You may know Dell as a computer and server maker, but Dell also operates a substantial IT services division — at least it did until today. NTT Data, the IT services company of NTT, is acquiring Dell Systems for $3.05 billion.
The main reason why Dell sold off its division is that the company needs cash, and quickly. When Dell acquired EMC for $67 billion, the company promised that it would find ways to help finance the debt needed for the EMC acquisition.
But $3.05 billion doesn’t seem much. First, Dell acquired Perot Systems (which later became Dell Systems) for $3.9 billion in 2009.
Second, Dell wanted more than $3.05 billion. Rumor has it that Dell was asking for $5 or $6 billion. So it looks like Dell didn’t have enough time to find another potential buyer to outbid NTT.
On the other side of the equation, NTT wants Dell Systems because Japan-based NTT is trying to expand its client base to new regions. Dell Systems is mostly operating in North America in the health-sector.
NTT has already acquired Dimension Data in South Africa and Keane Inc. in the U.S. The company is just iterating on its strategy of expanding its foreign presence. Many Japanese companies have been looking at foreign markets when it comes to growth.
In short, Dell is offloading side businesses in order to finance the EMC acquisition. Nobody knows if the EMC acquisition was a smart move, but at least Dell is committed to this strategy. Meanwhile, NTT is slowly but surely expanding to new markets.Featured Image: dokmai/Shutterstock