales. (In a rumor that turned out to be half right, weComplete Story »