Microsoft Sizes up Dell

I choose this article because as an IT director these type of stories shape purchasing decisions, and are of interest within the industry.


PC sales in the U.S. have been falling as tablets, smartphones, and other internet enabled devices. Dell Computer has been struggling to keep its position of the second largest manufacturer of PCs in the world and has recently expressed interest is going private. Talks with a large private equity firm, Silver Lake Partners is facilitating talks and searching for buyers. Dell is said to be worth $22 billion dollars. Microsoft has expressed in interest in the firm and reported to possibly invest up to $2 billion which would make it the largest shareholder. Although Microsoft wouldn't run the day-to-day operations there would be strong incentive to use Microsoft software exclusively. If Microsoft can broker this deal it would help in developing their own ecosystem for hardware and software, similar to how Apple integrates its iPhone, iPad, and an array of other devices to work in harmony with ease. A short time ago Microsoft partnered with Nokia to help develop the Windows Phone, they supplied the company with billions of dollars for marketing, research, and development. Cash is not a problem for the software giant as they have attainted a $66 billion stockpile of cash, most of which is in foreign accounts. Microsoft wouldn't have to pay taxes on this money if it brought it back into the U.S. as it would be going to Dell and not its parent company. Microsoft does risk alienating its other customers as it would be seen as playing a favorite. When Google purchased Motorola it took a hit from Samsung, LG, and other companies as it was giving Motorola unfair advantages.

This story advances my learning by illustrating the mechanics of mergers and acquisitions.

http://online.wsj.com/article/SB10001424127887323940004578257803594294788.html?KEYWORDS=microsoft+sizes+up+dell