Microsoft recently approved President Steve Ballmer to take on up to $40 billion in debt for stock buybacks. The company plans on taking advantage of the fiscal difficulties currently being experienced by the market to boost its dividends and profits. The company's quarterly dividends are being raised from 11 cents to 13 cents, an 18 percent increase; they will be made payable on December 11 to stockholders on record as of November 20.
The board approved this loan in wake of percentage rates sitting at around 2 percent after receiving the two highest credit scores available from Standard and Poor's Rating Services and Moody's Investors Service Inc. Short term loans in the software and technology industry continue despite other market sectors feeling an economic pinch. This buyback plan is the second $40 billion buyback by Microsoft in the last 5 years.
The board approved this loan in wake of percentage rates sitting at around 2 percent after receiving the two highest credit scores available from Standard and Poor's Rating Services and Moody's Investors Service Inc. Short term loans in the software and technology industry continue despite other market sectors feeling an economic pinch. This buyback plan is the second $40 billion buyback by Microsoft in the last 5 years.
This is the first time the company plans on taking on a debt, although they were previously expecting to take out a similar ($47 billion) loan for the expected acquisition of Yahoo, the deal fell through prior to finalization and no debt was accrued.
Since the market is so topsy-turvy, it makes sense for a large corporation like Microsoft, with nearly $24 billion in the bank to make this type of move. They'll own more of their company while raising its value. The stockholders are happy, obviously they are happy and everyone wins. It will allow future leveraging for other such buyouts (both of stock and competitors), financing and expansion globally and at home. This isn't even to mention the enormous amount of marketing the company is doing right now to reengineer its brand recognition.
The "I'm a P.C."/"Life without walls" campaign has already kicked off. By the time their buyback has expired in 2013, the value of an individual stock should increase from the current $24.50 (which is already the result of increase). Microsoft in effect, has launched an all out television, viral and internet marketing campaign to keep growth alive, spending money during a time when its traditionally difficult to do so.
Since the market is so topsy-turvy, it makes sense for a large corporation like Microsoft, with nearly $24 billion in the bank to make this type of move. They'll own more of their company while raising its value. The stockholders are happy, obviously they are happy and everyone wins. It will allow future leveraging for other such buyouts (both of stock and competitors), financing and expansion globally and at home. This isn't even to mention the enormous amount of marketing the company is doing right now to reengineer its brand recognition.
The "I'm a P.C."/"Life without walls" campaign has already kicked off. By the time their buyback has expired in 2013, the value of an individual stock should increase from the current $24.50 (which is already the result of increase). Microsoft in effect, has launched an all out television, viral and internet marketing campaign to keep growth alive, spending money during a time when its traditionally difficult to do so.