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Dells bid to buy Quest Software reportedly has broken down, just more than a week after reports said the two sides were close to making a deal.
According to reports by Reuters and BloombergBusinessweek, unnamed sources said talks between the two companies broke down late last week for unknown reasons. Sources told Reuters that despite the ending of negotiations, lower-level representatives from both companies are still in touch.
Quest, a 25-year-old company whose software is designed to help businesses manage database, server and user workspace, protect and backup data and monitor performance, has been a topic of conversation for more than two months since executives agreed to be bought by venture capital firm Insight Venture Partners for $2 billion.
Quest reportedly had been granted a go shop period since the agreement with Insight, and several analysts said the software company had gotten interest from several top-tier tech companies, including Dell, Microsoft, Oracle, CA and BMC Software.
Dell was seen as a logical choice, given its interest in expanding its reach beyond its core PC- and server-making businesses and becoming an enterprise IT solutions provider. Softwarealong with networking and storageplays a key role in that effort, and Dell already has grabbed other software makers to help build out its portfolio.
Dell this year bought Wyse Technologya longtime hardware maker that itself was shifting its focus to cloud software and desktop virtualizationas well as Make Technologies for application modernization software and Clerity Solutions, which also is in application modernization.
Quest and Dell also have been strong partners in the past, with Quest having a page on its Website devoted to the alliance. According to the software company, the two vendors have worked together since 2004, and Quest has become one of Dells top 10 partners worldwide and Dell is one of Quests top five.
Our deeply rooted association means that we frequently collaborate heavily on planning, designing, implementing and managing hardware and software solutions for our customers to deliver powerful results, Quest officials say on the Website.
Those shared efforts revolve around such areas as virtualization management for desktops and servers, various Microsoft projects, application management for SAP, PeopleSoft and Java, and database management for Oracle database offerings, SQL Server and MySQL.
Dell executives have been pushing the transformation of the company for several years, trying to move it into higher growth areas to protect it against the increased commoditization of PCs and servers. It hasnt been easy for Dell, as illustrated by the first three months of this year. In a May 22 conference call with analysts and journalists, officials reported that first-quarter revenues and profits came in lower than during the same period in 2011, missing Wall Street analysts expectations. During the call, Brian Gladden, Dells senior vice president and CFO, said that despite the financial numbers, the company was committed to the strategy and that the results of the transformation would not be linear. ¦ This is a long-term strategy and will take time.
Krista Macomber, an analyst with Technology Business Research, said in a May 22 research note that the firstquarter quarterly financial numbers shouldnt throw Dells transformation efforts off-track.
The enterprise revenue decline is not yet a significant threat to Dells strategic direction, Macomber wrote. Considering Dells expansive existing install base and go-to-market know-how within the midmarket, Dells midmarket customers are adopting its solutions and services ahead of enterprise sector customers.