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Dell Inc. + Extreme Networks = Win / Win

Since Michael Dell took the CEO helm back in 2007, his company has made a significant shift in moving away from the staid and low-margin PC maker mentality to an IT services mentality; specifically cloud computing and mobility.

While I haven’t agreed with the majority of their acquisitions, execution, and maneuvering into this space, I do sense a great opportunity for them.

This great opportunity is in the form of Extreme Networks.

I feel that the key piece they are missing in their portfolio is networking, which will tie both aspects of their new mentality into a nice holistic package.

Mr. Dell stated during his June 29th keynote that: “Our focus now is on enterprise solutions that provide efficiency and flexibility.” Couple that message with their plans to
focus on:

  • Data Management
  • IT Services within Cloud Computing
  • Revamping their user computing model

It is readily apparent to me that they need the underlying communication framework and network technologies to make their vision a reality.

Granted, Dell has existing partnerships with Brocade and Juniper that can and will assist them in this regard, but why not bring this key piece of the information
technology equation in-house with a smart and timely acquisition?

Extreme is prime for the taking:

  • $265M market cap
  • Vastly under-valued
  • Management turnover
  • Investor dissatisfaction
  • 52 week range of $2.51 – $4.25

Mr. Dell, an offer of ~6$/share will fill out your portfolio and vision nicely, as well as make speculating investors such as myself very happy.

By the end of this year, I expect some action regarding this.