Transitioning Microsoft announces US$40 billion share buyback
By Sophie Estienne, AFPNEW YORK--Microsoft announced a new US$40 billion share buyback on Tuesday as part of an effort by the transitioning U.S. tech giant to return more cash to stockholders.
September 19, 2013, 12:25 am TWN
The tech giant, which has seen its stock stagnate in recent years, also said it was increasing its dividend by 22 percent, to 28 cents a share.
The new share buyback comes on the heels of another share repurchase plan announced in 2008, which was set to expire on Sept. 30.
“These actions reflect a continued commitment to returning cash to our shareholders,” said Microsoft chief financial officer Amy Hood in a statement.
The move comes with Microsoft in transition, having announced the departure of chief executive Steve Ballmer within a year.
Microsoft, which is trying to refocus the company around “devices and services” after missing the transition to mobile computing, also recently announced it was buying the mobile phone division of Nokia.
The maker of Windows software had been the undisputed leader of the tech sector for years, but it has recently been overtaken in market value by Apple and Google.
Microsoft shares rose 0.59 percent to close at US$32.93. A buyback generally boosts the value of a stock by reducing the number of outstanding shares.
Keith Weiss, analyst at Morgan Stanley, said the news was a “modest” positive for Microsoft but noted that investors may be cautious because of the “struggling devices strategy.”
Citi analyst Walter Pritchard argued in a research note that “there is much more room for Microsoft to return more capital through dividend.”
Microsoft has more than US$70 billion in cash holdings, much of which is held overseas. Like Apple and some other tech firms, Microsoft has held off repatriating the cash, which could be subject to the top corporate tax rate of 35 percent.