Microsoft To Buy Back $40bn of Its Shares 345
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!."
BUY BUY BUY! (Score:4, Funny)
Re: (Score:2, Funny)
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Re:BUY BUY BUY! (Score:5, Informative)
Seriously though, my MacBook Pro is one of the best Windows machines I've ever used, simply because the hardware support is dead simple. The drivers are solid, and I can download them from one place.
Re: (Score:3, Insightful)
Macs may be the best Windows PC but all installing Windows does is install crapware. After buying and using Windows PCs for more than 10 years I finally got too aggravated with them and bought the MacBook Pro I'm typing this on last year.
So you replaced one proprietary system with vendor lock-in with another?
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"Desktop computers and office business model from the 80s won't survive a recession/depression", the same way they didn't survive the dot com crash, or Wall St crash, right?
"Advertising will" - advertising for what? All the businesses that aren't surviving the recession/depression?
You live a sad sad life, twitter.
Re:BUY BUY BUY! (Score:5, Funny)
It's funny how you couldn't just say "BSD" because then you'd be including Mac OS X too.
$40,000,000,000 (Score:5, Interesting)
Isn't that almost all of their spare cash?
Re:$40,000,000,000 (Score:5, Informative)
Not really. They allocate that much over the length of the project and spend it over a period of a few years.
This is generally viewed as the company believing they are under-valued. It's a great time to "buy low" so they can sell them later at a higher price and keep the spread.
Also generally speaking, there's a bit of wealth destruction going on when a company does this because the premium for shares rises over the course of the buy-back.
It's also worth noting they've increased their dividend so investors are getting impatient with all of the cash they have laying about a couple of different ways.
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So my small bit of M$ stock should go up in value, yes?
When I bought it, it was doubling and splitting regularly, and was a good investment; along came XP and activation and M$'s stock went flat and has stayed that way ever since. I'd like to see it earn its keep again for a while before I sell it.
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So my small bit of M$ stock should go up in value, yes?
Not necessarily. You'll end up with a larger slice of a smaller pie. Your stock changes value only if "the market" decides the buyback is a particularly good or bad idea.
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I don't play the market. I've had the same stocks for a long time -- some for over 35 years (mostly stuff like Exxon and Philip-Morris). Bought a small chunk of M$ about 10-12 years ago, but it's not a major investment by any stretch. And 2% per split isn't a bad cost to pay when your money is being doubled every 6 months, as used to be the case with M$. I don't think it will ever do that again, but I'd like to see it up in its midrange before I'd consider selling it (if I do so). I've observed that it's ne
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Yes... well those splits definitely destroy value.
Over an extended period stock splits increase market value. Say X's stock sells for $100 then does a 2 for 1 split. Within months the sales price may be $60, a $20 increase.
Buy-backs are also a bit of a value destructor too so don't bank on it.
Buy-backs are an attempt to keep the value in a stock. When a corporation announces buy-back, if I were a stockholder I'd be worried the board is expecting hard tymes so I may unload the shares I own. There is one
Re:$40,000,000,000 (Score:4, Insightful)
It's also putting all your eggs in one basket,
Yeah, but MS isn't a mutual fund - they should concentrate on making good (or at least profitable) products and not worry about investing. As a stockholder, YOU should be the one diversifying - not MS. And the simpler they keep their business plan, the easier that is for you.
Re:$40,000,000,000 (Score:5, Informative)
Re:$40,000,000,000 (Score:5, Insightful)
No, spending your capital to buy back stock indicates that you have no ideas for using that capital to build your business, and are instead converting it into value for shareholders (the opposite of diluting your stock by creating new shares).
Essentially, Microsoft is doing what Dell thought Apple should have done ten years ago: shut things down and give the money back to shareholders.
If Microsoft had any implementable ideas, it would be using that $40 billion to make more money, just like Apple has used its capital to rapidly expand its business while earning more cash on hand. Apple isn't buying back its stock because it thinks it can make more for investors building new business than it can by simply giving the money back.
Google's Android Platform Faces Five Tough Obstacles [roughlydrafted.com]
Re:$40,000,000,000 (Score:5, Informative)
I think it's much more likely that Microsoft has implementable ideas, they just don't need all of that $40bn to implement them. They're absolutely rolling in cash. They can easily implement all the good ideas they have, many of the bad ideas and many of the pie-in-the-sky ideas and still have $40bn spare. I imagine it must actually be pretty hard to spend $40bn and make a profit with the resulting business. No tech industry in the history of the world cost anything like that much to set up. They'd have to burn money at XBox rates on half a dozen projects and I just don't think there are that many markets big enough to justify that kind of investment.
Re:$40,000,000,000 (Score:5, Insightful)
Pundits like to point out that Apple has 5% of the PC market. Yet Apple is sitting on $20 billion in cash.
No, Apple isn't blowing billions on products that don't work, it's turning that capital over to earn more.
Now, name implementable ideas Microsoft has rolled out lately. There's certainly nothing at all in consumer electronics. It only barely started breaking even on Xbox sales after having blow billions to develop it, and the 360 is now reaching its end of life and sales are rapidly tapering off. That's Microsoft's BIG SUCCESS! Everything else is in flames: Windows Mobile, Windows Media DRM, Zune, and every other product it has trotted out at CES over the last decade.
Re:$40,000,000,000 (Score:5, Insightful)
Microsoft spins its R&D into an "Other" category in its earning statements, and that segment blows through crazy billions of dollars. The problem is that nothing tangible results from all of that spending.
Apple has $20 billion, which for a company that earns haft as much revenue and a third the profits, is proportional to Microsoft. The difference is that Apple is growing and building new products and businesses, while Microsoft is servicing the same three monopolies it had ten years ago: Windows, Office, and Servers. Outside of those high profit cash cows, Microsoft hasn't done a damn thing in ten years. All three are now under attack.
Re:$40,000,000,000 (Score:5, Informative)
Not necessarily.
A significant portion of the salaries Microsoft pays its employees is in the form of stock options rather than cash. Compared to the rest of the industry, Microsoft employees are on mediocre rates. The way it attracts and retains employees is stock options.
It's a good technique because it saves a substantial amount of tax, but the downside is that the constant issuing of shares to employees dilutes the value held by existing shareholders. When the company is growing fast, that's fine, but now there's a downturn, a lot of threats and a whole slew of new companies trying to attract employees.
MS can not afford a major drop in the value of their shares, so they're pre-emptively propping them up with their spare cash instead of issueing the cash as dividends or reinvesting. This isn't a sign of a company in good shape. This is Microsoft girding their loins and settling in for a siege.
Re:$40,000,000,000 (Score:5, Insightful)
Please do not tell moderators what to do.
If you disagree with a poster, you should just respond to the post and explain your point of view.
This is a discussion forum, for crying out loud!
Re:$40,000,000,000 (Score:5, Funny)
Please do not tell moderators what to do.
Mod parent up!
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Nice tone.
You don't think MS is diversified? Are you serious? They have 90% of the consumer PC market, nearly 100% of the business PC market, roughly half of the server market, about 1/3 of the video game console market, and a substantial chunk of the smart phone and PDA market. They have nearly 100% of the office software market, and many of their other products are successful as well.
I'm not saying that they shouldn't keep spending money on R&D, but I think they have that covered. As a big and mature
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Insightful? 8.5% of Microsoft's income in 2007 was from investments.
Nice snark. How can you be so sarcastic when you are making my point for me? Way too much of their income is from non-core business activity. They seem to agree, and are buying back stock rather than investing the cash some other way.
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If you buy MS stock, you can't do much to increase its worth. But MS, they have the means to improve its value.
Re:$40,000,000,000 (Score:5, Funny)
so therefore.... they should invest that $40bn in something like Linux, Open Document Format, or Google...
wow.. that chair nearly hit me, where did that come from?
right... (Score:2, Insightful)
And we should trust you on your opinion about 'm$' because... you post things like these [slashdot.org] and have like 20 accounts [slashdot.org]. Right?
I see you have an active journal [slashdot.org] and write mostly about all the supposed bad things happening with Microsoft. Did you perchance write a long JE about how they turned a record profit last fiscal year? No, you probably only wrote one about how their revenue declined %20 in one quarter. It's always fun to look at the small picture when it suits you, isn't it?
I'm not even going to bother exp
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It means that the company can't think of anything better to do with it's cash than put it into stock, which is usually doing very poorly.
If they can't come up with better investments/research/technologies to put their money in, then I'd avoid the stock like the plague.
That's the reason growing, healthy companies rarely do buybacks.
Re:$40,000,000,000 (Score:5, Insightful)
If I were a Microsoft shareholder, I'd much rather see excess cash returned to the owners (shareholders) than invested in unrelated things (like sub-prime mortgages!) in which Microsoft has no need for expertise except to invest their spare cash. In this case, I'd rather diversify my own portfolio through pure plays rather than through muddled investments in what is supposedly a software company but which in fact is more of an investment company. So, I'd like the cash returned to me - the most obvious ways are through dividends or increased stock valuation via buybacks.
Obviously, if the buyback leaves Microsoft cash starved so they later had to borrow money for new development and operations, the buyback would likely (although, not necessarily) have been a Bad Idea. However, if this were to happen, the problem would have been that the board was stupid, not that a buyback authorization was a bad idea since I believe this buyback is at the discretion of the board and they may not buy back a single share.
A buyback can be an effective way to return tax advantaged assets to investors. First, there have been many times when what are now called "qualified dividends" were taxed at ordinary income levels while capital gains were taxed at lower levels - and "tax reform" seems much more likely to repeal preferential tax treatment of "qualified dividends" while retaining some preferential treatment for capital gains than doing the inverse - so it's best to bet on capital gains rather than qualified dividends. Second, dividends are taxed in the year they are paid out - so in order for a long term investor to compound gains, they would have to infuse more outside cash with the "pay dividends" strategy (to cover the taxes paid prematurely on dividends) than to simply "buy and hold" a block of stock for many years and let it increase in value, in part, as a result of buy back rather than dividend payments.
Re:$40,000,000,000 (Score:5, Interesting)
1. Announce plan to buy Yahoo!
2. Watch stock plummet
3. Buy back $40bn
4. Profit. Yahoo!
Re:$40,000,000,000 (Score:4, Informative)
If they blew it all right now, it'd be 2x their available cash.
OTOH, they'll more likely spread it over a few years, and skim it off the top of inbound money.
In fact, IIRC they just got done with something similar, and that this is just pretty much a new iteration of that (which probably explains why Wall Street collectively yawned in its direction yesterday).
Why do companies do this? (Score:3, Interesting)
Doesn't make sense to me, come on you stockmarket guys, explain the rationale.
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Re:Why do companies do this? (Score:5, Informative)
Re:Why do companies do this? (Score:5, Funny)
Re:Why do companies do this? (Score:5, Insightful)
You're a car manufacturer. You buy a bunch of cars when they're not very valuable, particularly old used cars on the secondary market. You destroy these cars in mass. This in the long term creates better higher demand (thus price/value) for newly-produced cars in the future, because there are overall fewer cars in circulation, particularly old clunkers that people might otherwise use instead of getting a new car.
Re:Why do companies do this? (Score:5, Funny)
Re:Why do companies do this? (Score:4, Funny)
I understand cars and would love to help you out, but, unfortunately, I don't understand analogies. Are they anything like cars?
Re:Why do companies do this? (Score:4, Interesting)
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
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Also note that just sitting on a ridiculous amount of money (like the ~$30bn Microsoft has) is a terrible financial move
Not necessarily true, it depends on the rate of inflation. In times of economic growth then money you keep as 'cash' is earning interest (so increasing in value) and is highly liquid so can be rapidly transformed into other forms of asset, allowing the company to take advantage of new opportunities easily. Since money is backed by the government, it is much less of a risk than most stock investments. In times of economic slowdown or (related) high inflation you are unlikely to see much return - the money
Thanks Ubergrendle (Score:2)
However, $40bn is an awful lot of moolah, couldn't they improve shareholder value in some other more productive, or revenue generating way?
Comment removed (Score:5, Interesting)
Better for shareholders than a dividend (Score:5, Informative)
Buybacks are more tax efficient. US shareholders would each be taxed at the dividend income rate for the dividend payment. By doing a buyback, shareholders who would have preferred a dividend can sell a portion of their shares, simulating a dividend, and then only paying the capital gains tax, which is typically lower than the tax for ordinary income or dividends.
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Buybacks are more tax efficient
That was once true, but is no longer the case. Since the Bush tax cuts, qualified dividends and capital gains are both taxed at 15%. Dividends and Buyback are also bought with after corporate income tax dollars, so the corporate income tax treatment is the same.
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This pulls those stocks off the market, reducing the number of stockholders (and the votes that come with them). And hopefully if they need cash in the future, they could sell the stock for a higher price.
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Its a payout to current investors. Buy 1B shares at $40, and see the price instantly increase as buying it at anything under 40 is now a steal. The real question is why not just issue dividends.
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Taxes.. and they market view.. and the cost of doingit
if they where to issue dividens.. they would have to cut checks.. alot of them.. to alot of people.. this costs money. a good amount.. then the people get them would have to pay taxes on them (and ms would have to send tax forms for them) all of this transfering of money ot 9b shares is expensive.
if they buy back .. then they only have to deal with the paperwork and movement of mony for 1b or less shares. then their stock price will also go up as th
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There are only two good reasons I can think of to buy back stock:
So it's pretty obvious. They're afraid their stock is going to collapse to the point that they can be bought by SGI. :-D
In other words, I haven't the slightest idea what is going through their heads, but then again, computer people have been wondering what Microsoft could possibly ha
Re:Why do companies do this? (Score:5, Informative)
The third reason is to have shares on hand to re-issue as options to current executives and employees without diluting the existing share holders.
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Why not spend $40bn on other stock.
Doesn't make sense to me, come on you stockmarket guys, explain the rationale.
Because they want to raise the price of the Microsoft stock, not someone else's.
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I can think of two reasons:
- They buy the stocks now when they are low, because hey think the stock will go up and then they can sell them with profit.
- They buy the stocks to get the price up (and then sell them with profit).
Normally the stocks go up, down, up, down, etc. so if you buy when they have gone down, you will gain money later when they go up. But this isn't always the case. E.g. if you bought SCO stocks, you probably lost a lot.
Personally I would not risk my money on their shares. Firefox is eat
Re:Why do companies do this? (Score:5, Informative)
Overall, yes, Microsoft is declining, but their core windows products have declined by less than 10%. It's a little early to be writing their eulogy.
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But Linux has only been around for 16 years; I promise you, next year will finally be the year of Linux on the desktop!
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yeah, but to date MS products have been better than the alternatives (linux fanbois regardless).
However... fast forward to today. Linux is not just as good (at least, lets not get into arguments here), but its making big inroads into the server marketplace - Oracle sells Oracle, and you get a free OS to run it on (redhat^H^H^H^H^H^H'Unbreakable' linux). VMware sells you the best enterprise virtualisation product... that runs on Linux (RedH^H^H^H ESX).
The desktop is getting close to being good enough to use
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This is effectively a dividend increase. They think the rate of return on other companies is not good enough at the moment, and the cash is just sitting there. So they'll return it back to shareholders.
Consequences: lower float -> higher earnings per share.
Re:Why do companies do this? (Score:5, Informative)
Doesn't make sense to me, come on you stockmarket guys, explain the rationale.
It reduces the number outstanding shares. This good on several points:
1) It counters stock dilution caused from issuing stock options, and previous financings, by reducing the shares outstanding adds shareholder value. (The remaining shares each represent more of the company than they did before.)
2) It improves certain financial markers like 'earnings per share' (and others) because with fewer shares, the EPS and other figures look better. (One can argue this is just a sleight-of-hand to make earnings look better than it is, but the counter argument is that the lower EPS isn't representative of the companies actual strength, because it doesn't account for the 40 billion just sitting there...)
3) A buyback is also an indirect way of distributing value to shareholders. (The direct option is dividends); a buyback by creating a demand and reducing the supply for the shares tends to bolster the prices, providing value to shareholders.
4) MS is sitting on pile of cash and not doing anything with it, that's not in the shareholders best interests, so they should do -something- with it. If the shares are depressed, due to, for example, an unrelated global credit crisis, then a buyback may represent best investment of that money for the shareholders.
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Basically it means that, as a company, you are telling your investors that you cannot really think of a more productive way of spending the money you have. Buying back your company is like giving money back to investors, with the added bonus (from the company side) that you can get it back with no ifs or buts. Also have the advantage of not having to be ever really made. You can make the announcement, and then after a year say that you changed your mind, or the markets are not favorable anymore. It's great.
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Re:Why do companies do this? (Score:5, Interesting)
Listen to the words of the oracle of Omaha, Warren Buffett, from the Berkshire-Hathaway 2005 Annual report:
I'm going with "never" (Score:3, Funny)
Can we vote on this?
It's funny, they've been having a lot of trouble (Score:4, Interesting)
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.
Re:It's funny, they've been having a lot of troubl (Score:5, Insightful)
in the last 15 years, Microsoft has lost over $10 billion on Windows CE/PocketPC/Windows Mobile alone. The Xbox venture is probably already around $20 billion and yes, they've lost billions on everything outside of their ability to leverage the desktop OS monopoly. IMO
I figure this is more to keep executives happy and employees happy as they have already seen 30% of their retirement vaporize this year alone.
As far as Vista goes, it is forced onto OEM PCs so they get paid just like they did when Windows XP was preloaded. They might have changed the payment some because of different version packages but it's preload $$$ that keep flowing to their banks and only OEMs going away from Windows is going to slow that down. That's taking a while but gaining momentum every day.
LoB
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"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
Re:Vista Sales (Score:5, Insightful)
1. It doesn't require anything my 4 year old laptop doesn't have. 2ghz pentium M, 1gig of ram.
2. The bugs are greatly exagerated the only relavent one: slow file operations has been fixed since sp1.
3. Um I've run vista just fine on computers NOT marked as vista capable. And this is the same as #1 so you're just inflating your numbers.
4. Service Packs are always in development. THIS IS A GOOD THING.
5. And yet Windows 7 is still a ways down the road.
6. But the ad campaign proved what it was meant to. The majority of the trash talk about vista is just trash talk.
Extra: Vista has no "DRM crap" it only has support of certain DRM functionalities so that its now POSSIBLE for you to watch DRM protected content.
By any rational, unbiased inspection of the facts, your post is a colossal FUD.
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3. Um I've run vista just fine on computers NOT marked as vista capable. And this is the same as #1 so you're just inflating your numbers.
The fraudulent "Vista Capable" is well documented [google.com]. It wasn't just about beefy hardware, it was also about poorly supported device drivers:
No Slashdotter would admit to owning any... (Score:2)
Or would you?
Re: (Score:2)
Sure I would, especially if I'd just sold it back.
Re:No Slashdotter would admit to owning any... (Score:5, Funny)
That's fifteen lashes with a wet mouse cord, and a nursing of an orphaned baby-penguin for 6 months. Report to room 2011 down the hall to receive the lashes, and pick up the penguin on your way out by reception.
Re:No Slashdotter would admit to owning any... (Score:4, Funny)
> and a nursing of an orphaned baby-penguin for 6 months.
Man, I hate that. It makes my nipples hurt.
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Some of us hope to eventually reach a majority shareholder position and liquidate the company.
*wakes up*
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Probably Better than Losing it Bit by Bit (Score:4, Interesting)
What does that mean? (Score:2)
That doesn't make sense to me. Don't the stock owners own the company? What does it mean when you own shares of a company that owns shares of its company. Isn't it redundant?
Disclaimer: I got A's in all my CS classes and B's and C's in my Economics / Business classes.
Re:What does that mean? (Score:4, Informative)
A better plan (Score:5, Funny)
I think Microsoft should buy up all the mortgage-backed securities it can get its hands on.
That way I won't be forced to buy them (with my taxes).
Debt is cheaper (Score:4, Interesting)
Could someone explain to me... (Score:2)
Re:Could someone explain to me... (Score:5, Interesting)
Re:Could someone explain to me... (Score:5, Informative)
The short version: By offering to buy their own stock, they are spending their pile of cash to raise the value of the other shares. That raises the stock price at the cost of the cash they spent. It also signals to investors that this stock is safer to buy, because if it starts to drop the company will step in and buy from them.
Read more about it: http://en.wikipedia.org/wiki/Stock_buyback [wikipedia.org]
Speaking as a shareholder: (Score:3, Interesting)
I am happy they are doing this. I wish they would buy back more stock instead of crapping around with Yahoo, and conducting R&D that they will never commercialize. Also they raised the dividend from its current crappy l1 cents to 13 cents which is still crappy. They should raise it to at least 40 cents.
Mark Cuban was right ?? (Score:4, Interesting)
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I hope MSFT can avoid that fate.
I don't, with exception to the possible impact it could have on the economy.
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1929
Who owns Microsoft? (Score:2, Informative)
Composite government funds own 82% of Microsoft according to this website. [cafr1.com]
This file shows that the New York retirement investment fund had over $1,000,000,000 in MS stock in 2006. [cafr1.com]
Add up every other state, county and city that owns Microsoft stock and it could really pile up.
Could it be that our own Government over the last several decades has been promoting to those fortune 500 companies, of which Government owns most through Bond - Loan investment / stock ownership [EXAMPLES: 82% stock ownership of Microsoft Corporation, Disney 61%, AOL - Time Warner 58%, EXXON 72%] to manufacture abroad so that Government would realize greater returns on their investments at the Peoples of the USA's expense in jobs and wealth retention.
-cafr1.com
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Given the implausibility of that figure, I'd prefer to see it confirmed by a less psychotic-looking source.
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I couldn't resist looking myself ... the Google Finance link in the story here clams 60% total institutional ownership. And the billion dollars the NY pension owns doesn't look that large when you remember that the story here is the company's buying back $40B worth. You might want to go elsewhere for your investment advice.
Ahh, and now we see the REAL reason why... (Score:2, Insightful)
Now we see the REAL reason why the government failed to follow through on the punishment phase of MS's antitrust/monopoly furtherance conviction.
Hell, in light of that one, even the most liberal left winger would suspend MS's punishment and spin up a story to cover that one.
Shoulda bought AAPL or GOOG instead (Score:2)
1. Buy $40B worth of stock
2. Wait for it to grow
3. Sell it for profit
4. Ruin AAPL/GOOG share price by a sudden influx of stock.
5. Lather, rinse, repeat. You also get voting rights as a major shareholder.
Re: (Score:2)
I think MS owns as much of Apple's stock as the DOJ will let them.
"It's Now Or Never" (Score:2)
It's now or never,
our bid is right.
Yahoo, you're sinking
'neath Google's might.
We're desperate and it's geeeeeetting late.
Icahn's our puppet and this chaaaaaaaaair won't wait.
http://www.youtube.com/watch?v=lVMy0PFr8no [youtube.com]
It's about the issuance of high-quality debt (Score:5, Interesting)
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.
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They're bond rating is "AAA"
Yes, but part of the reason for that was the large amount of liquid assets (marketable securities in the amount of $40+ billion) which meant that for any amount that they were likely to borrow the chances of them being unable or unwilling to repay their notes was practically non-existent. If they use most of the cash hoard to buy back equity shares then the future credit rating will more accurately reflect the likely future sales and licensing revenues of their flagship products (Windows and Office) which h
And How Much From Gates? (Score:2)
A very clear message to Yahoo (Score:5, Funny)
This sends a very clear message to Yahoo: Let us buy you, or we will buy ourselves instead!
- RG>
Sign of a Dying Company (Score:5, Interesting)
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.
Re:Sign of a Dying Company (Score:5, Interesting)
Re: (Score:3, Interesting)
Here's my question... pretend you are an investor, you see the stock value is going down. You see that they are shifting advertising routes, losing market share to competitors, losing money on XBox, Zune, whatever... What would entice you to push all your money into that company?
How is that any different than a company doing the same thing. Sure, it raises stock price/dividend over the short term, but it shows you that they don't plan on doing anything outside the flow of "normal business" which they have
Re: (Score:2, Insightful)
Re: (Score:2)