Back to top

Analyst Blog

The world’s third largest PC maker Dell Inc. sealed two government deals yesterday.

Under the $100.0 million contract awarded by the National Institute of Allergy and Infectious Diseases (NIAID), Dell will provide information technology (IT) support to researchers. The institute is an agency of the United States Department of Health and Human Services and is responsible for conducting researches to detect and prevent various infectious and allergic diseases.

Dell’s technological support will ensure uninterrupted research work, the upgradation of the institute’s network infrastructure, supporting high performance computing and ensuring secure data exchange. It will also facilitate the adoption of cloud computing across the institute’s IT network for smooth IT management.

In a similar development, the National Institute of Health’s (NIH) Information Technology Acquisition and Assessment Center (NITAAC) opted for Dell’s services for a period of 10 years. NITAAC is responsible for acquiring various products and services in the IT, defense and health care areas for provision to different government agencies.

This Indefinite Delivery/Indefinite Quantity (ID/IQ) contract has a ceiling value of $20.0 billion. Under this contract, Dell will help in software development, management of IT operations, security of critical infrastructure, as well as other general IT functions.

Dell’s service deal-winning spree is likely to continue. Dell’s Service segment performed well in the last quarter (up by 4.0% year over year) with the company reporting a solid backlog growth of 15.0% year over year.

We are encouraged by Dell’s recent cost cutting initiatives, opportunities in healthcare, cloud computing and the ramp up of Ultrabooks. But concerns over Dell’s ability to continue dividend payouts, uncertainty regarding the acquisition of software vendor Quest Software and fears of losing PC market share to Hewlett-Packard Company (HPQ - Analyst Report) and Apple Inc. (AAPL - Analyst Report) have led to our bearish view for the short term.

Currently, Dell has a Zacks #4 Rank, which implies a short-term Sell rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
STRATTEC SE… STRT 80.24 +3.00%
PATTERSON-U… PTEN 34.54 +2.98%