Microsoft on Thursday reported earnings that were just ahead of analysts’ expectations, as the company announced a plan to buy back as much as an extra USD 40 billion worth of its stock. The software maker said it would buy back USD 20 billion through a tender offer set to be completed on Aug. 17. The company said that its board of directors has also authorized the company to buy back up to USD 20 billion worth of stock through June 2011. The company said it has completed the USD 30 billion stock buyback announced two years ago.
If I understand correctly, this website is about operating systems, tech, and related topics…
But this is corporate news, not tech…
Or, is it because it’s Microsoft?
Edited 2006-07-21 07:13
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.
As far as I understand, share holders can dictate their wishes to MS and control it’s development directions. Now they’ll be their own masters. I hope it will be for good…
Naaah… dream again. Control in one hands never leads to good. Especially MS.
LOL Rayz… i was about to say that same thing hehe… dont forget music players as well now
The company is very wide spread (not to mention if you go into their research departments) it’s just everyone likes to focus only on the first in your list OS’s … the fact is though they are all over the place
The greedy bastards released about 12 billion shares into the nazdaq mania and got very rich. Now nobody wants to buy their over-issued stock, so they have to buy 2 billion shares themselves. They should do some reverse splits to get shares-out number back to about 3 billion, then it might be less of a beached whale on Wall Street.
Edited 2006-07-21 18:17
that this is a buyout over four years, and that means its on par with the rate at which Microsoft has been buying its stock back for the past few years.
To stimulate the stock P/E ratio and reduce the over splitting that went on at Microsoft.
The stock has been stuck in the $20s for several years because it is over extended in shares.