Slashdot Mirror
Microsoft To Buy Back $40bn of Its Shares
phantomflanflinger writes "As you may have heard already, Microsoft have announced their intentions to buy back $40 billion in stock from their investors, in the biggest single buy-back plan in business history.
The announcement has given Microsoft shares a small gain but they still stand significantly below their level in January — before Microsoft's unsolicited bid for Yahoo!. The announcement of the plan has also created new speculation about a now-or-never deal with Yahoo!."
Isn't that almost all of their spare cash?
Microsoft has made a lot of money off of OS and office products but hasn't been equally successful with the side ventures. Vista has been such a tremendous flop, I wonder what their internal projections are looking like for the next five years. I think it's arguable to say that the advances they've made in other segments stem directly from their control of the desktop. If they lose the desktop battle, will their products remain compelling enough to hold onto the beachheads in the server room, in the development shops? I doubt they'll dry up and blow away overnight but it looks like there's a serious possibility of a reduced relevance in the future.
Kwisatz Haderach
Sell the spice to CHOAM
This Mahdi took Shaddam's Throne
This is probably better than losing the whole pile bit by bit to enterprising attorneys and their clever lawsuits AND with the markets being so depressed right now and the number of good alternative investments diminished it probably does make sense to recapture some of those outstanding shares while the price is still attractive.
All this means is that debt is a cheaper and more risk-averse way for them to finance their crappy commercials and world takeover plans. In this market, you can see billions in capital evaporate in minutes. Not to side with Microsoft, but it was a good move as the market is about to take a dump.
Mark cuban recently wrote a post about the correlation between shares Buyback and Collapse of Financial powerhouse like AIG-Lehman and ML . I hope MSFT can avoid that fate. http://blogmaverick.com/2008/09/16/the-aig-lehman-merrill-lynch-link/
somethings are best left unsaid , I am one of those things
Also note that by doing this Microsoft isn't required to use all of that $40bn either. If they see something more attractive they can always shift the money around later.
Also note that just sitting on a ridiculous amount of money (like the ~$30bn Microsoft has) is a terrible financial move. The board is right to do something with that money, and if they can't get Yahoo (all or part) with it, then best to do something worthwhile rather than sit on their hands and hope something good comes along
Microsoft can loose a lot of money quickly being in the equity markets, especially when the markets move +/- 5% a day. Their CFO concluded that going forward, it will be cheaper and less risky for them to raise new money with bonds, rather than stocks. This is not a sign that they're in trouble, rather a move to hedge against a sharp decline in the overall stock market.
Consider this move in the context of the financial system meltdown, with US Treasury bonds at 40 & 50-year lows.
The *officially stated* purpose of this action is boosting MS share values. But they are almost completely going to deplete their entire cash reserve to buy back shares. From now on, they'll use debt -- bonds -- to finance expansion and development.
They're bond rating is "AAA", which only 5 or 6 other companies and the government have.
What's interesting is that with lending seized-up around the world, we know that money creation is basically halted. So, I wonder if there wasn't a little pressure on Microsoft to convert to a debt-financed operation & flood the market with new, high-quality debt, thus creating new money.
Listen to the words of the oracle of Omaha, Warren Buffett, from the Berkshire-Hathaway 2005 Annual report:
Soylent Green is peoplicious!
Once I read an insightful article that pointed out how a stock buyback is the sign of a dying company.
Why would it be that, you ask?
Because a company who can't find a better place to invest their cash in expanding themselves into new areas (as opposed to merely buying back their stock) clearly has no vision or wish to be anything more than they already are.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
"Vista has been such a tremendous flop"
Do you have any idea what an idiot making such an inane assertion makes you look like?
The smart and observant kind of idiot?
By any reasonable measure, Vista has been a tremendous flop. Just look at the kind of marketing money Microsoft is having to spend to convince people it isn't.
1. Requires insanely beefy hardware while offering the average user little more functionality than XP
2. Launched prematurely, too many bugs to count
3. Lies and falsehoods about hardware requirements, too many machines sold as "vista capable" that obviously weren't.
4. First service pack in development before the OS even shipped.
5. Microsoft forced to unveil Windows 7 years early to convince people that better is coming.
6. The name Vista is such poison that Microsoft had to base an entire ad campaign around the whole Mojave thing, getting people to try the OS without the Vista name because they knew just hearing "Vista" puts a bad taste in the consumer's mouth.
Vista represents what, six years of development, $12 billion? And all that additional DRM crap is thrown in to reduce your system's performance.
By any rational, unbiased inspection of the facts, Vista is a colossal failure.
Kwisatz Haderach
Sell the spice to CHOAM
This Mahdi took Shaddam's Throne
Comment removed based on user account deletion