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Microsoft Businesses The Almighty Buck

Microsoft May Invest $1B-$3B In Dell Buyout 151

Posted by Soulskill
from the dude-you're-gettin-dell dept.
alexander_686 writes "We heard that Dell is in buyout talks with private equity firms. Now, the word is that Microsoft may invest one to three billion dollars in that buyout. For that amount of money, Microsoft isn't going for majority ownership, but it would be a significant stake. Dell is worth around $22-25 billion. Speculation is that investors would put up $5-7 billion in equity, borrowing the rest. As a point of reference, Michael Dell's stock is worth $3.6 billion."
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Microsoft May Invest $1B-$3B In Dell Buyout

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  • My stocks aren't much lower, amateur
    • Define significant. That is at most a 16% stake in Dell which makes it just another investment on the balance sheet for Microsoft. I would get in on the Dell deal if I could.

      • Most of the time 10% gives you access to the board - including naming people on the board.

        I don't think it would be 16%/ That would be 1 1b investment in 7b equity - that would be lower range of MSFT investment and higher range of Dell's value. 25% would be more likely - 2b investment / 7b in equity gives me 28%.

  • proof (Score:5, Funny)

    by aletterman (544519) on Tuesday January 22, 2013 @06:08PM (#42661969)
    that a fool and his money are soon parted.
    • Microsoft just changed there slogan from software company to a services company. They need a way to manufacture products with there own hardware and software they are trying to follow Apple model this might be a move in the right direction.
  • by Anonymous Coward on Tuesday January 22, 2013 @06:11PM (#42662005)

    Is Michael Dell shutting down the company and giving the money back to the shareholders??? :)

    • by lee1026 (876806)

      In the event this sell goes though, that would be more or less what he is doing.

    • by aliquis (678370)

      Make me curious of what he has said. I can imagine about what it could be but I don't know.

  • Dude you are being owned by the man

    • by Anonymous Coward

      Yes, Dell should prepare to be Nokia-ized.

      Microsoft won't "own" them so Microsoft won't give a shit when they go bankrupt.

  • by Monkey-Man2000 (603495) on Tuesday January 22, 2013 @06:13PM (#42662023)
    ...is Linux flying off new Dell computers.
    • by Anonymous Coward
      That whooshing sound was heard years ago when Linux machines at dell failed to sell. After all if you are smart enough to use Linux why would you be shopping for a prebuilt machine at Dell?
      • Re: (Score:3, Informative)

        Because building a laptop from component parts is a pain in the ass?

        • by Anonymous Coward

          Haven't you heard of ODMs? Same hardware made by the same people that build the Dells, HPs, etc.. Even if you don't want to put it together yourself, you can still get it without an OS, no matter what Dell decides to do (and it's likely to be less expensive, too)

        • Why would you ever want to buy a Dell laptop?

      • by Nerdfest (867930)

        There was a low priced Linux laptop for sale around Christmas for $279 if I remember correctly. It sold out very quickly, although you could still pick up the version with Windows on it ($329, I believe) for quite some time. There's value in knowing that you're buying a pre-built machine whose components all have Linux support.

      • by jbolden (176878)

        Linux sold great on Dells for many years. They've had some problems with desktop users and Dells but Linux was core to Dell's server business, it allowed them to get rid of their OEM SCO in the early 1990s while still having a strong server presence.

      • "Linux machines at dell failed to sell."

        There was a lot more to it than just failing to sell.

        Never did Dell actually PUSH Linux on their machines. Behind-the-scenes politics blocked that. Had Dell devoted as much as ten percent of their sales efforts to push Linux, sales would probably have been strong. I've browsed their site over the years. Linux was difficult to find, at the best of times. You have to SEARCH for Linux.

        Not like Windows, which is the default on every single machine they sell.

      • Not necessarily a fair assessment. The linux boxes & no-OS boxes were priced higher than the same builds WITH Windows pre-installed. Why on earth would I pay more money when I can wipe Windows off of a machine in the blink of an eye.

        The problem wasn't Linux. It was the pricing scheme.

        • by i.r.id10t (595143)

          The reason for this is that McAfee, Norton, etc. pay $OEM some small amount - say, $1 per machine - to have the base installed system leave the factory with a trial version of their program(s) on it.

          This obviously doesn't work well with non-Windows machines, so for the 35 or so crap programs, cripple-ware, trial versions, etc. that would normally be on the system, said $OEM has to get that money back some how....

  • It would make sense (Score:5, Interesting)

    by cshark (673578) on Tuesday January 22, 2013 @06:13PM (#42662027)

    Microsoft has been dissecting Apples strategy of being a device and os company. Or perhaps they want to be IBM, which does the same thing? A Microsoft stake in Dell might mean an end to Studiobuntu Laptops, though. And I think that would be a shame. Those things are nice.

    • by Dr. Evil (3501)

      Apple is a computer hardware company which moved into consumer electronics and services.

      If they really sold software, they'd market MacOS as a Windows replacement. Their strong proprietary model and walled garden has always impaired MacOS's market penetration. http://en.wikipedia.org/wiki/Usage_share_of_operating_systems [wikipedia.org].

      Their proprietary OS keeps them from being screwed by a third party.

    • You clearly have absolutely no concept of IBM's history or present day offerings. An absurd and pathetic comment.
  • Motivation (Score:5, Insightful)

    by Enderandrew (866215) <enderandrew AT gmail DOT com> on Tuesday January 22, 2013 @06:14PM (#42662045) Homepage Journal

    HP is going in the toilet and keeps talking up the post-PC world, taking a page from Apple's playbook. HP Servers are still a great product, but if HP goes under, the Dell becomes almost the lone supplier of Windows enterprise hardware.

    Dell has embraced Linux more and more over the years. And they haven't been pushing Windows 8 tablets as much as other companies. Microsoft needs strong hardware partners to push their ecosystem.

    If Dell is suddenly controlled by new investors, you have to wonder what direction they'd take the company. It makes sense for Microsoft to want some say in Dell's future to protect their own interests.

    • by afidel (530433)

      IBM is right behind Dell for open server shipments and Cisco with UCS is fairly big at #5.

      • Re:Motivation (Score:5, Insightful)

        by Enderandrew (866215) <enderandrew AT gmail DOT com> on Tuesday January 22, 2013 @06:25PM (#42662149) Homepage Journal

        IBM ships lots of servers, but I'm assuming they're shipping most of those with Red Hat, Oracle Linux, or AIX.

        I'm not sure IBM is pushing Windows Server so much.

        • Actually, most of the Enterprise stuff is going towards Blades and VMWare (or XEN or ...) as the Host OS. The Big Iron doesn't count towards Windows Licensing at all, and those are measured in Volume Licensing/CALs anyways.

          Even if I'm installing only ONE server, I'm putting VMWARE between the OS and the hardware. Too many advantages to list here, but the top two are, Abstraction away from specific hardware, Backup (Snapshot). Makes recovery a breeze and as painless as your last snapshot.

          • True, but I think most people who run Windows shops have been historically buying Dell or HP servers, where as most shops who run IBM hardware have are Unix shops.

            Dell and HP sell blade and VMWare solutions,

    • Re:Motivation (Score:4, Interesting)

      by Missing.Matter (1845576) on Tuesday January 22, 2013 @06:34PM (#42662259)

      And they haven't been pushing Windows 8 tablets as much as other companies.

      On the contrary, I think Dell has been pushing Windows 8 tablets much more than others, with the exception of maybe HP. They have been producing Windows tablet PCs since 2008 with the Latitude XT, which as an okay tablet although decidedly 1st generation and way overpriced. Since then they've released a new version almost yearly, and have done a great job marketing them toward businesses. Their Latitude 10 tablets are some of the more appealing tablets out there (I don't know of many other tablets with a user removable battery), and for full Windows 8 tablets they actually managed to get some sane pricing on them... originally going for $670, but then they added an entry level $580 version. As a tablet PC lover I've been more than happy with Dell's support of this device category.

      • The only Windows Tablets I've seen in the wild were used by Dell Geeks at a Dell Conference. That being said, I saw more Galaxy Notes and Nexus 7" (saw a number of Windows 8 Tablets). I can also report more issues seen with Win 8 Tablets than I saw with the other Tablets. Granted, this is all anecdotal evidence, but I am not going to get a Windows 8 Tablet anytime soon. I'd rather have an overpriced iPad ... and that is saying something.

    • by cthulhu11 (842924)
      HP's servers are a great product, not , with the Gen 8 product line and iLO4. The serial console finally works out of the box, and no longer flips to 115200bps when you PXE boot. The HBA's finally do 3-way mirrors. iLO4 is finally fast enough to use, though the lack of a working system console when SSH'd in is annoying, as is the anachronistic DB9 console connector.
  • They would be in talks with HP. Just sayin'.

  • by Joe_Dragon (2206452) on Tuesday January 22, 2013 @06:15PM (#42662049)

    So no more linux on dell systems. MS may push there UEFI boot lock in and then say bye bye to a big part of the sever market then.

    • by Rob Y. (110975)

      Turns out UEFI boot lock isn't the only impediment to other OS's. Ever try setting up a Windows/Linux dual boot on a system with an OEM copy of Windows and a UEFI boot loader - Windows 7 in this case without boot lock 'security'. It's hard - most linux distros can't set it up out of the box, and even those that can require you to be able to boot the installer from the CD/DVD or flash drive in EFI mode - which is iffy, depending on your firmware. It's possible to install in legacy mode - though the system

    • UEFI boot lock in

      Why did I read that as "MS may push their UEFI boot-lickin' and then say bye bye to a big part of the server market then"? Oh, I guess it's because my screen is just dirty.

  • by Anonymous Coward on Tuesday January 22, 2013 @06:16PM (#42662057)

    I say go for it. Those two companies deserve each other.

  • Microsoft needs Dell (Score:5, Interesting)

    by onyxruby (118189) <onyxruby@NOspam.comcast.net> on Tuesday January 22, 2013 @06:16PM (#42662063)

    Dell is the most loyal company to Microsoft of any of the OEM's and they always play ball. Their efforts on *nix support are minimal and they are legendary for the work they will do try to inspire you to run Windows. With Asian OEM's increasingly dis-enfranchised with Microsoft the need for a partner that isn't going go their own way is paramount.

    I wouldn't say things are as bad as around a decade ago when Microsoft bailed out Apple to prevent their bankruptcy. That being said I think a fair argument can be made that Microsoft needs Dell more than Dell needs Microsoft. If your surprised about this investment you haven't been in the industry very long.

    • Re: (Score:3, Interesting)

      by Bearhouse (1034238)

      Hmmm, well I've been in the industry for a long, long time...and many things have not so much surprised me as simply amazed me.
      Like the slow-motion cluster fuck that IBM made of the original PC-PS/2 & DOS-WIN-OS/2 Intel battlefield.
      The astonishing demise of DEC (Digital) and HP, innovative engineering-led companies absorbed by the former beige-box cowboys at Compaq, with the final blow dealt by the lovely Carla.
      Don't even get me started on Xerox, who actually marketed a full GUI system before Apple. Wo

      • by onyxruby (118189)

        I agree with all of your points that you have made, so no arguments there. You certainly sound like you've been in the industry for a 'long, long time'. As for this being a smart move, I'm inclined to call it more of a strategic move by Microsoft than a smart move. The biggest concern from their point is that for many years Dell has been the number one supplier of computers worldwide.

        If they fail, or more likely, if they start to fail and shrink as so many computer companies before them have done that is go

        • Get your point. Wonder how they'll control the rapid VC boys with only a minority shareholding, tho...

          • by onyxruby (118189)

            That is one thing I haven't got a clue on. Understand the industry, sure, understanding how things like that work? Beat's me.

            I have seen amazing amounts of control done with minority stakes over the years. It's always baffled just how much control you can have with a minority stake, and I have never understood why and how that works.

      • by rtb61 (674572)

        Sounds like a straight up financial deal. The M$ buy in, is just to ramp up the price of Dell. Dell has a real problem going forward, all those ODM's that it uses are now pushing selling direct and Dell simply wont be able to compete. M$ could simply get in and get out with a guarantee by Silverlake to make a good percentage, basically Silverlake paying M$ an appearance fee to help sell Dell.

        If M$ go hardware and software, at this point in time they will create a Android, Chrome, Linux storm, with all th

      • by Alioth (221270)

        On a point of pedantry, MS didn't bale Apple out -- Apple still had billions of cash reserve and were no where near bankrupt.

        • by Tharkkun (2605613)

          On a point of pedantry, MS didn't bale Apple out -- Apple still had billions of cash reserve and were no where near bankrupt.

          Apple would be nonexistent without Microsoft's support. Microsoft had no competition and needed Apple to survive.

  • ring ring (Score:5, Funny)

    by vlm (69642) on Tuesday January 22, 2013 @06:25PM (#42662143)

    ring ring
    Dell support this is "John" how may I help you?
    Ah hi John, this is Steve at microsoft I'd like to open a support ticket because I'm having trouble transferring $3B as part of a private equity buyout.
    OK Steve while I do the needful opening a support ticket I have some tasks for you, I was wondering if you could reboot the computer.
    Well John the problem is on your website, I'm trying to paypal you $3M and I'm getting an error message about ..
    Please do the needful Steve and simply click the start button, then shutdown...
    No John this is windows 8 there is no start button anymore
    Oh so sorry Steve let me pull up the correct script... Ah I see you are needing to restore windows from your install partition, which will reinstall all the crapware and drivers and a unpatched version of windows from 2010 complete with 57 varieties of security hole, but we don't charge extra for that.
    OK John (Steve humors John, and fumbles around for his iPad to use instead, pretending just so they can get past the script)
    I'm not really sure where to go with this, other than it should probably end with "steve" from microsoft throwing a chair, or "developers develpers developers" or somesuch nonsense.

  • by Anonymous Coward on Tuesday January 22, 2013 @06:39PM (#42662331)

    "What would I do? I'd shut it down and give the money back to the shareholders,"

    • "What would I do? I'd shut it down and give the money back to the shareholders,"

      To be fair that quote was back in 1997 and Apple was $17 a share it has lost 20 times that in the last three months, and that was 4 years before the ipod changed Apple. Steve Jobs had only just returned to Apple...after the buyout of Next.

      Ironically the 1995 Steve Jobs complained how Apple milked the Macintosh for profits and left itself vulnerable to disruption and market share collapse...fortunately Apple wouldn't do that again.

  • by Andy_R (114137) on Tuesday January 22, 2013 @06:43PM (#42662363) Homepage Journal

    If Microsoft wants a PC manufacturing business, why not just finish off the job they have already started and set one up themselves? They already have the product design, retail links and manufacturing capability in place from the Surface Pro, all it would take is launching a desktop or two (and possibly some servers) to flesh out the range and they would be all set to compete with Dell, for far less than $3Bn.

    I'm no fan of Microsoft, but I can see big corporate buyers attaching more value to a Microsoft branded PC than an identically specified Dell branded one, on name alone.

    The real issue here is the potential for monopoly abuse, Dell's current bulk deal for Windows might already be so good that it would be an unfair subsidy if they were owned by MSFT.

    • by c0lo (1497653)

      If Microsoft wants a PC manufacturing business, why not just finish off the job they have already started and set one up themselves? They already have the product design, retail links and manufacturing capability in place from the Surface Pro, all it would take is launching a desktop or two (and possibly some servers) to flesh out the range and they would be all set to compete with Dell, for far less than $3Bn.

      I know you have the intellectual ability to perform additions. Would you please perform by yourself these 3-4 million additions by tomorrow for a margin of 0.5% profit?

    • by ADRA (37398)

      1. Microsoft has a very tenuous relationship with their OEM's that can only be balanced with deep discounts for OEM's windows licenses. If Microsoft bought dell tomorrow, wouldn't that put them in substantial channel conflict? One could argue that Samsung's toe waggle with Tizen is a hedge against Google/Motorola locking down the android a market (dumb idea for any involved) and running away like bandits.
      2. The desktop market is shrinking (very slowly), and losing one more player from the open playing field

  • by bitt3n (941736) on Tuesday January 22, 2013 @06:47PM (#42662397)
    between Dell's unbeatable reputation for sleek, innovative, high-margin technological wizardry, and Microsoft's remarkable ability to bring such inimitable mix of elegant simplicity and raw sex-appeal to new markets as puts their rabid fan base into a swoon, every other player in the industry would doubtless close down and give the money back to their shareholders.
  • by Sponge Bath (413667) on Tuesday January 22, 2013 @06:54PM (#42662483)
    They removed the Start (power) button.
  • by RichMan (8097) on Tuesday January 22, 2013 @07:00PM (#42662539)

    Dell had threatened to make nice cheap $50 appliance that connected to a host OS in the cloud.

    That threat seems to have produced a nice response from the NW.

  • Apple has complete control over their production pipeline, software and hardware.

    Microsoft has historically only handled the software part of the pipeline, while letting the OEMs take care of hardware.

    Microsoft now looks at Apple and sees that the full-pipe model is viable and wants to cut out the middle man, the OEM.

    Instead of building the hardware part of the pipe for themselves, they do things like poison Nokia or take a stake in Dell, because they perceive subversive paths to be cheaper and quicker.

    MS w

    • Apple has complete control over their production pipeline, software and hardware.

      Microsoft is not buying Apple, its simply buying a seat on its board [a position of *influence*] with enough money to lock Dell down with Golden handcuffs, so its less building its own hardware...more making sure it sells locked [police state] Microsoft products and does not start selling Android or god forbid tries to do something innovative ironically like completely control their production pipeline, software and hardware...maybe using Linux.

    • by Abreu (173023)

      Zune, Kin, Surface, it all leads here.

      If at least one of those was the least bit successful, your argument would be a little bit less ridiculous.

  • There could be some shareholder influence into this all. On Dell's part I heard M. Dell aims to get rid off shareholder's pressure for stable quarterly results in order to restructure Dell, and therefore the buyout.
    And then I guess Steve "Chair" Ballmer heard that "look at Apple!" too often. They took some inspiration from Cuppertino already and while it was mostly desktop features in the past they now try to copy business model features like controlling both hardware and software.
    It's not just mice any mor

    • by vakuona (788200)

      Why can't Dell, the founder of the damn company, convince his board and other shareholders that taking a short-termist view is ultimately contrary to their interests, and that he has no interest in running the company to please day traders and others looking for the stock to make quick quarter-on-quarter gains so that they can dump the stock onto some poor buyers just before it tanks again when it becomes clear that the last huge profit number was a one-off due to some accounting trick that Dell found to em

      • Why do you by stock in a company? Or you a "Growth" person - looking for razzle dazzle? Or are you a value person - looking for a nice steady company to invest in.

        Dell is currently a "value" company - are so are it's shareholders. Michel Dell wants to flip the company from value to growth - a risk a lot of the current shareholders don't want to take.

        Apple and Steve Jobs - you know there is an advantage of returning to a company that was a listing ship and righting it. All of a sudden you are St. Jobs and y

  • Bye bye Windows 7 (Score:2, Informative)

    by tompaulco (629533)
    You already can't get Windows 7 period on some of their laptop line. Now, I guess we can say good-bye to Windows 7 and have to purchase the upgrade from Windows 8 to Windows 7 aftermarket, and they will probably tell us that voids the warranty.
    • Are you ok with a Dell business machine? If you go to the Dell website and look at ANY business machine (Optiplex, Vostro, Dimension, Latitude), either desktop or laptop, they are listed across the board with Windows 7. Windows 8 is not in sight. I think it will be a long time before businesses are ready for the Windows 8 nonsense.
  • I recently purchased around 50k in Dell servers. Sat on the fence awhile and my rep kept discounting and discounting. Original configurations added up to about 65k, (self configured on the website was much higher). He wanted that end of quarter sale very badly.
    As well, I recently investigated Dells new AppAssure backup software. They bought out the original company in Feb I believe. Long story short, I paid 48% of the original quote which was 12k for 7 server / 100 workstation licenses.

    I wonder if the push

  • Dell and Microsoft have had a long and close business relationship. If Dell ends up going private equity then Microsoft wants a seat at the table, so to speak. My feeling is that Dell has quietly conceded the consumer market to Apple and Samsung. Sure, they still sell in that market but their bread and butter is the corporate market. Just like Microsoft. So Microsoft wants to protect that partnership by having some influence in the direction of a private equity led Dell.

  • . .. after microsoft invested in Apple.
    #amiright?

  • MS needs companies like DELL and HP because these companies are putting MS product onto business and Govt desktops. Without these companies, Linux and MacOS would get a bigger foot hold in these big buying areas.

  • Many MS insiders were heavily invested in Dell when It first went public. This is just the second round.
  • Seriously. FOSS disrobes the emperor with respect to the cost of fundamental software, driving them toward commodity status. What's MS's profit margin on operating system and office suite software sales? Still high, but progressively, as the lingering fog of FUD laid down by MS and others begins to clear, software managers are recognizing that they have options, that they don't NEED to pay for basic infrastructure software like an OS, database, office suite ... and that leads to MS loss of sales, having

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