Dell may buy more companies

In an exclusive interview with Bloomberg, Michael Dell of Dell Inc. (DELL) said his company is "rapidly developing" merger expertise and will seek more deals as part of a turnaround plan.

Dell is considered to be well behind Hewlett-Packard (HPQ) and IBM (IBM) in its attempt to diversify beyond its hardware business, which relies mostly on PC and server sales.

Dell investors will be disappointed if the company cannot manage new software and IT consulting businesses better than its core operations. Dell has already made one very large acquisition with the buyout of Perot Systems (PER), though many on Wall Street felt Dell overpaid for the deal.

Dell has been losing PC market share to HP and aggressive Asian competitors like Lenovo and Acer. Over the last two years, Dell's shares are down well over 40 percent, while HP's are off only 5 percent, and IBM's are 10 percent higher. Part of the reason Dell has sold off is that it has been considered slow in improving customer service, introducing new machines and moving into the business of selling its products through retail outlets.

Dell had almost $12 billion of cash on hand at the end of last quarter. But having money and spending it well are not the same thing. It will take the clear success of the Perot deal and any other transactions to get Dell back into Wall Street's good graces.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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