Microsoft Replaces $40 Billion Share Buyback Program, Offers Dividend Increase
September 17, 2013 11:26 AM
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Microsoft is upping the quarterly dividend from $0.23 to $0.28
Microsoft is investing its cash into its own stock through a new share buyback program, and has also announced a dividend increase.
Microsoft introduced a new $40 billion buyback program, which is replacing the previous program that expires September 2013. While the previous and new buyback programs are both set at $40 billion, the new one doesn't have an expiration date.
This looks great for Microsoft because it shows that it wants to invest its own cash into its own stock.
In addition to the buyback program, Microsoft is upping the quarterly dividend from $0.23 to $0.28, which is a 22 percent increase over that of the previous quarter. According to Microsoft, the dividend is payable December 12, 2013 to shareholders "of record" on November 21, 2013.
“These actions reflect a continued commitment to returning cash to our shareholders,” said Amy Hood, chief financial officer of Microsoft.
Microsoft has been particularly busy this year trying to turn things around after a failed Surface launch, a lack of enthusiasm for Windows Phone and complaints about Windows 8. The company is currently undergoing a restructuring process, where CEO Steve Ballmer will be out within the next year and devices like Windows Phone, PC and Xbox One will become more unified for a more fluid user experience.
Microsoft is attempting to stay competitive with new efforts like
buying Nokia's devices and services unit
for $7.2 billion and holding a
new Surface 2.0 event September 23
-- which will hopefully muster up more enthusiasm than the previous generation.
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RE: Hardly laudable
9/17/2013 5:20:00 PM
It more means that they're generating more cash than they can effectively deploy. Generally its better that companies return the cash to shareholders than do things like large acquisitions (remember Microsoft buying a bunch of cable company assets at the top of the market?) It remains to be seen whether Skype and Nokia purchases will be written down substantially like virtually every other large Microsoft purchase, but Microsoft is grotesquely profitable, generates more money than it can use, and should return it to its shareholders.
RE: Hardly laudable
9/18/2013 3:19:00 PM
That assumes they are using some of their own cash hoard to buy back shares, versus borrowing the money (leverage) to do so given how dirt cheap rates are at the moment. If they do borrow instead of dip into their treasury, your argument becomes invalid.
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