* Offer at $27.75/shr, up $0.25 from last week's bid
* 17 pct discount from last week's announcement of talks
* Analysts say Dell may need to do more
* Dell, Compellent shares down (Revises first sentence, adds analysts' comments and valuation vs 3PAR, Isilon deals, updates stock prices)
By Ritsuko Ando
NEW YORK, Dec 13 (Reuters) - Dell Inc DELL.O plans to buy data storage company Compellent Technologies Inc CML.N for about $960 million, in a bid to shake its reliance on hardware, but it may need to do more to compete in new technologies like cloud computing.
Dell and rivals like Hewlett-Packard Co (HPQ.N) are all trying to invest in corporate business technologies including storage and services, as PC sales are hurt by low margins and competition from new devices like Apple Inc's (AAPL.O) iPad.
The deal for Compellent comes three months after Dell lost to HP in a bidding war for another storage firm, 3PAR, and as large vendors are looking to buy small firms and become "one-stop shops" for business technology.
Dell and Compellent said last week they were negotiating a deal. Dell sweetened its cash offer to $27.75 a share from its bid last week of $27.50 per share. Net of Compellent's cash, Dell said it will pay $820 million.
The offer is a 17 discount to the shares' level before the companies revealed last week that they were in talks. Previously, the shares had risen 90 percent since late October when Reuters first reported a deal was under discussion.
Analysts said the price seemed moderate. Dell's offer values Compellent at around five times sales, compared with multiples of over eight that HP offered for 3PAR and EMC Corp EMC.N offered for Isilon.
"It looks like Dell got a really good deal relative to some of the recent storage acquisitions, although Compellent doesn't have such a high growth rate. I like it," said Robert W. Baird analyst Jayson Noland.
Dell said on Monday the deal, expected to close in early 2011, should add to its adjusted earnings in fiscal-year 2012.
Compellent shares were down 3 percent, or 87 cents, at $27.84 on the New York Stock Exchange, 9 cents above Dell's bid.
Dell, HP, and International Business Machines (IBM.N) have all been looking to broaden their offerings beyond computers.
Many corporate clients are looking for simpler ways to deal with their massive volumes of data, and want fewer vendors for all of their computing, networking and storage needs.
Data storage plays a crucial role in cloud computing, the accessing of remote computing power and data over the Internet. Dell entered this market in 2008 with its purchase of EqualLogic.
Eden Prairie, Minnesota-based Compellent specializes in storage and recovery of data for small and medium-sized businesses.
But analysts said Dell may need to do more. Its dependence on hardware is becoming an increasing concern on Wall Street.
Goldman Sachs said in a report on Sunday that Dell and HP were particularly vulnerable to the growing popularity of tablet computers. He recommended a "sell" on Dell and HP while rating Apple a "buy."
Dell shares were down 2.7 percent at $13.52 on Monday afternoon, while HP shares were down 1.25 percent at $42.01.
While some analysts said Dell managed to avoid paying a super-high premium, others said Compellent is too small to enable Dell to compete effectively against an HP-3PAR combination.
Kevin Hunt, an analyst at Hapoalim Securities, recommended a "buy" on Dell but said he did not think the deal adds much for Dell.
"Not a game-changer in our view," he said.
The recent spate of storage deals has left few potential acquisition targets in the sector, however, although CommVault Systems Inc (CVLT.O) as well as privately held Pillar Data Systems and DataDirect Networks are also potential targets.
Some analysts and bankers say NetApp Inc (NTAP.O) could also be a target -- but at a market capitalization of nearly $20 billion, it could be too big.
Analysts said the latest move was sure to disrupt Dell's sales partnership with EMC. Dell, however, said it would continue selling EMC's storage products to customers who wanted them. (Reporting by Ritsuko Ando and Paul Thomasch in New York and Saqib Iqbal Ahmed in Bangalore; Editing by Unnikrishnan Nair, Derek Caney and Matthew Lewis)