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Businesses The Almighty Buck

Dell Buying Perot Systems For $3.9 Billion 92

Posted by CmdrTaco
from the thats-a-fat-bankroll dept.
alphadogg writes "Dell has agreed to buy Perot Systems for around $3.9 billion in cash, and intends to make the company its global services delivery division, the companies said Monday.The deal will allow Dell to expand its range of IT services, and potentially allow it to sell more hardware to existing Perot customers, it said. Dell's rival Hewlett-Packard expanded its own global services unit with the acquisition of EDS for $13.9 billion in May 2008. Over the last four quarters, Dell and Perot together had revenue of $16 billion from enterprise hardware and IT services, with $8 billion coming from enhanced services and support, Dell said. Perot's contribution to that is relatively small: In 2008, the company reported total revenue of $2.78 billion."
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Dell Buying Perot Systems For $3.9 Billion

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  • fake (Score:2, Funny)

    by Anonymous Coward

    this is obviously photoshopped

  • by damn_registrars (1103043) <damn.registrars@gmail.com> on Monday September 21, 2009 @10:31AM (#29491161) Homepage Journal
    ... when I see the pie charts presented to show it happened.
  • Hmm... (Score:3, Interesting)

    by Mad-Bassist (944409) on Monday September 21, 2009 @10:40AM (#29491273) Homepage

    If I only had .0256% of that deal!

    It would have been more entertaining if Perot bought Dell, then maybe I'd like them. After all, he caused the world's largest jailbreak that appears in the Guinness Book.

  • by dkleinsc (563838) on Monday September 21, 2009 @10:41AM (#29491287) Homepage

    I think workers at Perot Systems just heard a giant sucking sound.

    • Re: (Score:3, Funny)

      by Old97 (1341297)
      The heard that when they were hired.
    • I've seen job ads for Pertot Systems. Their positions are pathetic. They are all for limited time periods only--no full-time positions are offered.

      Who would take a job when you know you'll get the axe in six months?

      • The poor slackers like me who have been forced to take contract jobs since we are labeled as contractors once you do a couple in a row.

      • by altek (119814)

        That is simply, purely not true.

        I know many people who work for Perot Systems that are full-time, non-contract employees. Maybe the ads you saw were for contract positions, but your statement that they ONLY hire contract employees is simply false.

  • by Tetsujin (103070) on Monday September 21, 2009 @10:41AM (#29491293) Homepage Journal

    Dell: So, we were thinking we'd like to buy-
    Perot: Can I finish?
    Dell: Yes, but-
    Perot: Can I finish... Can I finish can I finish can I finish?
    Dell: well, naturally-
    Perot: Can I finish?

  • by idiotnot (302133) <sean@757.org> on Monday September 21, 2009 @10:48AM (#29491415) Homepage Journal

    ...and somewhat a reaction to HP's buy of EDS, I think.

    Perot has some penetration inside the federal government, though I've never encountered one of their workers. Most of the job adverts I've seen require TS/SCI, so, probably some interesting stuff.

    The question is whether Dell will be able to leverage it into other areas. I'm not sure how bright the future is in government IT services these days, following the monumental clusterfucks that HP and NG have chaperoned last few years (NMCI, and VITC).

    • I interviewed at their HDQ once and had a slightly hard time finding the facility as they have no name on their building and no address either.

      On the plus side, the halls are filled with some of Ross's memorabilia from over the years.

    • by psergiu (67614)

      > though I've never encountered one of their workers.

      They're skilled ninjas. You cannot see them :)

    • by chipset (639011)

      They also have other markets, including health care. That was the group I was working with when they were one of my customers.

      • Re: (Score:3, Insightful)

        by DarthVain (724186)

        Government Healthcare. In the medium/long term there are going to be some big contracts to be had. This is likely Dell positioning for these potential contracts. Having a global footprint doesn't hurt. Also HP did it so it must be a good idea. 4B is nothing to shake a stick at so one must think this was a very carefully thought out acquisition.

    • by squidguy (846256)
      The question is whether Dell will be able to leverage it into other areas. I'm not sure how bright the future is in government IT services these days, following the monumental clusterfucks that HP and NG have chaperoned last few years (NMCI, and VITC).

      Let us not forget that EDS was once owned (and started) by H. Ross Perot. Let us also not forget that Dell is part of the current NMCI team.
      And to quote H. Ross himself: ...a giant sucking sound...
    • Not that Jim Cramer is known for being right, but he had a funny take on this, and a great comparison. HP was Gallant and made a decent, prudent acquisition that compliments what they already do well, while late-to-the-party Dell was Goofus, making a poor purchase to answer HP. EDS was a successful and relatively innovative company that had something to bring to HP, whereas Perot is heavy into healthcare and isn't unique. The price paid per is also a hell of a lot more, compared to earnings. Oh Dell, get ou
      • Forgot: EDS 2008 revenue - $22 billion, HP paid - $14 billion Perot 2008 revenue - $2.8 billion, Dell paid - $3.9 billion EDS is arguably the perfect match for hardware behemoth HP, while Perot is perhaps not such a great addition to Dell. Maybe it will help, maybe not, but everyone is making these comparisons.
  • This is a horrible purchase for Dell. This is like trying to jam three cows in your chicken coop. Ain't gonna work! Just look at this chart!
  • by ubermiester (883599) * on Monday September 21, 2009 @10:54AM (#29491501)
    the giant sucking sound of IT jobs being outsourced to India and China.
    • by psergiu (67614)

      ... and Romania.

    • Re:I can just hear (Score:4, Interesting)

      by Creepy (93888) on Monday September 21, 2009 @12:37PM (#29492829) Journal

      Good luck on that.

      H Ross Perot Sr owned companies were already big on outsourcing before outsourcing was even popular - when EDS (also started by Perot - he was on the board of directors for part of the time I was there) bought a company I worked for the first thing they did was gut benefits and lay off 20% of the US workforce (and in the next two years layoffs were roughly 40%, even though the division I was in grew by 6x) and move those jobs to India - and that was in 2000. If anything Dell moves people from India to China where people are even cheaper to hire.

          The best day of my life was leaving EDS - the constant fear of layoffs, the downward spiral of their stock, their stupid moves like selling profitable divisions and keeping unprofitable ones so their stock wouldn't go junk (what I call the Control Data spin, and yes, I worked for them, too, albeit briefly).

      • Re: (Score:3, Informative)

        by Red Flayer (890720)
        I've met a few people who worked for Perot Systems, and I turned down an offer from them in 2005.

        My understanding (from this limited exposure to them) is that Perot Systems operates quite differently from EDS, in that offshoring is limited. Apparently (according to the mid-level managers I'm friends with) Perot Systems is leagues ahead of EDS wrt treatment of employees, keeping jobs onshore, etc. It's possible that the people I know just drank the koolaid, but that's what I've heard.

        On another note, Per
  • by shaitand (626655) on Monday September 21, 2009 @11:24AM (#29491863) Journal

    Generally speaking buying any company outright that made 2.8bil last year for only 3.9bil is a steal. That's less than half what the company is worth on paper based on earnings alone.

    • by Arthur Grumbine (1086397) on Monday September 21, 2009 @12:15PM (#29492555) Journal
      "Total Revenue" does not equal "made" in the normal sense. General Motors, now Motors Liquidation Company [yahoo.com] had Total Revenue for the last twelve months of 129 billion dollars. Yet they lost money overall (gross profit = $-1.6B) over that same period of time. What's their worth on the market right now, if you wanted to buy all their shares? 467 million dollars. Perot Systems [yahoo.com] did turn a gross profit of $487 million over the last year, but that puts the buy price at 8 times the yearly profit, maybe a good deal (there's a lot of other factors that are important, though) but not as much of a "steal" as you might have thought.

      Generally speaking, speaking in generalities about a particular case is not always the wisest thing to do. Especially in something as complex as buying a multi-billion dollar corporation.
      • by timeOday (582209)

        General Motors, now Motors Liquidation Company had Total Revenue for the last twelve months of 129 billion dollars. Yet they lost money overall (gross profit = $-1.6B) over that same period of time. What's their worth on the market right now, if you wanted to buy all their shares? 467 million dollars.

        It's not accurate to say that General Motors is now Motors Liquidation Company. Under the terms of the bankruptcy and reorganization, everything of value was sold off to other carmakers or reorganized into a

  • by WindBourne (631190) on Monday September 21, 2009 @11:30AM (#29491941) Journal
    The reason why MS beat out Apple was never about MS, but about the many PC builders. They were fast and limber in building new systems and designs.

    Likewise, the Big 3 car companies were disasters because there was only three (that is why I have been arguing that we needed to break up GM and Chrysler).

    Now, you have IBM, HP, Oracle and Dell all doing the same thing. That is they are exporting the jobs to Asia and there is really very little innovation (though in time, both China and India WILL be innovative) due to such few companies. What is needed is not to block this, but the West desperately needs to encourage small companies in all these industries. That means that if Obama, Brown, Sarkozy, Merkel, Harper, Rudd, etc want to bring back manufacturing to the west, they will need to start small companies, and buying from them.
    • At some point in every sector of our economy we will need to address these large bloated corporations. They're slow to innovate, slow to penetrate.
      • mod previous redundant; benadryl+monday=dull-eyed mouthbreathing replies.
        seriously. I need a nap.
      • Big companies are quick to penetrate ! I constantly get raped by comcast ! and it is neither slow nor painless.

        • Me too :( they keep telling me I'm asking for it, the way I google so provocatively. They tell me to struggle...I'm so ashamed *sob*
  • by MrWin2kMan (918702) on Monday September 21, 2009 @11:43AM (#29492091) Homepage
    I've never worked for a more dysfunctional, management-laden organization than Perot Systems. God help Michael Dell.
    • Amen to that. When I started there out of college at an account, they had recently finished taking the company's internal IT, hiring them to Perot, and then screwing many of them out of pensions that kicked in at 25 years, and they were 20+ years in. Talk about low morale. We had one person who was so stressed by the whole situation that they subconsciously lit a cigarette at their desk.
    • by Jeng (926980) on Monday September 21, 2009 @12:51PM (#29493023)

      Back when I worked at Dell, the department head of logistics or something emailed out copies of this article.

          http://www.forbes.com/1999/04/21/feat2.html/ [forbes.com]

      I think back to it now and then. Dell took all that was good in the company and sold it out to MBA's and exported the rest out of the country.

      It was better when Dell didn't give a fuck who it employed as long as they did the damn job.

  • I really never heard of them, and their Wikipedia page and website give away nearly the most vague description physically possible. It's just one step away from "We do things. Things that make you go. (On a global vertical enterprise scale.)"

    Can someone tell me what this purchase means? What are actual real products they offer?

    • by rwv (1636355)

      What are actual real products they offer?

      Synergy. Also, Dell wants the customers who gave Perot $2.8 billion in 2008 to give it to Dell instead. Acquisitions are a good way of getting new customers.

    • by gtall (79522)

      "Things that make you go." Errr....they are selling constipation cures? And on a vertical enterprise scale? Now that is a solutions company!!

  • Interesting... (Score:4, Insightful)

    by chipset (639011) on Monday September 21, 2009 @11:49AM (#29492193) Homepage

    I have been to both Dell and Perot headquarters.

    I ran into Ross (Sr.) in the lunch room. The entire HQ on Plano Parkway might as well be a history museum.

    Contrast that with Dell's clinical feel.

    It will be interesting.

    • by WarlockD (623872)
      I know someone who JUST finished the meeting. It looks like both Mr Perot and Michael Dell were there.

      I have been to the company a few times for computer jobs and they are really amazing. Your right, Its like a living history museum over there and people speak of Perot in awe. One of the few company's, so they told me, that don't outsource overseas. This is vs EDS that every time I visit THEM, it feels like a government money waste hole with people clinging to the rafters.

      I will be putting in my appl
      • and people speak of Perot in awe

        For the young-ins in the crowd: Ross Perot had two employees taken hostage in the 1979 Iranian Revolution. What does a good CEO do to help his employees? Most today would issue some press releases and call for their release in carefully-measured PC terms. Ross Perot hires an ex-green beret to lead a rescue team, him included, they bust their men out of jail, and when their helicopters fail, they escape from Iran overland through Turkey. Big, frikkin', brass ones.

        Then he

  • Pretty funny (Score:5, Insightful)

    by ArhcAngel (247594) on Monday September 21, 2009 @11:59AM (#29492319)

    H. Ross Perot starts a company (EDS [wikipedia.org]), grows it into a huge business and sells it to GM in 1984. He presumably gets bored spending his billions on trivial things like yachts and mansions and uses it to start Perot Systems [wikipedia.org] in 1988. HP, looking to pick up some of that IBM Global Services [wikipedia.org] kind of action, purchases EDS in 2008 and to counter Dell acquires Perot Systems. Looks like Perot is nothing but an IT services arms dealer!

    • Let's not forget he was the guy that attempted a Soldier of Fortune-type rescue of the Iranian hostages.

      • Let's not forget he was the guy that attempted a Soldier of Fortune-type rescue of the Iranian hostages.

        Oh yeah - he sent in that "Blake" joker, right?

      • by Anonymous Coward

        Let's not forget he was the guy that attempted a Soldier of Fortune-type rescue of the Iranian hostages.

        Delta Force "attempted" the rescue that was unsuccessful.

        Ross's was the one that was successful.
        For two employees.
        Will your boss do that for you?

        • by Ironica (124657)

          My employer won't even pay for my health insurance. OTOH, rescuing employees out of a hostage situation *would* probably help keep insurance premiums down...

        • by stockard (1431131)
          The whole story of Perot's rescue was documented in a book by Ken Follett called "On Wings of Eagles".
          At one point, Perot actually flew in to Tehran pretending to be a courier for a news service so he could actually visit the two guys in jail. Pretty ballsy, and while there might be few executives who would organize a rescue attempt, he's probably the only one willing to do that for their employees.
    • by virmaior (1186271)
      The timing coincided with an expiration of a no-compete. He also tapped some of the same people he liked working with at EDS who also had their no competes expire.
    • by ArhcAngel (247594)

      Breaking news! [bloomberg.com]

      There just "might" have been a little "insider" trading before Dell announced the purchase of Perot Systems.

      It just gets better and better.

  • Honestly, my first reaction to this story was "let's roll out some seventeen-year-old H. Ross Perot jokes!" - and I assumed the name was a coincidence which could be exploited for comedy purposes.

    But you know, H. Ross Perot is rich for a reason, right? Something about being in business or something...

    And sure enough, TFA says Perot Systems was founded by H. Ross Perot, and his son (H. Ross Perot Junior) is now chairman...

    So how does this story not have anything to do with "ross"? :)

  • by 1sockchuck (826398) on Monday September 21, 2009 @12:42PM (#29492889) Homepage
    This is all about Dell buying service revenues in health care and government [datacenterknowledge.com], two areas that are getting s huge boost from the Obama stimulus package. In today's conference call, Perot Systems said it gets 48 percent of its revenue from the healthcare sector, and 25 percent from government. That's a strong footprint in two key growth areas, which is why Dell is paying a 65 percent premium to Friday's share price for Perot.
  • It's 3.9 billion dollars being sucked out of Dell's coffers.

    Well, either that, or there's a Packers game on TV.

  • H. Ross SR wrote a blank check to the state of Texas to save a oak tree poisoned by not too stable individual. He did not have to do this, but he choose to quickly assist to save a symbol of trust when it would be obvious to anyone that normal bureaucracy would not act in time. See a problem, react quickly to resolve it. This oak, the Treaty Oak was regarded by the native Commanches and Tonkowas as a "Tree God". Early settlers and Indians signed treaty's under it's branches. http://www.ci.austin.tx.us/tre [austin.tx.us]
  • This will be an epic failure. Dell has no clue about customer service and support. The company culture does not allow for such a thing to flourish.

With all the fancy scientists in the world, why can't they just once build a nuclear balm?

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