The second-largest PC maker in the world, Dell Inc. (DELL), recently announced that it will provide the NASA Center for Climate Simulation (NCCS) with its PowerEdge C6100 servers.
The server, which supports high-performance computing (HPC), will aid NCCS in carrying out analytical research to understand and predict any impending change in climatic conditions.
The total contract value of $5.1 million will not have a significant impact on Dell’s quarterly revenue. However, NASA’s involvement does signal growing interest in Dell’s expertise.
Dell’s HPC solutions are based on Intel Corp.’s (INTC) Xeon Processors and facilitate designers, engineers and program developers to conduct research work faster and more efficiently. Dell’s PowerEdge C6100 server, which is one of the HPC solutions, will empower NCCS to look into minute environmental details with the help of faster research and innovation, thereby reducing energy consumption.
Dell’s HPC solutions are gaining popularity in universities and organizations keen on deploying upgraded technology for their research work. This opens up further streams of revenue for the company.
Apart from successful product deployments, we are also encouraged by the company’s PC shipments in the past few months. According to market research firm Gartner, Dell holds a second position, closely behind the tech giant Hewlett-Packard Co. (HPQ), surpassing the Taiwanese computer maker Acer.
New products, a stronger services business, opportunities in cloud computing and the Electronic Medical Record sector, its smartphone initiative, as well as IDC and Gartner’s increased 2010 PC shipment numbers are positives for the company.
On the other hand, Dell’s relative weakness in emerging markets, stiff competition from other PC makers like HPQ, Apple Inc. (AAPL) and International Business Machines Corp. (IBM) and its high level of debt are causes for concern.
Considering the above factors, we maintain our short-term Hold rating on Dell shares, which equates to a Zacks #3 Rank.