Dell Making Headway in Schools - Analyst Blog

According to the latest findings of the market research firm IDC, more and more schools and universities across the world are deploying Dell Inc.’s (DELL) technology solutions.

The growing popularity has made the PC maker the top world-wide provider of computing solutions for the education sector.

Reportedly, Dell has a series of solutions targeting at students, both software and hardware.

Launched last year, Dell’s Connected Classroom provides a platform that educational institutions use to improve their students’ technical knowledge with the aid of practical training. The solution also helps set up interactive and collaborative web applications within the classroom environment.

In May, Dell launched an enhanced netbook, Latitude 2110, which features high definition display and built-in mobile broadband connectivity. The product is intended to cater to students with access to digital textbooks.

Last week, Dell launched another milestone in computing, which it refers to as the Virtual Lab solutions. The solution should be particularly helpful for educational institutions that typically operate on tight budgets. Dell’s Virtual Lab solutions lower the infrastructure costs related to laboratory set-up costs. Through this solution, students would be able to access their lab facilities in their personal computers from anywhere around the world.

We remain encouraged with Dell’s continuous efforts to attract next generation users with its innovations. In this context, Dell launched its android-based tablet PC, which will provide users with navigation facilities (Google maps) and networking experience while traveling.

Dell’s PC shipments rose 12.4% worldwide and 23.7% in the U.S. during the second quarter of 2010. Market research firm Gartner Inc. anticipates spending in the professional sector to rise by year-end 2010 and in 2011 owing to a larger refresh cycle. We expect Dell to be one of the key beneficiaries of the recovery in corporate spending.

Based on the ongoing corporate refresh cycle, Dell expects fiscal 2011 revenues to increase 14.0% to 19.0% from the prior year.

Despite the encouraging guidance, we believe 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 Zacks #3 Rank ('hold') on Dell shares.

 
APPLE INC (AAPL): Free Stock Analysis Report
 
DELL INC (DELL): Free Stock Analysis Report
 
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
 
INTL BUS MACH (IBM): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
Zacks Investment Research