Reports: Microsoft may invest in Dell buyout (Update)

Jan 22, 2013
A Dell Precision R5500 Rack-mounted workstation is seen at the world's biggest high-tech fair, the CeBIT, on March 6, 2012 in Hanover, central Germany. Microsoft is in talks with private equity investors on a possible buyout of US computer giant Dell, the Wall Street Journal and cable news channel CNBC reported Tuesday.

Microsoft has joined the negotiations to buy struggling computer maker Dell, according to media reports.

Both CNBC and The Wall Street Journal reported that Microsoft Corp. may invest some of the money needed to take Dell Inc. private after 25 years as a publicly traded company. Tuesday's stories cited unidentified people familiar with the negotiations.

If Microsoft joins in a Dell buyout, CNBC and the Journal say the software maker would contribute $1 billion to $3 billion. That amount would make Microsoft Corp. a minority investor in a complex deal expected to cost $23 billion to $27 billion if it's completed.

Microsoft declined to comment on the reports.

Word that Dell Inc. is interested in selling to a group led by buyout firm Silver Lake Partners first surfaced last week. Dell's stock price has climbed about 20 percent since then. The stock rose 33 cents, or 2.6 percent, to $13.17 in Tuesday's early afternoon.

Dell, which is based in Round Rock, Texas, hasn't said whether it's interested in selling. Going private, though, would enable the company to overhaul its operations without having to meet Wall Street's demands for higher quarterly earnings.

Dell, the second largest U.S. computer maker behind Hewlett-Packard Co., is one of Microsoft's biggest partners. Among other things, Microsoft licenses its Windows operating system to Dell's personal computer makers.

Like many other PC makers, Dell's revenue has been sliding as the popularity of smartphones and tablet computers divert consumer and business spending from laptop and desktop machines.

By becoming a part-owner in Dell, Microsoft would risk being viewed by HP and other PC makers as more of a rival than a partner. Microsoft already has rankled some of its PC makers by releasing a tablet computer called Surface that competes against their products.

So far, though, there has been little evidence indicating that the Surface is reshaping the market for computing devices.

Explore further: Alibaba's Ma rides 'Forrest Gump' story to riches

2.3 /5 (4 votes)
add to favorites email to friend print save as pdf

Related Stories

PC maker Dell to pay dividends

Jun 12, 2012

Struggling computer maker Dell announced Tuesday it will use some of its cash stockpile to pay shareholder dividends as it pursues a shift to services.

Dell's profit, stock drop on weak quarterly report

Nov 19, 2009

(AP) -- Some of the computer-industry's biggest players - such as IBM Corp., Intel Corp. and Hewlett-Packard Co. - have wowed Wall Street this fall with stronger-than-expected profits.

Analysts: Dell buyout could make sense

Jan 18, 2013

Back in 2010, Michael Dell acknowledged that he had considered taking his company, Dell Inc., private, but he declined to say much about it.

Recommended for you

Alibaba makes Wall Street debut

1 hour ago

Alibaba made its long-awaited Wall Street debut Friday on the heels of a record stock offering that opens the door to global expansion for the Chinese online retail giant.

Alibaba IPO to boost employee fortunes to $8 bn

4 hours ago

Employees of Chinese e-commerce giant Alibaba will see their fortunes swell to nearly $8 billion as the company prepares a massive US stock offering that could be valued at $25 billion.

Alibaba mega IPO caps founder Jack Ma success tale

7 hours ago

When Jack Ma founded Alibaba 15 years ago he insisted the e-commerce venture should see itself as competing against Silicon Valley, not other Chinese companies. That bold ambition from a time when China was ...

User comments : 0