Microsoft mulls buying stake in Dell

 

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By Stewart Mitchell

Posted on 23 Jan 2013 at 09:57

Microsoft is in talks to put up to $3bn into a deal to buy a stake in Dell, part of an increased focus on hardware from the Windows giant.

Dell has been reportedly looking to go private, with a consortium looking for investors in a deal that could be worth up to $25bn.

According to CNBC, Microsoft is in discussions to join the Silver Lake Partners consortium believed to be leading the race to buy Dell, and could be ready to commit between $1bn and $3bn to the cause.

As a major supplier of software to Dell, Microsoft has a serious interest in the future of a company that has fallen from top spot to third in the table of PC makers, according to Gartner figures.

An investment would not break the bank for Microsoft, while giving it some level of control over the company's direction, allowing its PCs to be used as a flagship for its Windows software.

"They have unlimited cash and if they went into the junior debt, they would have attractive high single-digit returns," one credit investor told the Financial Times. "They would also have a strategic toehold."

However, analysts believe the company would need to tread carefully for fear of upsetting other Windows PC manufacturers such as HP or Lenovo, especially following the launch of its Surface RT tablet.

One executive talking to the Wall Street Journal said any signs of favouritism would push corporate customers towards rivals such as Google, which is pushing to get into the enterprise.

"Nothing will open the door for people to make Google enterprise ready faster than this," the unnamed executive said.