Microsoft has been slowing inching towards manufacturing hardware that supports its operating systems, with the xbox and surface tablets, but taking a stake in Dell would push it further along that path.
Dell's management is understood to be eyeing a management buyout, lead by its founder Michael Dell and private equity groups. Michael Dell currently owns about 16% of the company while Microsoft is thought to be after a 10% stake.
Dell is currently worth around US$22 billion.
Although a 10% stake wouldn't give Microsoft any meaningful management control of the company, the funding agreement is thought to include an agreement by Dell to promote Microsoft software products.
Dell has also variously attempted to get into the handset and tablet markets itself, and a deal involving Microsoft may heighten the persistent rumours that Microsoft wants to launch its own range of smartphones.
On the web: Wall Street Journal
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