Microsoft May Help Dell Go Private

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.

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

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
question-mark-and-maze

'Mystery' of IoT to drive channel innovation

Cisco partner says market will filter out lacking IoT solutions

5-arrows-up

IDC: Cloud spending sees significantly greater increase than non-cloud IT in Q1

Research firms names HP as top vendor

us-dollar-1

If the price is right, profit will follow

Deciding on a pricing model requires research, introspection and evaluation

Rejected Link Request

Salesforce CEO: SAP rejected our partnership

Marc Benioff said he attempted to collaborate with competitor

Visitor comments
Add comments
blog comments powered by Disqus
In-depth
shutterstock-208347706-translation

From the channel to the casino in a tough UC market

Reseller talks unified communications struggles in Oregon, bringing the field to indigenous tribes

ad-blocking-good-bad-ugly

The Good, the bad and the ugly - June 2015

Channelnomics examines the good news, bad news and downright ugly news that surrounded the channel in June

us-dollar-1

If the price is right, profit will follow

Deciding on a pricing model requires research, introspection and evaluation

darren-webroot

Vendor Q&A Series: Darren Niller, Webroot

The latest channel exec to sit in the Channelnomics hotseat is Webroot's senior director, worldwide channel and alliance marketing