Dell Heads Toward More Virtualization (DELL, VMW, CTXS)

Dell Inc. (NASDAQ:DELL) has announced a definitive agreement to acquire EqualLogic, a provider of high-performance iSCSI storage area network (SAN) solutions uniquely optimized for virtualization.  Dell will purchase EqualLogic for approximately $1.4 billion in cash.

The acquisition will strengthen Dell’s product and channel leadership in simplifying and virtualizing IT for customers globally. iSCSI SAN technology represents the fastest growing part of the storage business.

The acquisition of EqualLogic is expected to close late in the fourth quarter of Dell’s fiscal year 2008 or early in the first quarter of fiscal 2009. The company expects the acquisition to be dilutive to earnings per share, excluding the amortization of intangibles, by $0.02 to $0.05 in aggregate for Fiscal 2009 and Fiscal 2010. The acquisition has been approved by the board of directors of each company and is subject to regulatory approvals and customary closing conditions.

Dell plans to grow EqualLogic’s successful channel-partner programs with current and future EqualLogic branded products, and also plans to incorporate EqualLogic technology into future generations of its Dell PowerVault storage line available through the channel and direct from Dell.

After virtualization has been catapulted into the coming mainstream after the wildly successful IPO of VMware (NYSE:VMW) and the successful addition of virtualization at Citrix Systems (NASDAQ:CTXS), you can expect more virtualization deals in the industry down the pipe.  As far as big tech trends, virtualization the the next "Next Thing."

Jon C. Ogg
November 5, 2007