Computing major Dell Inc. (DELL) is continuing on its deal winning spree. Recently, the company announced a two-year extension with The Massachusetts Health Connector Authority (Health Connector). Per the agreement, the technology major will provide solutions for a range of enrollment, billing, website and customer experience services.
The deal focuses on services that Massachusetts Health will provide through “Commonwealth Care,” a low-cost health insurance option. Dell is currently applying its technical know-how and best practices to other state government organizations that the company has developed in association with Health Connector.
Dell also provides maintenance services for the company’s portals, which meet specific healthcare needs of individuals. Although this is a renewal agreement, Dell did not disclose the financial details.
Dell also clinched another six-year information technology outsourcing deal with TUI Travel plc, a company under TUI AG, a renowned European travel group. As usual, Dell did not comment on the financial impact, but said that it would 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 winning meaningful deals at regular intervals, the company continues to benefit from the enterprise PC upgrade cycle, server upgrades and server virtualization. Although Hewlett-Packard Company (HPQ) is the market leader in the PC segment, of late, Dell has been seeing market share gains in the developing world. This is expected to catalyze its business growth over the long term and result in more deal wins from the region.
This apart, the company is also repositioning its Enterprise business, which is now focusing on several high-margin segments, such as cloud computing and network storage where corporate spending is likely to increase. This offers additional business opportunity. Going forward, we expect this focus to positively impact the company’s results and thereby, investor sentiment.
Apart from Dell’s recent deal wins, growth prospects and acquisition spree, we remain encouraged by its new products, a stronger services business, opportunities in the Electronic Medical Record sector, as well as the introduction of Dell Streak late last year. However, intense competition from Hewlett-Packard Company and Acer may temper growth prospects slightly.
Currently, Dell has a short-term Strong Buy recommendation, as is indicated by the Zacks #1 Rank.
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