News outlets in the US are reporting that software giant, Microsoft, is now part of negotiations to purchase beleaguered computer manufacturer Dell. According to CNBC and The Wall Street Journal maker of the popular Windows operating system, Microsoft, is looking to become part of plans to take Dell private. The software giant will invest in the deal that will take Dell stock off the market after 25 years of being traded in the stock exchange. The WSJ an CNBC did not name any specific sources for their information but claimed that they were familiar with the negotiations taking place.
The reports also indicate that Microsoft may end up spending $1 to $3 Billion if they join in on the Dell buy out. The deal should cost approximately $23 billion to $27 billion in total and Microsoft’s contribution will make it a minority stakeholder.
Last week reports started hitting news stands that Dell was looking at selling to a group that was being led by Silver Lake Partners. The struggling firms stock price jumped on the news and saw a 20 percent increase. Currently Dell has not said whether they are going to sell but the move would be advantageous for the firm. By going private, the company can restructure and reorganize its operations at time when its is seeing a drastic drop in sales. With out investors looking for increases in profits and revenues every quarter, Dell can rebuild and reshape its business to meet future challenges.
Hewlett-Packard and Dell are the top two computer manufacturers in the US and both are Microsoft partners. Dell has a strong relationship with the software maker who licenses their Windows operating system to the computer manufacturer. The relationship has not been as profitable as it used to be in the past because less and less people are purchasing PC’s and laptops as they move to smartphones and tablet computers.
By jumping into the hardware game, Microsoft may alienate its other partners like HP which would start seeing the company as a rival. Microsoft has not commented on the story and other reports relating tot he matter.
Source: Ottawa Business Journal
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