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NEW YORK, Jan 22 AFP

January 23 2013, 08:00AM

Microsoft is in talks with private equity investors on a possible buyout of US computer giant Dell, the Wall Street Journal and cable news channel CNBC report.

The reports, citing sources close to the discussions, said Microsoft was considering investing $US2 billion to $US3 billion ($A1.91 billion to $A2.87 billion).

Dell has not commented on reports circulating since last week which said the popular computer maker, which has slipped from its number one position and has struggled amid a shift to mobile devices, was preparing to go private.

The move, which would delist the company from stock markets, could ease some of the pressure on Dell, which is cash-rich but has been seeing profits slump.

Microsoft did not respond to an AFP query on the reports, which said it was in talks with the equity firm Silver Lake Partners.

Dell shares extended their recent rally, gaining 2.4 per cent to $US13.15. The reports said a deal for the shares could be priced at between $US13 and $US14.

Sterne Agee analyst Shaw Wu said a deal in that price range is possible, but that "a materially higher price is less likely".

Wu said in a note to clients that "attractive returns could prove difficult" for Dell and that based on prior buyouts "acquirers underestimate the secular pressures a company in decline faces".

"While going private makes sense in taking the company out of the limelight and public scrutiny, we are not sure it improves the company's fundamental position," Wu said.

He said that despite Dell's efforts to diversify, "about 70 per cent of its business is tied to PCs".

"The reality is that ever-increasing competition from Lenovo, Asustek, Apple, Google, Acer, IBM, Hewlett-Packard, Samsung, and Cisco isn't going away by going private," he added.