This morning we announced a stock buy back of $40B over the next 5 years as well as an increase in the quarterly dividend by 18%. In a nutshell, here’s what was announced:
- Plan to buyback $40 billion in shares from now to 2013
- A quarterly dividend of $0.13 per share
- An authorization to borrow money up to $6B liquid for buybacks or projects
- Triple A credit rating from S&P & Moody’s; highest rating available
Translation: MSFT is a solid, well financed company. And as Steve Ballmer said, Microsoft shareholder win either way when it comes to the stock: When the stock goes up, Microsoft shareholders wins. When the stock goes down, Microsoft’s got the cash to buy the stock back when it’s a “buy”. And as a company, we’re very bullish about our strategy & annual growth so we’re more than happy to invest in our future if others aren’t.
What blows my mind is that as a company, Microsoft has a market cap of $237B. I mean, do the basic math: Buying back $40B in shares is a really, really large chunk of the company. While this is next sentence is a pipe dream, we make about $30B annually in income and if you completely disregard the monetary war chest we have in the bank & non-corporate investments, if we were to execute a buyback like this a few more times at the current market cap, Microsoft could at some point be fully funded private company.
I don’t know too many places that have that ability.*
- THE STREET: Microsoft Sets $40 Billion Buyback
http://www.thestreet.com/story/10438636/1/_msnh/microsoft-sets-40-billion-buyback.html?&cm_ven=MSNH&cm_cat=FREE&cm_ite=NA - BARRONS: Microsoft Sets $40B Buyback; Hikes Div; Stock Rises
http://blogs.barrons.com/techtraderdaily/2008/09/22/microsoft-sets-40b-buyback-hikes-div-stock-rises/?mod=barrons_msnhttp://online.barrons.com/article/BL-TB-8805.html? - PRNEWSWIRE: Microsoft Announces Share Repurchase Program & Increases Quarterly Dividend
EXTERNAL: http://news.moneycentral.msn.com/ticker/article.aspx?symbol=US:MSFT&feed=PR&date=20080922&id=9171007
MICROSOFT: http://www.microsoft.com/presspass/press/2008/sep08/09-22dividend.mspx
* And yes, that includes a certain search company with $2B in annual income and a monster market cap of $139B.
kurtsh
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