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OT-OT-Dell's Asian talks raise hopes for Scots jobs boost
BILL MAGEE


This article: http://business.scotsman.com/technology.cfm?id=340682007


DELL, the personal computer company, is believed to be in advanced talks to acquire Asian IT rival Acer, a move that will have a direct bearing on the future of the company's operations in Scotland.

Acer is 35 times smaller than Dell with a market capitalisation of £2bn, but is punching above its weight. It has extensive distribution channels throughout Europe and Asia, which Dell badly needs.

One Scottish IT insider said: "Such an acquisition would lead to significant further strategic EMEA growth out of Scotland, which is being developed by Dell to handle an extensive portfolio of European, Middle East and African sales and technical inquiry calls."

Executives from Dell told Scotland on Sunday in November that it planned to double the number of staff for its call centre in Glasgow - from 850 to 1,500 and possibly as high as 2,000 - as operations expand from an original UK-only brief to take in EMEA business.

Toni Sacconaghi, senior analyst with Sanford C Bernstein, said a move on Acer was complementary to Dell in several ways, "making both strategic and financial sense" by giving it a much broader indirect channel to sell its notebooks and desktops.

Dell has concentrated on direct sales and is averse to big acquisitions. But the IT sector is increasingly heading along the convergence route, with a number of recent "megamergers" such as HP's purchase of Compaq, and IBM selling its PC business to Lenovo.

Sacconaghi claimed that buying Acer would supply a quick fix for some of Dell's issues. He said: "A combined Dell-Acer would enjoy leading share in nearly every major region in the world", especially in Europe and Asia "where Dell's position is relatively weaker".

Talk about a link-up between the two came as Dell appointed a new European boss. David Marmonti has become senior vice-president and EMEA president, moving across from running public sector sales.

Dell finally appears serious about fixing its problems, according to Carmi Levy, a senior analyst with Info-Tech Research Group. "It is finally saying what it's going to do to change," he said. "The admission of issues it faces is a huge step."

A spokeswoman for Dell, which remains subject to a US federal investigation into its finances, refused to comment on speculation over a link-up with Acer.

Founder Michael Dell, who returned as chief executive in January, said last week that he was disappointed at a 33% fall in fourth-quarter profits to £345m on sales of £7.2bn.

Dell claimed that what mattered was the plan to transform the company's fortunes. It lost its crown as the leading manufacturer of PCs to Hewlett-Packard last year.

One bright spot is that laptop shipments increased by 2%. Higher-margin non-US sales of laptops and notebooks provide a key for Dell's future wellbeing.

This article: http://business.scotsman.com/technology.cfm?id=340682007

Last updated: 04-Mar-07 02:55 GMT