Microsoft
Customers that have existing agreements with CIT can continue to get financing from the lender, Stacie Sloane, a spokeswoman for Redmond, Washington-based Microsoft, said yesterday in a statement.
CITs bondholders agreed to give the bank $3 billion in emergency financing this week, helping stave off bankruptcy for now. The lender, which expects to report a loss of more than $1.5 billion for the second quarter, has about $10 billion in debt due by next year. Technology companies such as Microsoft and Dell Inc. have used CIT to help customers pay for computers and software.
Microsoft had signed an exclusive agreement with CIT beginning in France and Switzerland in 2006. The companies expanded the deal to other countries in 2007. Microsoft plans to work with a number of other financial institutions, declining to say how much financing is provided to customers by CIT.
“We will ensure any credit-approved customer financing commitments are honored and plans are in place for new customers to receive financing through other vendors,” Sloane said.
Curt Ritter, a spokesman for New York-based CIT, declined to comment.
Dell Relationship
In 2007, Dell, the worlds second-largest personal-computer maker, agreed to pay $306 million to buy CITs 30 percent stake in a joint venture that provided financing to customers.
CIT still lends to some Dell customers, though that amount has been scaled back, Chief Financial Officer Brian Gladden told analysts on July 14. Dell absorbed about $200 million of the financing this year, he said.
Dell had an account receivable of about $35 million related to CIT on its balance sheet at the end of the first quarter, Gladden said. CIT also provides financing to some of Dells overseas customers. The computer maker is working to find alternative lenders, he said.
“Weve got a relatively limited funding and finance relationship with CIT today,” David Frink, a spokesman for the Round Rock, Texas-based PC maker, said last week. “If there are events that require action, we have various options to continue providing financial services without significant interruption or any impact on our customers.”
Frink didnt return a call yesterday seeking comment after Microsoft canceled its contract.
Microsoft rose 30 cents, or 1.2 percent, to $24.83 yesterday on the Nasdaq Stock Market. CIT dropped 27 cents, or 22 percent, to 98 cents on the New York Stock Exchange. The stock has lost 78 percent of its value in 2009.