CHICAGO, March 29, 2011 /PRNewswire/ -- Zacks.com Analyst
Blog features: Dell Inc. (Nasdaq: DELL), Hewlett-Packard
Co. (NYSE: HPQ), Apple Inc. (Nasdaq: AAPL),
International Business Machines Corp. (NYSE: IBM) and
Microsoft Corp. (Nasdaq: MSFT).
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Here are highlights from Monday's Analyst Blog:
Dell Grows Building BRICs
Dell Inc. (Nasdaq: DELL) has started construction of its
second operating unit in China, which is in line with its expansion
plan initiated in September 2010.
Per the plan, Dell will open a manufacturing and customer
support center in Chengdu,
Western China. Dell expects the
unit to be operational by fiscal 2011, creating 3000 job
openings.
Dell's efforts in this expansion complement the Chinese
government's strategy to develop new trade relations. China's
'Go West' policy was aimed at
developing economic cooperation with its western neighbors and
cementing trade ties with Central Asian countries. We believe that
Dell's expansion in China is an illustration of China's new
approach to international trade.
Along with Chengdu, Dell plans
to open an additional office in Xiamen, situated in southeastern China. This
proposed expansion will add 500 employees to the Dell family. Dell
had its first operating unit in Xiamen.
According to Dell, the overall China expansion will cost more
than $100 billion over the next 10
years on facilities, employment, research and development, as well
as purchases from Chinese suppliers. We believe this massive
capital expenditure reflects Dell's confidence in the region,
boosted by a string of successes there.
Dell China has recorded solid
revenue growth of almost 11 times over the past decade. In the
recently-reported fourth quarter, sales in China grew 21% year over
year. According to the industry analyst firm IDC, demand for
computer systems in western China will grow at a 21% annual rate
through 2014. With a talented workforce and well-planned execution,
we believe that Dell will be able to capitalize on the emerging
opportunities in China.
Dell has been investing in high growth countries such as
Brazil, Russia, India, and China (BRIC), and recently
announced its plan to expand in India. We remain confident about Dell's
expansion strategy.
Moreover, we are encouraged by Dell's attempt to shift its focus
from PC and server roots to becoming a data-center vendor with a
wider scope. However, concerns include soft demand from the
Consumer segment, a high debt level and stiff competition from
technology majors, such as Hewlett-Packard Co. (NYSE: HPQ),
Apple Inc. (Nasdaq: AAPL), International Business
Machines Corp. (NYSE: IBM) and Microsoft Corp. (Nasdaq:
MSFT). Currently, we have a short-term Hold rating on Dell shares,
which equates to a Zacks #3 Rank.
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