Microsoft Mulling a $1~$3 Billion Investment to Help Dell Go Private

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News Posted: Tue, Jan 22 2013 1:36 PM

Bloomberg last week revealed Dell's desire to go private, and this week, we learn that Microsoft is one of the companies looking to make that happen. It's unclear exactly how much money Microsoft would have to invest in order to seal the deal, but it's said to be between $1 and $3 billion - almost a modest figure given Dell's total current value of $22~$25 billion.

Microsoft isn't the only entity that's required to make a buyout a reality, however. Michael Dell himself could use his existing stock, currently valued at around $3.6 billion, while Silver Lake Partners and other investors would need to cough up $2 billion. Additional funds could come from Dell's balance sheet and result in some new debt of about $15 billion.

In recent years, Dell has struggled with rapidly changing market trends, and no doubt believes that going private would allow it to focus on improving that situation. However, such a contribution by Microsoft could cause some grief for the company's other partners, and it of course could raise questions by consumers since Dell would likely be obligated to focus to a large degree on Microsoft's software, because really, why else would Microsoft want to invest so heavily?

As has become fairly obvious in recent years, however, it couldn't hurt Microsoft to get tight with an experienced PC vendor. This may be what's needed to help the company get back on track - especially if it's not only Microsoft throwing ideas around, but Dell, too.

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My concern would be that Microsoft would revert to their old behavior - attempt to apply leverage to force Dell to freeze out other software vendors. Past experience has shown that MS not only will do it if they get the opportunity, they'll mostly get away with it. The good news is that it would mean Dell loses market share, since Android, Apple's iOS, and Firefox OS are now out there making slices in the pie along with Linux and BSD, and none of them are going away - no matter what Steve Ballmer (or for that matter, Tim Cook) wishes.

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3vi1 replied on Sat, Jan 26 2013 7:50 PM

MS probably would. And this all makes me suspicious of Dell's reasoning for introducing new Linux laptops last year - they probably knew it would bring MS to their door.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?

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