Dell Aims to Secure SMBs - Analyst Blog

Round Rock Texas-based PC maker Dell Inc. (DELL) is reportedly expanding its reach in Web security. Recently, Dell tied up with leading Internet Content Security vendor, Trend Micro Inc., to enrich its security-solutions portfolio.

Tokyo-based Trend Micro provides its customers (both corporate and consumer) with timely, easy and effective threat protection at reduced administrative costs.

With Trend Micro’s “Worry-Free Business Security Services”, Dell intends to provide small and medium businesses (SMBs) more secured data transaction and protection across the world.

As per the findings of Federal Bureau of Investigation, SMBs are generally prone to hacking, due to limited IT resources for threat prevention. Hence, companies must ensure restricted access to their websites and protect the integrity of their data.

The joint effort of Dell and Trend Micro will facilitate the SMBs to manage their data in a more secure and simplified way.

Dell’s IT solutions and services portfolio, created over the past two years, is geared to meet the requirements of SMBs in managing their IT infrastructure investments. Moreover, Dell recently announced (July 28, 2010) midsize security initiatives and partnerships with Juniper Networks Inc. (JNPR) and SecureWorks Inc. that confirm its focus in this area.

Dell and Juniper announced their intention to develop Unified Threat Management features and network security appliances. These will augment the existing J-SRX Services Gateway portfolio, which sets a benchmark for on-premise network security.

Moreover, Dell plans to provide a full range of information security services, which will facilitate customers to identify, monitor and manage security risks and compliance needs. For this, Dell will be partnering SecureWorks, a leading global provider of information security services. The services will be available by the end of 2010.

We believe that Dell’s SMB customers will clearly gain from the company’s visibility into emerging threats, which in turn, may increase customer retention rate.

Apart from this, we remain encouraged by Dell’s decent second quarter results, with earnings and revenues moving up from the year-ago quarter. New products, a stronger services business, opportunities in the Electronic Medical Record sector, the smartphone initiative, a revival in IT spending and an encouraging fiscal 2011 guidance were the quarter’s positives.

However, Dell’s relative weakness in emerging markets and high debt level are major concerns. Moreover, stiff competition from technology majors, such as Hewlett-Packard Co. (HPQ), Apple Inc. (AAPL), International Business Machines Corp. (IBM) and Microsoft Corp. (MSFT) is always a factor to consider before investing in Dell.

Keeping the above factors in mind, we are comfortable with our short-term Hold rating on Dell shares, which equates to a Zacks # 3 Rank.