* Dell says Perot integration progressing well

Stocks | Mergers & Acquisitions

* Sees expenses for deal through 2011

* sees costs of $80 mln-$120 mln related to Poland plant

* Sees long-term revenue growth 5-7 pct

(Recasts, adds executive comments, details, byline, previous NEW YORK)

SAN FRANCISCO, Dec 16 - Dell Inc (DELL.O) said the acquisition of Perot Systems will help the company tap new growth markets as it makes a deeper push into technology services.

Chief Financial Officer Brian Gladden said on a conference call on Wednesday that Dell has identified more than $300 million in cost reductions from combining the two companies. He also said Dell believes it can grow revenue 5 percent to 7 percent over the longer term.

Dell announced in September that it would buy Perot for $3.9 billion, acquiring a company with a strong focus on serving healthcare and federal government customers. The deal closed in early November.

The newly combined services business will have 42,000 employees and annual revenue of roughly $7.5 billion, with about half of that coming from the public sector.

Dell's services will be run by Peter Altabef, who was previously chief executive of Perot.

Dell expects to incur expenses through its 2011 fiscal year related to the acquisition. The company estimates it will recognize pretax expense of $120 million to $130 million in the fourth quarter, which ends Jan. 29.

It also sees about $20 million to $25 million per quarter throughout fiscal year 2011.

Dell said the new services business will have the greatest scale in healthcare, where it serves most of the hospitals and hospital systems in the United States, providing IT infrastructure and business process outsourcing for billing, among other things.

Paul Bell, head of Dell's public sector business, identified mobile clinical computing and electronic medical records as areas of focus for the services business.


Dell lags far behind rivals Hewlett-Packard Co (HPQ.N) and IBM (IBM.N) in the services arena. IT services offer higher margins and a more stable revenue streams than hardware, which currently make up the bulk of Dell's sales base.

Dell relies primarily on sales of personal computers to businesses, which have been severely hurt in the economic downturn. It has seen its global market share in PCs fall to No. 3.

Overall, Dell said its integration of Perot is progressing well and will benefit customers by making information technology solutions easier to access and simpler to manage.

Dell said it expects fourth-quarter revenue from the former Perot Systems business to be similar to what Perot reported in its third quarter, but said that there is typically some seasonal softness in the fourth quarter.

Perot's revenue in the third quarter was $629 million.

Dell said separately it planned to lay off 700 workers at a plant in Malaysia as it transfers some laptop manufacturing operations to other facilities.

Dell also said it would incur expenses of $80 million to $120 million in the fourth quarter ending in January, related to the sale of its Poland manufacturing facility to contract electronics manufacturer Foxconn (2038.HK).

Shares of Round Rock, Texas-based Dell rose 5 cents to $13.56 in early trading on the Nasdaq. (Additional reporting by Franklin Paul) (Reporting by Gabriel Madway, editing by Dave Zimmerman)