Microsoft rumored to be part of Dell buyout, may chip in 1-3 billion dollars

 

 

A new report from CNBC is stating that Microsoft is part of a group that is proposing to help with a leveraged buyout of Dell and the company may be looking to toss in 1-3 billion dollars.

The report indicates that Microsoft would likely receive preferred stock in the company for its contribution which will put the vendor in an interesting situation considering that the company has been moving deeper into the hardware market over the past few years.

If Microsoft does participate in the leveraged buyout of Dell that has been rumored over the past few weeks, how will this position them with other OEMs? While a 1-3 billion dollar investment will not net Microsoft a majority stake in Dell, it will force the company to have a vested interest in the performance of the brand. Seeing as vendors were already upset with Microsoft selling the Surface, we can only imagine how they will react if Microsoft takes partial ownership in a PC vendor.

Even though Dell has been struggling as of late, the company does have significant assets to the brand and strong ties to the enterprise. With Microsoft taking an ownership chunk, it could be a defensive play to keep Dell from moving away from Microsoft technologies and pursuing other platforms. But, at this point, it’s all conjecture based on CNBC’s information. 

At this point, we must wait and see if the rumor does materialize and if so, we will be quite curious to see how Microsoft plays the investment to its shareholders and at the same time, calms the nerves of its OEM partners. 

Source: CNBC on Twitter

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I duno, what did OEM's think when MS invested a ton of money in Apple? Anyways, I thought Dell was trying to go private?

neufuse said,
I duno, what did OEM's think when MS invested a ton of money in Apple? Anyways, I thought Dell was trying to go private?

MS did not invest a huge amount of money in Apple and they did it because it was in the best interest of the company to be able to show that there was some competition in the time of the antitrust case. It turned out that the investment was also very profitable which was a nice plus but, again, it was mainly a defensive operation.

neufuse said,
I duno, what did OEM's think when MS invested a ton of money in Apple? Anyways, I thought Dell was trying to go private?

They could still not have public stock, basically making them private...

neufuse said,
I duno, what did OEM's think when MS invested a ton of money in Apple? Anyways, I thought Dell was trying to go private?

Maybe MS wants to buy the consumer side of the company? Let Dell, HP and co have the enterprise side as I don't think Microsoft can take that on

efjay said
Time for all the OEM's to get stuffed, have had an Asus Atom tablet since November with absolutely no support for bugs like unresponsive trackpad after sleep, so more power to Microsoft getting deeper into the hardware business and giving us quality devices with retail outlets where you can actually speak to a person who isn't in a call center reading a script.

This!

Silver47 said,

Maybe MS wants to buy the consumer side of the company? Let Dell, HP and co have the enterprise side as I don't think Microsoft can take that on
This!

Yep. As soon as I saw that Dell was trying to go private a few weeks ago, I knew MS was going to either buy their manufacturing arm or the company as a whole. They've always wanted to have an end to end solution, but Anti-Trust has always gotten in the way of that.

The OEMs are barely making profit these days, especially in comparison with past profits, and the future is only pointing to slimmer margins. Dell is going to strike first to be bought out by the only partner who could reasonably buy them out.

Over the last 10 years under that DoJ agreement they allowed Apple and Google to do things that they were prohibited from doing such as integrating services like iTunes, Google search, Maps, and a ton of other services without protesting so that when the agreement expired and they did the same, no one could raise an objection.

MS needs a hardware division that would include the ability to manufacture desktops, laptops, tablets, and phones. There are only 3 manufacturers that could even come close to fitting this bill; Dell, Lenovo; and HP. Lenovo would never happen due to the Chinese government. HP is a bloated, hot manufacturing mess that would take alot of restructuring as well as be extremely expensive. Dell is the right size, has a decent reputation in the enterprise, and with some restructuring, would make sense for an acquisition.

In the end you'll have an Apple model of Hardware and Software synergy running Windows, with the vast access to corporations. Its going to be an interesting year.

Drewidian said,
Dell is the right size, has a decent reputation in the enterprise, and with some restructuring, would make sense for an acquisition.
I do not really disagree with your post, and Dell certainly is known for its scale, but I do not know many people that think of them as a good company.

Beyond monitors, I never associate Dell with quality. And, including monitors, I never associate even decent customer service with Dell.

pickypg said,
I do not really disagree with your post, and Dell certainly is known for its scale, but I do not know many people that think of them as a good company.

Beyond monitors, I never associate Dell with quality. And, including monitors, I never associate even decent customer service with Dell.

Not anymore... I agree with you but in the past Dell made excellent computers; I had boxes that lasted for years without an issue. And the customer service was top quality as well.

Dell's enterprise support is second for their all around services only to IBM in my experience. We have Storage (Compellent SAN as well as DASDI), Servers, Workstations, and laptops, and from our experience its been a decent experience. If MS wants direct access for HW to enterprises, Dell is probably the best option since IBM and HP would probably be too expensive. While quality on the consumer side may have declined, I think they are putting more of an effort into their enterprise offerings. Support was also pretty good from an enterprise pov as well. Just my experiences.

Fritzly said,
My understanding was that Michael Dell plan was a buy back of the company to take it private.

They could still not have public stock, basically making them private...

Just because someone invests, does not mean it can't go private. When a company issues stock, they need to make public filings, need to be accountable to the SEC, hold proxy votes, etc.

This is more like your room mate chipping in to buy a big screen TV. Taking private investments does not require the company to do those things a public company does, MS would just have an investment.

Time for all the OEM's to get stuffed, have had an Asus Atom tablet since November with absolutely no support for bugs like unresponsive trackpad after sleep, so more power to Microsoft getting deeper into the hardware business and giving us quality devices with retail outlets where you can actually speak to a person who isn't in a call center reading a script.

For those who don't know how a buyback works, I'll give a rough and very high level explanation. Right now, Dell has thousands of shareholders in the company because it is listed on a stock exchange and you can go purchase a share of Dell if you would like to do so.

By going private again, Dell needs to buy back all of the shares that are out in the market to retain ownership of the company which requires a lot of capital (money). Dell does not have enough cash in the bank to do this, so they need outside parties, like Microsoft and other banks, to buy shares for them and in return, likely will obtain a seat on the board of directors for the company.

Essentially, they will be taking the company from thousands of shareholders, to a handful of owners and then they will be de-listed from the stock exchange and become private.
This is not a perfect explanation, but will help to make what Dell wants to do, easier to understand.

Makes sense. And I guess the reason in taking a company private again is so they can make better decisions without having to answer to shareholders.

airedwin said,
Makes sense. And I guess the reason in taking a company private again is so they can make better decisions without having to answer to shareholders.

yup. Or to simply restructure the capital structure for efficiency. Great replies from you guys.

This reminds me of the same rumours regarding record company's putting in cash and discounts to keep hmv going in the UK. Dell like hmv is the public front for a big bulk of what the funder is selling. There not the only, but they are the biggest. If feel goes under its gonna have a big impact on Microsofts bottom line. If hmv go under its going to have a big impact on the record companies bottom line. So what do you do, you put in a bit of cash and keep the stores going.

It will most likely not be finalized/approved before 2015 so you should be fine if you are going to be hired within the next few months. However, you should have a backup plan as these kinds of acquisitions/restructuring will probably trim the workforce. Keep your eyes open.

The problem with PC OEM's is they dont seem to be able to see past the PC. Most of them seem like they can't adapt to the mobile platform. Asus has done a gone job with adaptation to mobile. Dell and HP seem to be struggling with it.

If MS can own a piece of Dell, I dont think it would prevent Dell from using another OS other than Windows. What it would insure is that since MS has a vested interest in success, and Dell would continue to provide balanced Windows products which means MS would get an arm into Dell manufacturing processes,better Windows testing on specific models before release and other positives.

I dont think MS wants to really be in the hardware biz aside from Xbox,Windows Phone or Surface. However, the OEM's basically pushed their hand. The last Windows Mobile devices were under-powered yet Windows Mobile 6.5 was awesome.

The tablets OEM's made before made XP Tablet Edition a failure...that combined with the fact the OS' GUI wasnt touch friendly. But now it is and the OEM's still cant get ice ready. The a nice device ready. The Surface is awesome.

As time goes by, many OEM's may move away from Windows and Microsoft having Dell as a fallback will give them a pretty good arm to reach consumers.

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