Texas-based PC maker Dell Inc. (DELL) recently tied the knot with Practice Fusion to jointly offer a comprehensive package including hardware, software and other online services to doctors at an affordable price.
 
Practice Fusion is a San Francisco-based electronic medical record (EMR) provider, which offers free services to doctors and other health care providers.
 
The partnership will combine Practice Fusion’s web-based EMR service with DELL’s diversified health care suite including desktop and laptop computers, specialized broadband hardware, scanners and printers.
 
The combined effort will enable small medical practitioners to set up a digital infrastructure for recording patients’ history. Moreover, the partnership claims to replace over-usage of paper systems with an affordable and easy-to-use EMR technology.
 
According to Gartner, DELL is the leading health care information technology services provider in the world.
 
On the other hand, the U.S. government’s endeavor to grow the information technology industry as a major player in health reform will help drive health care IT spending over the coming years. We believe that DELL, with its strong position, would be able to capitalize on the government’s initiatives.
 
Recently, Dell also partnered with the American Medical Association to provide EMR support to the latter.
 
Last September, the company expended a hefty $3.9 billion to acquire Perot Systems Corp. to strengthen its customer base and enterprise solutions capabilities within the health care industry.
 
This apart, we feel that DELL has the ability to grab a substantial share of the increase in PC shipments along with the increase in IT spending through new, innovative products and aggressive marketing.
 
The company reported first-quarter revenues of $14.9 billion, up 21% year over year and almost flat compared to the previous quarter. The growth in revenues was due to strength across all business segments, with highest growth witnessed in the Large Enterprise segment which is again attributable to robust growth in server revenues.
 
Though the potential IT spending, market share gains in health care industry and high growth forecast for the PC industry are positives for DELL, we remain concerned about the competition from Hewlett-Packard Co. (HPQ), Apple Inc. (AAPL), Microsoft Corp. (MSFT), as well as the company’s high debt level.
 
We maintain our short term Hold recommendation on the shares.
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