UPDATE 2-Dell to buy cloud computing company Boomi

Tue Nov 2, 2010 2:02pm EDT

* Dell wants to boost cloud-computing capability

* No terms disclosed

* Dell shares barely changed (Adds background on Boomi, updates shares)

LOS ANGELES, Nov 2 (Reuters) - Dell Inc DELL.O will buy U.S. cloud-computing services company Boomi to shore up its ability to provide software over computer networks.

The world's No. 2 PC maker did not disclose terms of the deal for Boomi, which counts Salesforce.com (CRM.N) among its clients and helps integrate so-called cloud-based applications and smooth data transfers between programs.

Boomi raised $4 million in 2008 in an initial round of institutional funding led by venture capital firm FirstMark Capital. The company is based in Berwyn, Pennsylvania, and was founded in 2000.

Privately held Boomi was mentioned as a potential acquisition target after Dell rival IBM (IBM.N) bought Cast Iron Systems earlier this year. [ID:nN03206373]

Dell has been on the acquisition trail, but lost out recently in a bidding battle with larger rival Hewlett-Packard (HPQ.N) for high-end storage maker 3PAR. Chief Executive Officer Michael Dell had said at an industry event in Hong Kong that the company would announce a cloud-computing acquisition on Tuesday, spurring a round of market speculation on potential targets. [ID:nTOE6A107A]

Shares of Rackspace Hosting Inc (RAX.N) climbed as much as 10 percent, but pared those gains to trade about 3.2 percent higher at $26.16 around midday.

Cloud computing refers to technology that allows users to access data, software and services over the Internet and corporate networks, and has been touted as the next big trend in the technology sector,

Shares of Dell were up 9 cents at $14.50. (Reporting by Eddie Chan and Gabriel Madway, editing by Matthew Lewis)

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