Microsoft announces $40 billion stock buyback
Microsoft on Monday announced a new stock buyback program of up to $40 billion, sending its stock up more than 5 percent in premarket trading.
The software giant said it would repurchase up to $40 billion worth of its shares through September 2013. It recently completed a previous $40 billion buyback program.
Investors, who tend to cheer stock buyback programs because it makes existing shares in the market more valuable, pushed Microsoft's stock to $26.50 a share in premarket trading, up 5.33 percent.
Microsoft has seen its shares lose roughly 22 percent of their value since it
PC maker Hewlett-Packard also announced a stock buyback program Monday, authorizing up to $8 billion in shares to be repurchased.
The Redmond, Wash.-based company, meanwhile, also announced plans to pay a 13-cent quarterly dividend, which is an 18 percent increase over its previous quarterly dividend. The dividend will be payable on December 11 to shareholders of record as of November 20.
In addition to the stock buyback program and increased quarterly dividend, Microsoft is also planning to float out corporate debt of up to $6 billion. The proceeds from the debt offerings will be used for general corporate purposes, stock repurchases, and working capital.
Dawn Kawamoto covers enterprise security and financial news relating to technology for CNET News. E-mail Dawn. 
A) Increase the value of remaining stock. Handy to do when you really can't grow, or don't pay dividends (another good use of profits). This version is for the company in the cat seat.
B) Increase the value of the remaining stock to hide an underlying weakness that would cause the stock to slide further down the pit. This version buys you time.
<a href="http://guyblaise.com">Guy Blaise</a>
Also, MSFT was once a pure growth stock - that is, no dividends, but you (the buyer) expected to make your money back from sheer price increase and splits. Since MSFT's stock has been pretty much flat since the dot-bust, the pittance they did add in dividends in 2001 (or so?) makes the stock rather unattractive to buyers who can get a better growth deal elsewhere in tech.
MSFT's buyback/dividend-boost is obviously two-fold, but for two common purposes as well - to draw attention, and to draw money (esp. the second part).
/P
They blow $300 million on an advertising campaign that succeeds only in showing how clueless and out of touch they are, now they are wasting $40 billion.
This money could go to hiring a competent team to deliver a competent OS. That would get their stock moving and be cheaper as well.
Perhaps the Borg are simply trying to assimilate themselves.
Blowing $300 million on a campaign... that is yielding real world results in brand recognition. Your point is... well, pointless. Try again without the bigotry.
Hiring a competent team to deliver a competent OS. Ah, now this may actually explain a lot of your comments here on CNET. Are you upset that you were passed over as not being qualified enough? You must have some reasonable explanation for all your MS hatred. You post on every Apple/Linux/Microsoft story about how horrible MS is regardless of what the story itself is actually about. Your postings come with no evidence, no facts, no supporting information at all, and when asked to provide it, you change the subject. This completely derails any chance you have of being taken seriously and as anything other than a troll.
You've earned the title of Troll quite well. You should wear it proudly.
"Blowing $300 million on a campaign... that is yielding real world results in brand recognition. "
I agree. That is what Microsoft needed. Before the last round of adds, I had no idea who Microsoft was. I have been to the mall, yet I still have not found their store. I hope I find it soon, I need new footwear
:).
It doesn't cost $40 Billion to develop an OS.
But yeah, I think its stupid to be wasting money on share buy backs. Never believed in it. Its short sighted and the effects never last.
buying back shares (and raising dividends which they also did) is seen in the market as a way to return value to investors. Holding enormous blocks of cash is actually viewed negatively and is something I have personally held against msft in the past. Sitting on cash is a very poor use of funds in my view. I would much rather see a cash cow like msft return that value in growth, reinvestment in brand or product, or a stock buyback or dividend increase.
What they should do is break up and spin themselves off as separate companies to ther shareholders. That will bust the pieces out of stagnant.
Meanwhile, one usually doesn't buy back shares unless price growth on those shares are relatively stagnant... which explains MSFT's situation perfectly. MSFT is seeking attention, which explains why they're doing this. Until this morning, MSFT was not an attractive stock at all - stagnant growth, relatively pitiful dividends, and an uninspiring product line-up (much of which carries a negative reputation).
Not so fast yourself.
Exactly how much cash does Apple have in the bank again?
Microsoft still has over $20 Billion in the bank right now, and that is after the first $40 billion stock buy back program.
And, Microsoft is making to the tune of $5 billion in profits per quarter as compard to a measely $1 billion in profits made by Apple per quarter.
Apple is not even on the same planet as Microsoft in profits.
Microsoft just completed one of its fastest growing years in recent times last fiscal year.
Windows Server, SQL Server , Exchange Server, even Office and desktop Windows are all growng in double disgits right now.
Apple has $20.77bn in cash-on-hand, currently with 38% YoY quarterly revenue growth:
http://finance.yahoo.com/q/ks?s=AAPL
Microsoft has $21.6bn cash-on-hand, currently with 18% YoY quarterly revenue growth:
http://finance.yahoo.com/q/ks?s=MSFT
IOW - my facts are proven, and they stand. Deal. ;)
Finally, consider that MSFT is also about to go into debt - $6bn of debt from the looks of it. Apple has $0.00 in debt.
/P
Well, maybe in the future, yahoo will accept Microsoft's bid. As the Hutu of Burundi say, ?If a young woman says no to marriage, just wait until her breasts start to sag.?
<a href="http://guyblaise.com">Guy Blaise</a>
They now PWN Mac-punk , AKA Young Steve Jobs AKA Jeepers Creepers Boy with their new I`m a PC ads. Good news all around.
New ads say I design and fly spacecraft with Windows PC`s. Mac ads now look simplistic and childish in comparison. Good counter-move MSFT !
"Do you wear panties when you have your microsoft cheerleader uniform on?"
I'm afraid this is not the forum for you to be describing your sexual fetishes. Please keep on topic.
One of those smoke and mirrors operations to hide real bad news which is normally always related to abysmal top management performance with no new Intellectual Property available.
eom
Meanwhile, one usually doesn't buy back shares unless price growth on those shares are relatively stagnant... which explains MSFT's situation perfectly. MSFT is seeking attention, which explains why they're doing this. Until this morning, MSFT was not an attractive stock at all - stagnant growth, relatively pitiful dividends, and an uninspiring product line-up (much of which carries a negative reputation).
In short, they're trying to give their finances a booster shot, but they'll end up dropping their cash reserves to do it (which is a bit risky these days).
Tesla Motors is not in the same league as Toyota, but look at the sales of Tesla- their sales growth is fantastic compared to Toyota's in the last year. Does this mean that Tesla is more successful than Toyota?
Of course not, only a complete moron would ever fall victim to such logic. I'm rather surprised that you have, and even more so that you're intentionally spreading this misinformation. I had really expected better of you. I am disappointed that you have fallen to the level of Troll. :/
apple microsoft
market cap $1.16B $231.91B
shares 885M 9.13B
share price $131.0734463 $25.40087623
Reverse # of shares $12.70536692 $262.0451977
You really need to compare things fairly. With the number of shares outstanding that Apple has, MS would be valued at $262/share...that reflects the more than double market cap ms has. Apple would be valued at 12.7 bucks a share if they had over 9 billion shares outstanding.
buying back shares returns some of this value to the stock holder, where it belongs. it is a common practice and is not viewed negatively. A company in trouble would never buy back shares with cash as they need that cash for operations. ms is not going down, much to your chagrin.
One other note, "relatively" pitiful dividends???know a lot of tech companies that pay big dividends, do you? Most don't, including your one true love, apple.
"Methinks" you are a larper in your spare time...
That man was never a capable manager, ready to stand on his own feet! He only got in, because he knew 'the man'. Those who were with The Club long enough will know what I am talking about.
Robert Faulkner
I'd like to have what you're smoking, please. According to Apple's latest SEC 10Q filing (July 11, 2008), Apple's _TOTAL_ assets is just $31B, with $9B in cash.
Companies don't buy back their stock because it's stagnant. They purchase their own stock like they purchase any other stock: because they believe they'll get the best ROI on that purchase than by making any other investment.
Oh, yeah, Apple's stock TANKED today because it was downgraded by analysts including Morgan Stanley. In total Apple's share price is DOWN almost 33% year to date, which means Apple's Year-over-Year growth actually LAGS behind Microsoft.
http://www.247wallst.com/2008/09/coal-in-apples.html
Quote: "Apple is about to have the worst October through December sales period in five years."
Over hyped. Over inflated.
- by Penguinisto September 22, 2008 4:30 PM PDT
- @mbenedict: See for yourself:
- Like this Reply to this comment
-
-
- by Vegaman_Dan September 22, 2008 4:55 PM PDT
- To really compare accurately, you will need to equalize their sizes. As Apple is in a niche market, their growth is going to be larger than the much larger MS. This is basic common sense. Now once Apple has the same total revenue as MS, *then* you can compare the two. But doing so with the figures you list is simply deceptive and ignorant.
- Like this
-
(40 Comments)Apple has $20.77bn, currently with 38% YoY quarterly revenue growth:
http://finance.yahoo.com/q/ks?s=AAPL
Microsoft has $21.6bn, currently with 18% YoY quarterly revenue growth:
http://finance.yahoo.com/q/ks?s=MSFT
We're talking generic cash in the bank here (hint: look for "cash and short term investments", not just "cash", since short-term investments can be liquidated on little-to-no-notice, and are often lumped in with most summaries).
Now if you insist on being disingenuous and silly, then let's play your game and ditch the short-term investments:
AAPL: $9.3bn in "Cash": http://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&symbol=AAPL.O
MSFT: $10.3bn in "Cash": http://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&symbol=MSFT.O
...seems my point still stands just fine:
Apple has almost as much (if not more) cash in the bank as MSFT has, right now.
Oh, and your cute little cite? Piper says that the Morgan Stanley analysts are idiots:
http://www.alleyinsider.com/2008/9/piper-ups-apple-aapl-estimates-morgan-stanley-whacks-big-tech-citi-warns-on-forex
Fortune says they're stupid too:
http://apple20.blogs.fortune.cnn.com/2008/09/22/analyst-apple-will-sell-5-million-iphones-in-q4/
Time to snag some bargains, methinks. ;)
/P
I sold some art recently. I ended up selling two pieces in two weeks and that is twice as much as I had the previous week. By your very logic, I am much more successful than Apple and MS combined. That puts me on top of all corporate sales of all products.
Obviously this isn't the case, but it clearly demonstrates why your logic is flawed. It's a common Apple Apologist trick to spread FUD. I really had expected better of you. You normally aren't the sort of person to fall for such deceptions.