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Forums - Microsoft - Microsoft To Buy Back $40bn of Its Shares

gnawkz on 24 September 2008

Nope the buyback is for several reason.

#1 Microsoft is one of the 6 companies in the world to be rate AAA debt by all 3 rating services.
#2 Debt can be used to lower their tax bill
#3 When you buy the stock cheap, you can use stock later on for buying up other companies instead of cash.
#4 of course as some of you mentioned to raise the P/E
#5 increase demand
#6 $40 Billion > US $23 Billion video game market, this is chump change to them.



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cwbys21 on 24 September 2008
heruamon said:
cwbys21 said:
The BBC article states that it will be drawn out until 2013, so it isn't as big of news as it is over 5 years, or 5bn per year. But with stocks dropping 30% according to the article, the board members won't be happy because their value dropped 30% as they are the biggest share holders. Doing this will inflate stock value because it creates demand and there will be less shares going around so everybody is now worth more money.

Dude, I don't personally know you, and I'm not saying you're ignorant, but the comment above is very ignorant, in the truest sense of the word.  A $40 bln stock buyback over 5 years is massive, by any measure.  Consider the market cap for Sony and Nintendo, and look at M$ commitment to reassure large sharholders that the company is in it to deliver.  In 2013, people holding M$ will be very happy...

 

It is a big buy back to be sure, but it isn't like they are going out right now and buying every free stock and when 40 billion dollars are spent they stop.  The BBC article reports that HP autorized an 8 billion dollar buy back and have already spent 5 billion of it.  So for companies with as much money as they have seems really big to us, but not really to them.  So is it that big a deal if HP has also spent 5 billion dollars when they don't rake in the same kind of money that Microsoft does?



God hates console fanboys.

heruamon on 24 September 2008
cwbys21 said:
heruamon said:
cwbys21 said:
The BBC article states that it will be drawn out until 2013, so it isn't as big of news as it is over 5 years, or 5bn per year. But with stocks dropping 30% according to the article, the board members won't be happy because their value dropped 30% as they are the biggest share holders. Doing this will inflate stock value because it creates demand and there will be less shares going around so everybody is now worth more money.

Dude, I don't personally know you, and I'm not saying you're ignorant, but the comment above is very ignorant, in the truest sense of the word.  A $40 bln stock buyback over 5 years is massive, by any measure.  Consider the market cap for Sony and Nintendo, and look at M$ commitment to reassure large sharholders that the company is in it to deliver.  In 2013, people holding M$ will be very happy...

 

It is a big buy back to be sure, but it isn't like they are going out right now and buying every free stock and when 40 billion dollars are spent they stop.  The BBC article reports that HP autorized an 8 billion dollar buy back and have already spent 5 billion of it.  So for companies with as much money as they have seems really big to us, but not really to them.  So is it that big a deal if HP has also spent 5 billion dollars when they don't rake in the same kind of money that Microsoft does?

While M$ hasn't spent the money, they have obligated the funds to this goal, which is really a strong statement, in of itself.  Since to renege would have seriously damaging reprecussions, with the added effect of eroding confidence in the company's ability to follow thru.  I'm not sure if HP borrowed to buyback, as some companies do that (Marvel did for example), and a 8 bln buyback is big, but even if it was Exxon...this would be HUGE.

 



"...You can't kill ideas with a sword, and you can't sink belief structures with a broadside. You defeat them by making them change..."

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