Dell Launches New SMB Solutions - Analyst Blog

Round Rock, Texas-based PC maker Dell Inc. (DELL) recently rolled out a series of new solutions targeted at small and medium sized businesses (SMBs). The solutions will help the SMBs to upgrade their information technology (IT) platform.
 
Dell's newly launched products are PowerEdge servers, PowerVault storage, and PowerConnect networking solutions. According to the company, the solutions will be vital for developing businesses with constrained budgets for IT resources.
 
Despite a challenging environment, Dell believes that the firms and organizations are under compulsion to upgrade their technologies in order to meet customer requirement and fight security threats. As per the findings of research firm Gartner, midsized businesses always prefer IT solutions that can be installed, configured, managed and used easily; need minimal customization; can be integrated conveniently and cut costs considerably.
 
Dell also announced the global availability of original equipment manufacturer (OEM) solution for Microsoft System Center Essentials (SCE) 2010, which will come handy with the PowerEdge servers. The solution will facilitate the consolidation of servers, monitor systems with more efficiency, and better manage hardware, software and services using a single console.
 
We believe that Dell's SMB customers will gain from the company's visibility into complex business needs, which in turn, may increase the customer retention rate. Notably, earlier this month, Dell joined hands with leading Internet Content Security vendor, Trend Micro Inc., to expand its security-solutions portfolio. With Trend Micro's “Worry-Free Business Security Services”, Dell aims at providing SMBs with more secured data transaction and protection across the world.
 
We believe that Dell's effort in introducing new solutions will likely generate streams of revenue from its SMB operating unit. In the second quarter, the unit earned revenues of $3.5 billion, or 22.6% of total revenue.

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, a revival in IT spending and an encouraging fiscal 2011 guidance were the quarter's positives.
 
However, soft demand from the Consumer segment, high debt level and stiff competition in the computing and emerging cloud computing space are concerns.
 
Currently, we have a short-term Hold rating on Dell shares, which equates to a Zacks # 3 Rank.