

Microsoft to Buy Back $40 Billion of Stock - ComputerGuru
http://www.paidcontent.org/entry/419-microsoft-authorizes-a-massive-40-billion-buyback-ups-dividend/

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andreyf
From the little I know about this kind of stuff this makes a lot of sense...
could this let them innovate/take risks more, instead of being tied to stock
holder's demands of sticking tightly to financial forecasts?

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jcl
From what little _I_ know, I'd expect the opposite. Their war chest is what
allowed them to run exploratory divisions at a loss, like the XBox and Zune
groups.

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netcan
They are not running those out of the bank balance. They're running them out
of the profits of the profitable businesses, which are still very profitable.

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briansmith
If they have excess cash that they have no clue how to spend, they should
return it to investors via a dividend.

See <http://blogmaverick.com/2008/09/08/talking-stocks-and-money/>

Note the section "Microsoft, Dividends and Stock Buybacks," originally written
four years ago.

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icey
Almost like the article that was linked. The full title of the article is:
"Microsoft Authorizes A Big $40 Billion Buyback; Ups Dividend"

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briansmith
They only increased the quarterly divident by $0.02 per share. The 2004
special one-time dividend was $3.00 per share. Without the buyback, Micosoft
could repeat the $3.00 per share dividend with money to spare.

Granted, this is an over-simplification of what is going on. Microsoft
authorized a $40 billion buyback but they probably won't buy back all $40
billion. This has the effect of inflating the price of shares beyond their
true value.

The main people who win are here are the ones that would have used the
dividend to buy more Microsoft shares (since a buyback effectively is a way of
the company forcing you to buy more shares with your dividend, but with lower
taxation and brokerage fees), and the ones that are were going to sell their
Microsoft shares anyway.

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tocomment
Would it be worth a group of hedge funds buying say 50% of MS and forcing it
to pay all it's spare cash as dividends? What would the return on investment
be on this?

(Let's assume it's worthless for MS to re-invest any money in R&D etc. Assume
they'll profitably sell Office and windows for another 10 years as they slowly
die.)

