Dell Founder Dropped $100M Onto Red Hat

diegocgteleline.es writes "Via google news, I found a article at MSNBC claiming that Michael Dell, Dell's founder and chairman, has droped $100M into Red Hat (Michael himself, not his company). Analyists say that "Dell - neither the person nor the company - is interested in acquiring Red Hat", but one wonders what's behind of this move. A fight against their competence in the server market?"

Comments

linguistic note

[greenguy]

"Competence" = competition

In Spanish, competencia means both, hence this is an easy error for native Spanish speakers to make in English.

BFD

[sysadmn]

Conspiracy theorists should read the article. (Oops, this is Slashdot...) Dell's investment management firm bought $99.5MM dollars of debentures out of $600MM offered. Red Hat's market cap is about $2 billion. On top of that, the debentures are convertible to stock at a rate that would give Dell about $42MM worth of stock. It's hard to control a company when you own 2% of the stock.
Even then, Dell might make money on the deal:

That's because MSD could have bought Red Hat's debentures using a strategy called "convertible arbitrage," wherein an investment firm buys convertible debt in one bet while short selling the company's common stock at the same time.

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Nothing funny here

[DenDave]

Actually at the time MSD procured the shares it made a lot of sense. ES3 was set to turn a massive userbase into a load of paying users. It was everyone's ecpectation that a significant portion of professional non-paying RedHat Linux 9 users would convert their systems to the paying model. At the time the expectation was that RedHat would thus generate a healthy amount of liquidity and that is always good for share prices. The market didn't quite play out that way but that is of course with hindsight. MSD's decision was a rational investment. Getting Michael Dell a say in the shareholders meeting is of course the priviledge of wealth and there can be no doubt that Dell's views on the market are not without audience in Raleigh. For MSD to diversify his investements is just sound financial management, I mean would you hedge your entire financial future on Dell Computer?? ;)

speculation of Michael dell actually buying RedHat is, on this information, totally unfounded.