Microsoft May Help Dell Go Private

  • Tweet  
  • LinkedIn  
  • Facebook  
  • Google plus  
  • Send to Kindle
  • Send to  

Dell may be enlisting an unlikely investor in its quest to go private: Microsoft. Reports are circulating the software giant may throw as much as $3 billion to the massive buyout effort.

In its quest to go private, Dell Inc. might be getting help from an unlikely source: Microsoft Corp.

The software giant is reportedly offering between $1 billion and $3 billion in mezzanine financing, or preferred ownership that converts to equity in the event of a default.

Related articles

If it comes to pass, Microsoft for the first time will hold a major equity stake in a hardware company that’s also one of its biggest channel partners. The investment could give Microsoft big influence over the way Dell develops mobile, cloud and application products.

While Dell itself is mum on going private, steady reports are circulating that the one-time PC market leader is working with Silver Lake Partners and other private equity firms to raise money to buy outstanding shares.

Last week when news first broke of Dell possibly going private, the estimated buy-out price stood at $19 billion. Dell itself has $5 billion in liquid cash, necessitating for outside investment help. Share prices have climbed, bringing the tally to an estimated $24 billion.

Microsoft has $60 billion in the bank. Analysts and shareholders have criticized Microsoft for not investing more of its war chest or paying dividends. Even a $3 billion investment in Dell wouldn't put much of a dent in Microsoft’s cash reserves.

Going private is something Dell has flirted with before. One of CEO Michael Dell’s chief complaints is that Wall Street won’t allow companies to transform; they seek short-term results even when they compromise long-term objectives. As a private company, Dell will have more latitude to execute strategic plans and transform the company into an enterprise portfolio vendor with hardware, software, cloud computing and professional services.

Just how a Microsoft investment in Dell will affect its other OEM relationships is unknown. Microsoft rankled longtime PC partners, most notably Acer, when it released the Surface tablet in competition with their Windows 8 mobile devices.  Hewlett-Packard is Microsoft's largest OEM partner, and the two companies have substantial joint-ventures in cloud computing and professional services. Microsoft's tying up with Dell could further strain relations with these and other strategic vendors.

 

  • Tweet  
  • LinkedIn  
  • Facebook  
  • Google plus  
  • Send to Kindle
  • Send to  
More on Channel Business
contract-drafting

RackWare signs up to NetApp partner program

Firm integrating technology with NetApp and IBM

data-quality

Value over volume, RackWare says of expanded channel partner program

Aim is to have the right coverage with close relationships, VP says

divorce-pa

The velvet divorce? Options and disruptions to come from HP split

News that Hewlett-Packard is breaking into two companies continues to reverberate through the channel. While the ultimate impact on HP partners and customers remains unclear, the new entities will have plenty of options for plying their futures

treasure-chest-with-gold-coins

Channel strikes gold selling to non-techies

Tech sales staff busy selling to business units as much as tech staff, according to Gartner

Visitor comments
Add comments
blog comments powered by Disqus
In-depth
steps55

Time to step up: vendors missing the mark on IoT

A new study by AVG Technologies finds that SMBs and MSPs see tremendous potential in the Internet of Things as a driver of business growth – provided IT vendors and solution providers step up their game

wael-aggan-cloudmask

Vendor Q&A Series: Wael Aggan, CloudMask

The latest vendor executive to sit in the Channelnomics hotseat is Wael Aggan, CEO of CloudMask

healthy-heart

Microsoft getting healthy, thanks to consumers

Is it time to take the software giant off the watch list of tech companies in distress, at least on the consumer side, asks Larry Walsh

John Murdock - Kaspersky Lab

Vendor Q&A Series: John Murdock, Kaspersky Lab

The latest executive to sit in the channelnomics hotseat is John Murdock, Vice President, Channel Sales, Kaspersky Lab North America