The world’s third largest computer maker Dell Inc. (DELL) announced that it has won a contract from U.S. Department of Transportation, spanning over a period of 10 years, and bearing a deal value of $65.0 million. The company has won the contract, through the Dell Perot Systems Government Services Unit.
As per the terms of the agreement, Dell’s unit will be providing IT support services to the Department Of Transportation, which includes IT infrastructure services, hosting services, program management and e-mail management for the company. Dell’s acquisition of Perot Systems for $3.9 billion in September 2009 is proving beneficial for the company.
This is the largest ever acquisition in the company’s history. We believe that going forward the acquisition will allow Dell to offer a broader range of IT services and create cross-selling opportunities for its hardware among Perot Systems’ customers. The company is eyeing more such acquisitions as it looks to bolster its portfolio and increase focus on corporate clients.
After establishing itself as a personal computer maker, Dell has diversified into other segments, such as storage and Electronic Medical Records. This apart, the company has also launched a smart phone, the Mini 3 that is running on Google’s (GOOG) Android mobile operating system and is connected through AT&T’s (T) carrier network.
Moreover, as per the latest findings of leading technology research firm Gartner, worldwide PC shipments are expected to grow 19.7%, reaching 366.1 million units in 2010. The firm also expects that spending on PCs will increase 12.2% to around $245 billion. These statistics indicate a boost to Dell’s business this year.
Dell reported strong fourth quarter numbers, with the EPS exceeding the Zacks consensus estimate, and revenue moving up sequentially. The EPS was also better than the year-ago quarter. New products, a stronger services business, opportunities in the Electronic Medical Record sector, smart phone initiative and a revival in IT spending are positive factors. The acquisition of Perot Systems has also expanded the customer base and opened up cross-selling opportunities. Its relative weakness in emerging markets and the mobile/consumer segments of the PC market and the high level of debt are a concern.
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