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Dell Might Keep Turin Alive

Analysts think Dell Technologies (Nasdaq: DELL) might keep running the Turin piece of Force10 Networks Inc.

It's not as obvious a match for Dell as Force10's Ethernet switches, which were the main motivation behind the acquisition offer, announced Wednesday. (See Dell to Acquire Force10 and Force10 Deal Could Sting Brocade, Juniper.)

Dell has said it plans to support both the carrier and Ethernet pieces of Force10 but hasn't offered any specifics. And it's hard to imagine Dell wanting to deal in the telecom transport gear that came out of Turin Networks, which acquired Force10 in 2009 and adopted its name. (See Force10, Turin Play Convergence Card.)

Still, Shaw Wu, an analyst with Stern Agee & Leach Inc., thinks Dell sees a chance to boost its service-provider business.

"They sell some servers and storage into that area, but it's not that big. This could help," Wu says.

He's not alone. "I think they're going to invest in all aspects of the business," says Brian Marshall, an analyst with Gleacher & Co.

Like Wu, Marshall thinks Dell wants to strengthen its service-provider business, and the company has shown it can handle acquisitions well. "EqualLogic [a 2007 storage acquisition] was a textbook example," he says.

Still, there's skepticism out there. Turin comes with an installed base that's using aging products acquired from Carrier Access Corp. and White Rock that Dell might be loath to support.

"When you look at that company, you're going to see a lot of stale products, and that means a lot of vendor liability," says one industry executive who requested anonymity. "It wouldn't surprise me if it all just disappeared."

But Wu says Turin is pretty small compared with Dell's US$14.5 billion in cash and roughly $60 billion in annual revenues. Turin's revenues were $26.6 million in the six months ended March 2011, according to Force10's S-1 filing, making it about a quarter of Force10's $200 million-a-year business.

"It's not like they bought Cisco Systems Inc. (Nasdaq: CSCO)," Wu says.

— Craig Matsumoto, West Coast Editor, Light Reading

sam masud 12/5/2012 | 4:58:11 PM
re: Dell Might Keep Turin Alive

Nah, Dell does not have any use for Turin. Why would Dell want to dabble on the transport side? And if it wanted to get into that biz, then surely there are vendors out there with better equipment, more customers than Turin which Dell  could acquire.

Pete Baldwin 12/5/2012 | 4:58:11 PM
re: Dell Might Keep Turin Alive

I dunno ... I'm still having a hard time seeing this.

paolo.franzoi 12/5/2012 | 4:58:10 PM
re: Dell Might Keep Turin Alive

I can imagine that Dell would love a piece of the Tier 1 carriers.  The Turin base?  Probably not.


seven


 

^Eagle^ 12/5/2012 | 4:58:09 PM
re: Dell Might Keep Turin Alive

Seven, you hit the nail squarely with that comment.  "probably not the Turin base"...


To my knowledge, the Turin - Whiterock - CACs base are all small niche carriers.  I don't know of any significant wins by those platforms in any T1 carriers.  (note: I might have missed some announcement, hence... "to my knowledge" comment).


I agree, I don't think the Turin assets really help Dell get into the T1 carrier space.  


Maybe Dell is hoping that their miniscule sales of servers for carriers to use in the networ will be a door to "help" Turin penetrate the carriers.  Hahahaha, yeah right.


Note: I am distinguishing between end user pc's and servers used in the "enterprise" for use in the carrier's internal LAN and those servers used to actually run the transport networks (think signalling servers, etc.).


sailboat

bollocks187 12/5/2012 | 4:58:05 PM
re: Dell Might Keep Turin Alive

I recall it was Turin that actually acquired Force10 for the simple reason that Turin buisness resulted in making Force10 closer to break even. The merger resutled in a financially agreement that made the two companies more attractive for acquisition. They still could not get to an IPO since Force10 was so bloated with people they should in reality have gone away a long time ago. While Turin, whiterock,CAC made enough to break even they where as an entity not attractive for acquisition or an IPO given the niche market they served.


 

bollocks187 12/5/2012 | 4:58:05 PM
re: Dell Might Keep Turin Alive

The only 'potential' segment of the Data center market that Turin is of potential value is in the transport-interconnect solution between datacenters.


Why would DELL actually want to get into the Tier 1 carrier markets in the first place? Nearly every company that has tried has resulted in financial loses - in the long term. Tier 1 carriers are not 'good profitable customers'.


 


 

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