NEW YORK (
(MSFT - Get Report)
reports its fiscal second-quarter results after market close, amidst rumors that the software giant could
reported that Dell is close to clinching a leveraged buyout by private equity specialist
, with Microsoft discussing providing part of the funding. Citing people with knowledge of the matter,
reported that Microsoft may contribute about $2 billion toward the deal. One unnamed source told
that a deal could be announced this week.
Both Microsoft and Dell declined to comment on this story when contacted by
, 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
, for example, has hardly set the world on fire, and Microsoft faces stiff competition from
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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
, 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
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
expect a higher gross margin of 76.53%.