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Additionally e.g. I don't know WTF is this about. "plan to buy back as much as an extra USD 40 billion worth of its stock" - can anyone translate this marketing speech to plain english ?

they have a lot of cash and have decided that one way to spend it is to buy their own stock, up to about 40 billion.

Reducing the number of shares outstanding increases the per-share value of a company, so companies with a lot of cash and not a lot of business reasons to spend it will sometimes spend it on buying back shares.

Good explanation - but you would have thought they may have spend it on diversification.

I read an article a while back saying that with $40bn in cash - MS could qualify as a bank, and it's finance department would have to be larger than some investment houses just to manage it.

Couldn't they have bought someone like Northrop Grumman with that cash and got even further in to bed with the US Government?

Good explanation - but you would have thought they may have spend it on diversification

Yep, they could get into:
Operating Systems
Desktop applications
Server applications
Databases
Development tools
Computer peripherals
Anti-virus guff + security guff
Games consoles + Games
IT Consultancy
Online services
Mobile computing

I kinda think they're diverse enough.

They could have a crack at money-lending....

Yep, they could get into:
Operating Systems
Desktop applications
Server applications
Databases
Development tools
Computer peripherals
Anti-virus guff + security guff
Games consoles + Games
IT Consultancy
Online services
Mobile computing

I kinda think they're diverse enough.

They could have a crack at money-lending....


Yes... but that's all software

Look at someone like General Electric - *that* is diversification!

Yes... but that's all software

Computer peripherals
Games consoles + Games

... what?

I haven't looked at the Microsoft 10ks in a while, but not that long ago, they were making around 25% of their net income from their investments, so I'd say that they're pretty well diversified.

They had 40bn in the bank 4 years ago...it's closer to 100bn now and now doubt shareholders are screaming about this (which is why the started paying a dividend a while back as well). They have more cash reserves than any other non-financial institution in the entire world. And bear in mind that's just liquid cash, who knows how much they have when you include investments and whatnot.

Diversification isn't always a great thing for a stock, you end up with a company like Cendant where one division can be losing money and it makes beating the earnings estimates difficult. Regardless MSFT goes to great lengths to under-report revenue in order to stave off anti-trust lawsuits, and obtaining any company with leverage for it's products isn't in their best interest right now. Cisco did a buyback similar to this a while back although not on this scale and it was largely seen as a buyback of all the options and warrents that were created and exercised during and after the boom. I'm not sure this is much different, but it is good news for stock holders.

When you can't get investors to buy your stock it usually drops or stagnates. If you have enough cash on hand you can keep the price up by buying it back and holding it in the hope that the demand for it will go back up and you won't just be wasting your profits by buying it back.

If I don't understand this correctly then I will assume that Vista (or any other OS or tech) will come down from heaven with no corporate involvement. So then I won't have to think about who and what I'm supporting (or ripping off in the case of piracy.)

There's another reason to buyback your own stock: You can give it to employees in the form of stock options and/or stock grants. Deferred compensation is a vital part of how companies recruit and retain employees. MS is no different in that way.