Dell Inc. (DELL) has clinched a six-year information technology (IT) outsourcing deal with TUI Travel plc, a company under TUI AG, a renowned European travel group. Financial details of the deal were not divulged.
Per the terms of the deal, Dell will provide hardware and software asset management, as well as help desk, printer management, patch management, deployment, software compliance, and other services in the UK, Germany, France, Spain, the Netherlands and Switzerland.
Apart from the above services, Dell will develop a single point of communication to resolve all technical issues and set up a 24×7 help desk service for customer queries. TUI Travel will leverage Dell’s services to reduce cost of managing infrastructure as well as maximize employee productivity.
A few days back, Dell signed a seven-year deal with the Brooklyn Hospital Center (“TBHC”), under which the PC maker will provide its revenue cycle services. These services will facilitate TBHC in billing and payer reimbursement, thereby delivering maximum patient satisfaction.
We believe Dell’s services are in demand and will be a revenue driver in the coming quarters. During the recently concluded fourth quarter of 2011, Dell recorded a 1% year-over-year growth in its Service business. However, the company strengthened its services portfolio with the three acquisitions, namely information-security services provider SecureWorks Inc., cloud-based service provider Boomi and cloud-based medical archiving solutions provider Insite One Inc.
Apart from Dell’s deal wins and acquisitions, we remain encouraged by its decent fourth quarter numbers, with earnings per share and revenues showing annual improvements. New products, a stronger services business, opportunities in the Electronic Medical Record sector, along with the introduction of Dell Streak were the achievements of the year. Dell’s international exposure, particularly expansion in China, is also encouraging.
However, a high debt level and increasing competition from Hewlett-Packard Company (HPQ) and Acer keep us concerned.
Currently, Dell has a short-term Hold recommendation, as is indicated by the Zacks #3 Rank.
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