Dell to buy Alienware in gaming computer expansion

SAN FRANCISCO, Mar 23 (Reuters) Dell Inc. said on Wednesday it agreed to buy gaming-computer maker Alienware Corp., part of a push into the lucrative computer gaming market that could help the No. 1 PC maker boost profit.

Terms of the transaction weren't disclosed. Privately held Alienware, based in Miami, will operate as a separate unit and keep its product development, marketing, sales and technical support staff as well as its brand, Dell said in a statement.

A Dell spokesman said the acquisition was financially immaterial to Dell, which had revenue of .9 billion last year compared with Alienware's 0 million.

''This is good news for Dell's consumer market,'' said Ted Schadler of Forrester Research Inc. ''It is kind of re-upping Dell's commitment to that market.'' Dell, of Round Rock, Texas, has been expanding in the computer gaming market, launching a supercharged, ,900 version of its high-end XPS line of computers in January.

Gaming PCs can sell for five to 10 times as much as desktop PCs.

Dell is trying to boost profit in its consumer business, which accounts for 15 per cent of revenue, after it posted slower-than-forecast growth last year as it lowered prices on entry-level PCs too aggressively.

Chairman Michael Dell, announcing an aggressive push into consumer electronics, said in January about 20 per cent of PC users, or about 40 million people, are gamers and that the company wanted to capitalise on the high-performance gaming market.

The purchase renewed speculation that Dell, which exclusively uses chips made by Intel Corp., may begin using microprocessors by Intel competitor Advanced Micro Devices Inc., which run Alienware computers.

Dell spokesman Jess Blackburn said the company was not contemplating switching chip suppliers.

''Our strategy in terms of suppliers that we work with is unchanged,'' Blackburn said. ''This doesn't signal that we are changing that.'' Stock of AMD rose 2.1 per cent in extended trade after slipping 0.2 per cent in regular trading. Intel shares rose 0.3 per cent.

''This is a good way for Dell and AMD to get to know each other a little better,'' said JoAnne Feeney, an analyst with Punk, Ziegel&Co. ''There is not going to be any immediate impact on AMD sales, but it makes it more likely that Dell and AMD will work together in other areas.'' REUTERS SD