Microsoft Enters Discussions to Help Finance Buyout of Dell

The proposed buyout of Dell has a new development as Microsoft has entered talks to acquire the computer maker. The software giant would be buying the company from public stockholders, but a deal has not been announced. “Microsoft hasn’t made a commitment to throwing its money and weight behind the possible deal, which is expected to carry a price tag of $22 billion or more,” according to the Wall Street Journal.

“But if Microsoft were to participate in a Dell buyout its investment likely would be roughly $2 billion… people familiar with the talks said. A dollar amount of that size could give Microsoft one of the largest ownership interests in a private Dell.”

While Microsoft would not be involved in day-to-day operations at Dell under the deal, it would mean that Microsoft’s Windows software would be used to power “the vast majority” of its devices.

This wouldn’t represent much of a financial burden on Microsoft’s end. The company “had more than $66.6 billion in cash and short-term investments as of September 30,” notes the Wall Street Journal.

“But there is a big risk in owning a piece of Dell,” the article adds. “Microsoft could be seen as playing favorites among PC makers that buy its software. Those fears continue to dog Google Inc. and mobile-device maker Motorola Mobility, which the Web-search giant bought last year.”

Microsoft CEO Steve Ballmer has a long-standing relationship with Michael Dell. “I suspect it is not about the financial income this might generate for Microsoft as much as helping Dell to remain in a long term competitive position and good partner to Microsoft,” said Rick Sherlund, an analyst with Nomura Securities.