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Dublin: 15 °C Wednesday 17 September, 2014

Microsoft in negotiations to buy struggling Dell – reports

Microsoft is considering investing billions in joining a takeover bid for Dell.

A view of Windows 8
A view of Windows 8
Image: Paul Faith/PA Archive/Press Association Images

MICROSOFT HAS JOINED the negotiations to buy struggling computer maker Dell, according to media reports.

Both CNBC and The Wall Street Journal reported that Microsoft may invest some of the money needed to take Dell private after 25 years as a publicly traded company. Tuesday’s stories cited unidentified people familiar with the negotiations.

If Microsoft joins in a Dell buyout, CNBC and the Journal say the software maker would contribute $1 billion to $3 billion (between €750 million and €2.25 billion).  That amount would make Microsoft Corporation a minority investor in a complex deal expected to cost $23 billion to $27 billion if it’s completed.

Microsoft declined to comment on the reports.

Word that Dell is interested in selling to a group led by buyout firm Silver Lake Partners first surfaced last week. Dell’s stock price has climbed about 20 per cent since then. The stock rose 33 cents, or 2.6 percent, to $13.17 in Tuesday’s early afternoon trading.

Dell, which is based in Round Rock, Texas, hasn’t said whether it’s interested in selling. Going private, though, would enable the company to overhaul its operations without having to meet Wall Street’s demands for higher quarterly earnings.

Dell, the second largest U.S. computer maker behind Hewlett-Packard, is one of Microsoft’s biggest partners. Among other things, Microsoft licenses its Windows operating system to Dell’s personal computer makers.

Like many other PC makers, Dell’s revenue has been sliding as the popularity of smartphones and tablet computers divert consumer and business spending from laptop and desktop machines.

By becoming a part-owner in Dell, Microsoft would risk being viewed by HP and other PC makers as more of a rival than a partner. Microsoft already has rankled some of its PC makers by releasing a tablet computer called Surface that competes against their products.

So far, though, there has been little evidence indicating that the Surface is reshaping the market for computing devices.

Read: Bill Gates to meet with Taoiseach, Tánaiste and President tomorrow >

Read: Microsoft chief says Windows 8 is off to a “stunning” start >

Previously: Dell looking to trim costs by more than $2 billion. But how? >

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