Dell Creates Program to Invest in Budding Technology Companies
Paul-san:
Well you heard about Dell's investment in Lante the other day and now here is an article that shed more light in to Dell's foray into investments in budding tech companies. (http://biz.yahoo.com/rf/990621/z1.html)
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Washington, June 22 (Bloomberg) -- Dell Computer Corp. is putting its cash to work through a new business unit that seeks to acquire stakes in other technology companies.
Dell, the top direct seller of personal computers, has disclosed several technology investments in recent months, including the purchase of stakes in NaviSite and Red Hat Inc. These acquisitions reflect a formal program to gain access to new technology and boost the return on some $4 billion in cash and securities now on Dell's balance sheet.
The program is similar to efforts at Intel Corp. and Microsoft Corp., both of which also are flush with cash, and provide a foothold for Dell in smaller companies that may prove to be the next America Online Inc. or Amazon.com Inc. ''Most big companies realize that downstream from them are opportunities to capture superstars,'' said Bill Glynn, director of Southeast Venture Partners, a venture capital firm in Durham, North Carolina. ''You only need one'' such investment to succeed to reap big gains, he added.
Dell, based near Austin in Round Rock, Texas, has made several bets in recent months, including its purchase of a 4.9 percent stake in NaviSite, a Web-site services company backed by venture capital company CMGI Inc. Other investments include stakes in Digital Entertainment Network and Red Hat, which sells a version of the Linux software operating system, which seeks to compete with Microsoft's dominant Windows operating software and is offered in some Dell computers.
In addition, Internet healthcare companies such as WebMD Inc. and drkoop.com Inc. have said they recently sold shares to Dell. Drkoop.com, an Internet provider of consumer healthcare information co-founded by former U.S. Surgeon General C. Everett Koop, said in Securities and Exchange Commission filings that Dell offered to buy $10 million worth of its stock. 'Strong Presence' ''Dell wants to have a strong presence with consumers in healthcare,'' said Don Hackett, the chief executive of drkoop.com. ''There are more PCs to be purchased by consumers to manage their healthcare needs.''
The company has three goals in making such investments, according to Neisha Frank, a Dell spokeswoman. In addition to realizing a profit, Dell wants to get access to relevant technology or services and gain the ability to better understand customers to whom the company markets computers.
The initiative calls primarily for investments in technology and Internet companies, Frank said. It's separate from MSD Capital LP, the company set up by Chairman Michael Dell to invest as much as $1 billion of his personal fortune.
Frank didn't immediately comment on how much money Dell would devote to making venture capital type investments, an effort that is being led by Alex Smith, the company's former treasurer. The company, though, has plenty of funds available, including about $620 million in cash and $3.4 billion in marketable securities at April 30. ''We see a number of benefits from doing this,'' Frank said. ''You will see more of this activity from us.'' |
