Microsoft May Invest in Dell To Help It Go Private
Microsoft may invest up to $3 billion in Dell to help to company go private.
CNBC's David Faber reports that Microsoft may make an investment in Dell to help the latter company go private. Unnamed sources claim that Microsoft may invest between $1 billion to $3 billion USD, and is currently in talks with Silver Lake, the main sponsor behind the leveraged buyout, and Michael Dell who are currently working on the deal to go private.
Faber said that Microsoft's investment would be "mezzanine" financing, or rather debt that converts into equity if the debt isn't paid back within a specific timeframe. Faber also mentioned preferred shares which means the loan could convert into preferred shares of Dell at a certain point.
He also gave an update regarding the talks between Michael Dell, Silver Lake and the special committee formed by Dell shareholders, reporting that talks continue and a deal could be made by the end of the week. Pricing is still an issue, and last week reports claimed that the potential window was between $13 and $14 per share.
Faber points out that Microsoft has a lot at stake, as Dell is one of its biggest customers. Thus, it's not surprising that Microsoft would want to help its Windows partner so that the relationship continues to prosper. Dell of course is not only one of Microsoft's largest clients in the consumer division, but the enterprise sector as well – the latter probably more so than the former.
But Dell is looking to reinvent itself by going private. If Microsoft becomes a potential investor, then the Redmond company may have some influence over Dell's business which in turn could hamper Dell's ability to seek out a new business model. On the Microsoft front, it may face a serious backlash from its other Windows partners including the very vocal Acer, Asus, HP and others if it does indeed invest in Dell
David Faber's report on CNBC can be seen in full here.
Are those the same very vocal companies that have stabbed Microsoft in the back at the first opportunity and gone Android? The ones that have got access to a Windows tablet OS but produce piss-poor hardware and publicly diss Microsoft?
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With friends like those, who needs enemies?
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We are starting to see companies act like real people, rather than faceless entities, Apple trashes Samsung, so they tell Apple to get bent on contract for processors, screens, etc - just as the Octacore and flexible screens arrive
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So now we have a company that has been a staunch ally of Microsoft in consumer and commercial sectors, even in the lean times - so who is Microsoft going to invest money with? Not the asshats that badmouth you in public for sure
Yeah, that will surely enrage its partners, but you have to be bold to survive, and the tech world is changing quickly. Let's face it; all these companies: Acer, Asus, HP, Dell, etc.. have done incredibly little in the way of innovation over the past 10 years. And Apple has really demonstrated the benefits of vertical integration.
Well that kind of stuff doesn't happen unless this kind of stuff happens.........
And as said above, both private and public sectors have advantages, associated with the power of the money, but then again, Dell (in my eyes, please note this) has not done so well in the last time. I mean their monitors are great and their laptops are good but not anywhere top of the line, except some of their premium branded business ntbks and their Alienware line
you're joking right? you genuinely think people who invest in public companies are not "dollar first" share holders but those who invest in private companies are? I fail to think of one instance where this is true and can think of many where the opposite is, in fact, true.
How can you look at Windows 8 and NOT think MS is trying for a walled garden? Why else would they force that ridiculous UI formerly known as Metro onto desktop users if that wasn't the case?
It reminds me of the Gatoraid ad campaign 'Be Like Mike'... Only MS seems to want to 'Be Like Apple'.
You got me, I was thinking ahead as I typed it out; corrected.....
With most private companies, things run smoothly as long as the leaders of the company are making a profit and doing things in an efficient and sensible way. It's mostly funded by the same people that run it and the stakes for them are higher so there's a lot riding on trying to make all the right moves. When you turn a company into a publicly-traded one, then the fact that every move and decision made has the micromanaging vote of thousands of share holders and their money. If things go south, this is where the "golden parachute" term stems from the most because they have been playing with other people's money and bad decision-making at worst, means out of job. The main goal for either type of company is obviously to make as much as they can as far as net profit is concerned. Too many publicly-traded companies cut costs in areas just for the sake of improving their bottom-line for the shareholders (while forgetting the consumer at times) that much more. In turn, they end up sacrificing long-term public image for short-term dividends more often than not..
All very good reasons but I really don't think Microsoft cares.
Can this way Microsoft wants to make its own hardware, who better to make their hardware with than a hardware manufacturer. Microsoft gives him the specs they make their hardware, I don't really see this as a you had our back we got yours I see this more as a business decision.
From what I remember in the past Dell's main problem is cutting corners on their power supplies, and overall motherboards. In times when we were basically all have discrete GPU's, they didn't offer your slot in it unless you already bought one with a discrete GPU already installed.
The power supplies would probably die out for this computer as a whole would die out, and the motherboard generally didn't allow you at all to have an upgrade path.
If Microsoft buys them "helps them" and they have any say in the company at all I could really see Microsoft offering up a very good consumer computers through Dell, even offering up very decent phones and tablets with the production lines to back up their desires for higher-quality products.