Does Microsoft Want In on Dell?

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Michael Dell, the founder and Chief Executive of his namesake computer company, has been negotiating a deal with the private-equity firm Silver Lake Partners that would buy out Dell’s (NASDAQ:DELL) public shareholders. Analysts have questioned the plausibility of such a buyout, pointing towards the prohibitive costs and the difficulty of revamping the company’s business as reasons such an agreement would fall through. However, the addition of a powerful player in the personal computer industry could change the dynamic.

While the company has not yet made a commitment, sources familiar with the matter told The Wall Street Journal that Microsoft (NASDAQ:MSFT) is considering joining the investor group for a Dell buyout with a contribution of several billion dollars.

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As Microsoft has not made its interest in Dell public, the reasons behind the company’s interest in the computer manufacturer are not known. But as Dell is Microsoft’s third-biggest original equipment manufacturer, the company has a vested interest in its profitability. Furthermore, the deal could be a means for Microsoft to further its hardware ambitions.

Confirming that the Surface tablet would not be the extent of the company’s expansion, Chief Executive Officer Steve Ballmer told the BBC last October that his company was “obviously” going “to do more hardware.” He added, “Where we see important opportunities to set a new standard, yeah we’ll dive in.”

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