Unheralded M&A Moving Dell Beyond Dying PC Market

NEW YORK (TheStreet) -- The death of the PC market won't kill Dell (DELL) , thanks to the company's recent M&A strategy.

A string of unheralded 2012 acquisitions -- to go with three years of M&A in software and data security markets -- is helping Dell distance itself from peers and from its bread-and-butter PC business, positioning the company for improving operating margins and earnings per share. That comes as analysts expect long-term profitability declines in its core PC business.

Wall Street increasingly likes what it sees in the Dell M&A strategy.

On Monday, Morgan Stanley analyst Katy Huberty upgraded Dell's shares to "equal weight" from "underweight," on expectations that the company's recent acquisitions will help it generate earnings that are in line with the tech sector, rather than underperforming peer PC makers like Hewlett Packard (HPQ) . Now Dell can be expected to show similar performance to tech giants like IBM(IBM) , EMC(EMC) , NetApp(NTAP) and Seagate Technologies (STX) .

In the past six months, Dell's shares have gained just over 1% to $16.38, a stronger return than Hewlett Packard, which has experienced a near-10% drop. Tech companies geared to networking, data security and virtualization, like IBM, EMC and Seagate Technologies, have posted double digit stock gains.

"Our more positive view is a function of both potential EPS upside and the recent acceleration in acquisitions which show the company is taking action to address its past market underperformance and high exposure to secular pressures in the consumer/PC business," wrote Huberty in a note to clients.