Three Companies Dell Should Buy (And Three it Shouldn't)

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Perhaps it felt left out when Oracle bought Sun Microsystems, or Hewlett-Packard bought EDS. But it's always good to remember that sometimes the best acquisition decisions are the ones to not buy another company. Dell has clear needs. It also has areas that it may want to consider avoiding.

Here are three companies that Dell could consider buying:

Creative Labs Dell missed the boat on the whole MP3 player thing when its former CEO Kevin Rollins blew the iPod off as "a fad." Creative is coming off a particularly challenging quarter, where it bled $42 million in losses and saw its revenue go down by almost half. With Dell's ability to scale and bundle, and with Creative's nice brand equity, the Round Rock, Texas-based company could have some fun. Creative is in a weak financial position now, which could make it a good time for Dell to swoop in.

Novell Novell's market cap right now stands at about $1.3 billion. Dell could offer double that, in cash, and walk off with an interesting partner channel and a very strategic Linux distribution business. Dell rival HP has shown signs of building some nice offerings using Novell's SUSE Linux; this would throw a cute little monkey wrench into that.

Sun Microsystems Yes, Sun -- or at least Sun's hardware business. That means either cutting a deal with Oracle for that part of the company or a proxy fight for the whole thing in a hostile takeover. (Remember, Oracle still hasn't closed the Sun takeover.) Why would this make sense? Not for Sun's hardware, which would drain profits, but for Sun's customer list and engineering. Sun was building an enterprise customer list while Michael Dell was still putting motherboards into PC cases in college, and it has one of the best virtualization practices in the business. And, as an added bonus, we'd all get to see a fun proxy fight.

Here are three companies that Dell shouldn't buy:

CDW It would be redundant, it would be costly, and it would alienate the very channel Dell is trying to build right now. Just no.

Lexmark Dell has had a fascination with the printer business for several years, and rumors have come and gone for several years that Lexmark may be open to being acquired. Yet, printing has never been the success that Dell executives had once hoped it would be for it, and taking over Lexmark would create more problems than it would solve.

Twitter Over the last few weeks, there have been rumors that either Google or Apple would buy Twitter. Dell actually has gotten the whole social networking thing down successfully, and so might be tempted to think about it. If that happens, someone in Round Rock has to step up and just say no. It's not core to what Dell does, every time Twitter encounters performance issues it would reflect on Dell as a technology company and Twitter's users seem to be happy with it as an independent entity for now.