Zacks Analyst Blog Highlights: Dell, Hewlett-Packard, International Business Machines, BP Plc and Eni SpA

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Jan 13, 2011, 09:30 ET

CHICAGO, Jan. 13, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: Dell Inc. (Nasdaq: DELL), Hewlett-Packard Co. (NYSE: HPQ), International Business Machines Inc. (NYSE: IBM), BP Plc (NYSE: BP) and Eni SpA (NYSE: E).

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Here are highlights from Wednesday's Analyst Blog:

DELL Extends Retail Solutions

Dell Inc. (Nasdaq: DELL) recently extended its Retail Solutions portfolio, adding secure cloud support for application integration. The company expects the initiative to be particularly helpful for small and medium businesses (SMBs) that are increasingly turning to the cloud. The solutions are expected to address the SMB retailers' needs for integration of activities and data right from the storefront to the back office.

Dell's retail solutions for the storefront provide support for point-of-sale, digital signage and surveillance. The solutions accelerate the selling process, ensure store safety, reduce inventory shrinkage and enhance customer satisfaction. Dell's retail solutions for back-office operations ensure proper and secured data storage.

Apart from extending retail-based services, Dell is also enthusiastic about providing a full range of information security services to SMBs. As per the findings of the Federal Bureau of Investigation, SMBs are generally prone to hacking, due to limited IT resources for threat prevention. Hence, companies must ensure restricted access to their websites.

To facilitate the identification, monitoring and management of security risks and compliance needs, Dell partnered with SecureWorks, a leading global provider of information security services, in July 2010. Moreover, Dell joined the leading Internet Content Security vendor, Trend Micro Inc., to beef up its security-solutions portfolio. These deals secure Dell's position in the SMB space.

We believe that Dell's SMB customers will clearly gain from its growing expertise, which in turn, would improve the customer retention rate. Revenues from SMB units increased 24.0% year over year in the last quarter.

Dell's SMB exposure is encouraging, but soft demand in the Consumer segment, a high debt level and stiff competition in computing from tech giants such as Hewlett-Packard Co. (NYSE: HPQ) and International Business Machines Inc. (NYSE: IBM) keep us on the sidelines.

Currently, Dell has a short-term Hold recommendation, as indicated by the Zacks #3 Rank.

BP Beats Rumaila Target

BP Plc (NYSE: BP) and its partner China National Petroleum Corp. ("CNPC") have surpassed their initial production rate of 1.066 million barrels per day (MMbpd) by more than 10% on a rise in output from the Rumaila oilfield in Iraq. The growth was driven by continued focus on increasing oil production from existing wells, new wells that came on stream and an unperturbed flowline.

In 2009, a consortium, comprising BP (38%), China's state-owned CNPC (37%) and Iraq's State Oil Marketing Organization (25%) clinched a 20-year development contract for Rumaila and set a target to increase output to 2.85 MMbpd in six years through a $15 billion investment in cash. Later, the consortium set up an operating company with Iraq's South Oil Company.

BP, the oil giant of UK, highlighted that activity on Rumaila had steadily increased over the past year with 41 new wells being drilled, 103 workovers completed and 122 kilometers of flowlines laid. Employment has more than doubled to 10,000 workers on the project.

Located in southern Iraq, approximately 32 kilometers from the Kuwaiti border, the Rumaila oil field has an estimated crude reserve of 17 billion barrels. It is the world's fourth largest oil field with the current capacity of 1 million bpd, almost half of Iraq's current total output of 2.5 MMbpd.

The Iraqi government signed several developmental contracts, including Rumaila and Zubair deals, in order to meet Saudi levels of 12 MMbpd within six to seven years. These deals were signed with several oil companies for a remuneration fee of $2 per barrel.

A separate consortium, lead by Italy's oil-giant Eni SpA (NYSE: E), also increased its production level at Zubair oil field by more than 10% from the initial production rate in 2009. Eni said the consortium touched the breakeven production level of about 201,000 barrels per day.

BP's endeavor to overcome the oil spill related losses appears on track. We believe that keeping pace with the previous target in Iraq is a positive direction toward the turnaround. The Gulf of Mexico incident might hinder access to its acreages around the U.S. However, BP's reserve replacement ratio of 129% in 2009 reaffirms its 17-year industry-leading track record.

We retain our long-term Neutral recommendation on the company. BP holds a Zacks #3 Rank (short-term Hold rating).

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