Dell Adds Another Piece to Its Big Blue Puzzle

Before you go, we thought you'd like these...
Before you go close icon

It's nice to be right. Dell (NAS: DELL) is obviously chasing the IBM (NYS: IBM) operating model, and the puzzle is nearly complete.

The systems builder just announced the purchase of network security firm SonicWALL. Dell already has a healthy dose of networking expertise in the house, especially since buying high-speed networker Force10 last year. That deal put a drastic end toBrocade Communications Systems (NAS: BRCD) investors' hopes that Dell would buy their company instead -- Force10 is a force (pun intended) to be reckoned with.

So the networking play is already in full swing but SonicWALL's firewalls don't have any direct equivalent in Dell's portfolio today.

Financial terms were not disclosed, which could mean Dell picked the company up on the cheap. The SEC rules regarding deal disclosures are very complicated, but small agreements generally slide by without the money flows ever being public information.

I'm surprised to see SonicWALL falling into that category, though. Thoma Bravo, the private equity firm on the sell-side this time, bought SonicWALL for about $717 million in 2010. That particular firm likes to package many smaller firms together before spinning them back out again, and Thoma Bravo has been buying small security firms ever since.

However, SonicWALL seems largely unchanged from what it was two years ago. Dell welcomes the company's 950 employees to the team, up only modestly from the 819 staffers in SonicWALL's last independent SEC filings.

If nothing else, this buyout underscores the importance of having security products in a complete enterprise computing portfolio. The supply of small, independent firms in this space is drying up quickly; Fortinet (NAS: FTNT) and SourceFire (NAS: FIRE) stand out as potential pick-ups, but they're both pushing midcap status already. If any of the several would-be IBM clones out there want to boost their security powers at reasonable prices, the time to act is now.

The leap from network security to business intelligence is not large, as the two services go hand-in-hand. In a special report penned by The Motley Fool's finest analysts, you'll find the only stock you need to profit from the new technology revolution in Big Data and business intelligence. The report is totally free, but it won't be available much longer, so get your copy right away.

At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies mentioned. Motley Fool newsletter services have recommended writing covered calls on Dell. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners