Tickers in this Article: DELL, AAPL, PAR, EMC, IBM, HPQ, CSCO
F.Scott Fitzgerald is credited with saying "there are no second acts in American lives" and he may as well have been talking about American business. For every Apple (Nasdaq:AAPL), there are at least two Atari's - most companies have their one big shot as a growth company and then settle into a low-growth maturity or fade away entirely. Tech in particular seems to follow this pattern - how many people remember when Ciena, Lotus, and Netscape were the future of the tech sector? IN PICTURES: Eight Ways To Survive A Market Downturn

To borrow another literary metaphor, Dell Computer (Nasdaq:DELL) is not going quietly into its good-night. Once a hot tech stock for its success in the direct-to-consumer PC market, Dell has since struggled to recapture its former glories. Will a multi-year acquisition spree give DELL's shareholders another chance to enjoy above-average growth, or is the company simply frittering away its owners' cash?

The Latest Move
Dell's latest move is to acquire storage company 3Par (NYSE:PAR) for almost $1.2 billion in cash. At about $18 per share, Dell is paying an eye-popping 87% premium to 3Par's Friday close. That is a pretty hefty valuation for 3Par, but investors should remember that 3Par was posting very solid growth before the economy fell down the rabbit hole.

3Par is a logical extension of Dell's efforts to bulk up in information storage. 3Par offers hardware and software for data storage, and boasts a highly scalable architecture. What this means in English is that companies can try 3Par's system at a relatively small initial cost and then build it up from there if they are satisfied with the performance. While 3Par competes against some heavy hitters like EMC (NYSE:EMC) and IBM (NYSE:IBM), that scalability and ease-of-use has been a solid plus in its favor and has attracted big-name customers like Verizon (NYSE:VZ).

On its own, 3Par will not change Dell radically, but it is a logical tie-in with Dell's prior billion-dollar-plus acquisition of EqualLogic from a couple of years ago. The move does bring the ongoing relationship between EMC and Dell into question again, though, with EMC likely seeing Dell more and more as a "frenemy" instead of a long-term partner.

Can Dell do All of this Well?
Dell is now a fairly complicated company. There is the PC business, which has to compete with the likes of Hewlett Packard (NYSE:HPQ), Lenovo and a host of others. And it is an area where Dell has no particular stand-out advantage. Then there is the server business, where Dell arguably has yet to catch up to Cisco (Nasdaq:CSCO) or Hewlett-Packard. Dell also has this expanding data storage business (boosted by acquiring EqualLogic, Ocarina, and now 3Par) going up against EMC and IBM. Last and not least, there is the services business, which was beefed up by the nearly $4 billion buyout of Perot Systems more than a year ago.

Can Dell do so many things at once and do them really well? Apple's renaissance was founded largely on the company's incredible design savvy and recognition of trends in consumer electronics. Dell, though, appears to be trying to become all things IT to the business marketplace. That is not necessarily a bad destination (one could argue that is IBM's basic strategy), but is Dell on the right path? Perhaps it would have made more sense to become a great company in a single second business (like storage) instead of trying to get a foothold in multiple businesses all at once.

The Bottom Line
Dell management is going to be under a lot of pressure to prove that it can translate top-line growth into sustainable margin leverage and future cash flow. Along those same lines, there will be a great deal of scrutiny as to whether Dell takes these initial footholds and grows them through strong product development and marketing, or whether they have to continue to buy their way into the market. While these deals may yet prove to be a good use of shareholders' cash, investors should hold management to account and make sure they get their money's worth. Otherwise, Dell is just buying time with other people's money. (For more, see How The Big Boys Buy.)

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