This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Microsoft on Deck As Dell Rumors Swirl

NEW YORK ( TheStreet) -- Microsoft (MSFT - Get Report) reports its fiscal second-quarter results after market close, amidst rumors that the software giant could help finance a private buyout of Dell (DELL - Get Report).

On Wednesday Bloomberg reported that Dell is close to clinching a leveraged buyout by private equity specialist Silver Lake, with Microsoft discussing providing part of the funding. Citing people with knowledge of the matter, Bloomberg reported that Microsoft may contribute about $2 billion toward the deal. One unnamed source told Bloomberg that a deal could be announced this week.

Both Microsoft and Dell declined to comment on this story when contacted by TheStreet, although the software giant will likely have to address the rumors during its earnings conference call.

Microsoft, which exited its last quarter with more than $66 billion in cash and investments, could easily afford to finance a Dell buyout. This could also be a shrewd move, with Microsoft using the hardware maker to bolster its tablet efforts. The company's Surface tablet, for example, has hardly set the world on fire, and Microsoft faces stiff competition from Apple's (AAPL - Get Report) iPad and Google (GOOG) Android devices. Additionally, Microsoft's wrestling with the effects of a tough PC market, so Dell could help the software maker refocus its gadget efforts.

Number three PC maker Dell, which has a market cap of $22.53 billion, is already a close Microsoft partner, although a financing deal could antagonize the likes of Lenovo and HP (HPQ), who also rely heavily on Windows software. Nonetheless, Microsoft may take a calculated gamble to become part of a Dell buyout, thereby avoiding the anti-trust challenges of an outright acquisition.

Analysts surveyed by Thomson Reuters expect Microsoft to report second-quarter revenue of $21.53 billion and earnings of 75 cents a share, compared with $20.89 billion and 78 cents a share in the same period last year.

Thanks to its highly profitable software business, Microsoft is expected to deliver a gross margin of 72.96%, roughly flat from 73% in the same period last year. For its fiscal third-quarter, however, analysts surveyed by Thomson Reuters expect a higher gross margin of 76.53%.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
DELL $0.00 0.00%
AAPL $123.25 0.00%
MSFT $40.97 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs