Microsoft Joins Efforts to Take Dell Private: Reports

Microsoft officials are willing to put in as much as $3 billion toward a leveraged buyout of Dell, which would become a private company again.

Microsoft reportedly is joining the effort to buy Dell and take the company private, a move designed to help jump-start the struggling PC maker's efforts to transform its business.

Executives with the software giant are in talks with officials from Dell and Silver Lake partners—one of the private equity firms that was initially named last week in news reports about Dell going private after more than two dozen years as a public company—to invest billions of dollars as part of a leveraged buyout of Dell, according to reports by The Wall Street Journal and CNBC.

Microsoft officials have not made a final decision about whether to invest in Dell, according to the Journal. However, CNBC reported that the company could invest $1 billion to $3 billion, and that a deal is expected to be reach by the end of the week. A special committee for Dell shareholders is part of the negotiations, according to CNBC.

Spokespeople for both companies have declined to comment to the media on the reports.

Microsoft investing in Dell would make sense, given the historically close ties between the two tech giants and their shared mutual interest in returning the global PC market to health. Dell, like other tech vendors with tight ties to the PC market—such as chip makers Intel and Advanced Micro Devices and Hewlett-Packard, the world's largest PC maker—has been impacted by the relatively sudden and steep slowdown in PC sales in recent quarters, as consumer interest shifts sharply to mobile computing devices such as smartphones and tablets.

Earlier this month, Gartner analysts noted that PC shipments in the fourth quarter of 2012 fell 4.9 percent with Dell, at one time the world's top PC vendor, seeing shipments drop 20.9 percent. For all of 2012, Dell PC shipments declined 12.3 percent, according to Gartner. Even the release of Windows 8 by Microsoft in October 2012 did little to slow the declining PC sales worldwide, according to Gartner and IDC. Dell is the third-largest PC maker in the world, behind HP and Lenovo, according to the analyst firms.

The movement toward the mobile devices has been a boon for such companies as Apple and Samsung, which have seen rapid growth in sales of their products. Dell and HP, like other PC OEMs, have made forays into the mobile device space with different levels of success. In the meantime, both are aggressively pursuing efforts to grow their enterprise IT businesses, with the goal of offering end-to-end products.

After reports surfaced last week that Dell officials were considering taking the company private, industry analysts said such a move would enable the PC maker to accelerate its efforts to transform the company outside of the intense spotlight of Wall Street analysts and investors and free up the decision-making process.

"It allows the company to function with the agility of a startup and most of the resources of a large public company," Rob Enderle, principal analyst with the Enderle Group, told eWEEK after news of a possible leveraged buyout broke last week. "In effect, if you are contemplating making some major structural changes to the company, this is like, in a car race, pulling the car off the track to do the heavy modifications, rather than trying to do those changes during a pit stop or while the car was actually racing."