Microsoft in talks to invest up to $3 billion to help Dell go private

By on January 22, 2013, 1:30 PM

A week ago it was revealed that Dell was in talks with a couple of private equity firms with regards to taking the company private.  A day later we learned that one of those firms was Silver Lake Partners but given the scope of the deal, another major investor or two would also be needed. That major investor, according to CNBC, might be Microsoft.

Sources say that Microsoft may be prepared to invest between $1 billion and $3 billion in order to help Dell go private. We are hearing that Microsoft is chatting with Silver Lake Partners as well as Dell CEO Michael Dell directly about the deal. The publication notes that parties are only engaging in talks at this point but there are hopes on both sides that a deal could be reached by the end of the week.

It goes without saying that a lot could happen between now and then that could either accelerate a deal or cause it to fall apart completely. Microsoft didn’t immediately reply to a message asking for a comment on the story, according to the Wall Street Journal.

But in the event that the two sides are able to hammer out an agreement, it could be good news for Microsoft down the road given their recent ambitions to build Windows 8 hardware – something Dell could certainly help with.

Granted, Microsoft CEO Steve Ballmer has made it known in the past that he feels it’s important for the company to have a diverse group of manufacturers producing hardware powered by Microsoft software. One would have to imagine that such a move could once again run the risk of alienating other OEMs.




User Comments: 5

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Littleczr Littleczr said:

I don't get it. Why would Microsoft be interested in Dell going private and even investing 1 billion. I thought if you are a private company you cannot be in the stock exchange.

davislane1 davislane1 said:

I don't get it. Why would Microsoft be interested in Dell going private and even investing 1 billion. I thought if you are a private company you cannot be in the stock exchange.

Private and public structures have their advantages and disadvantages. If Dell feels they'd be better served as a private entity, it makes sense to pull it out of the exchange. Their stock has been in a steady down trend since 2005 anyways, so depending on their larger financial situation (which I am ignorant of), this might be a smart move from a short-term perspective.

ThanosPAS ThanosPAS said:

I don't get it. Why would Microsoft be interested in Dell going private and even investing 1 billion. I thought if you are a private company you cannot be in the stock exchange.

They won't have their stocks exchanged in the market, still they can have shares, but this doesn't mean that minor inverstors can't be traded on public.

Guest said:

I see a small conflict-of-interest here. other PC vendors may be suspicious of special pricing from ms to dell, unless rumors are true and windows will be going free-of-charge.

psycros psycros said:

I see a small conflict-of-interest here. other PC vendors may be suspicious of special pricing from ms to dell, unless rumors are true and windows will be going free-of-charge.

I wouldn't put much stock (if any) in the idea of Windows being free at some point. <I>Subscription-based</I>, certainly - Microsoft has been pushing this for years. As long as their enterprise update servers supported it, I think a significant minority of businesses would be OK with subscriptions <I>now</I>. Even consumers might get on board if the cost was very low..say, $50/year. Microsoft would be fools to ask more - a subscription means guaranteed revenue, and seeing as how 70%-plus of Windows installs are pirated, that would be major gain. Those without broadband obviously wouldn't be able to take advantage of this so they'd need to keep retail discs for those folks. There is a downside, though: anyone whose subscription expired would be at high risk for exploits unless they were using something like WSUS Offline Update. (This is already true of those folks who simply never update for whatever reason, but their numbers are steadily declining.) Microsoft can't really give Windows away because the investors and analysts would freak. They <I>do</I> offer various kickbacks to get manufacturers into Windows Phone, so its sort of "free"..just not on Microsoft's balance sheet. Ultimately the only way Windows goes free-to-use is if a competing (and low cost) OS starts getting significant market share on the desktop. That's only going to happen if a major player - Google, perhaps - gets support from major software vendors and puts serious resources into pushing their chosen alternative.

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