Microsoft Announces $40BN Share Buyback 1 Month After Its Largest Bond Offering Ever

Tyler Durden's picture

After the close, Microsoft announced that its Board of Directors approved an incremental $40BN share repurchase program and confirmed that the company is on track to exhaust it's current $40BN authorization by the end of 2016.  The buyback represents roughly 9% of Microsoft's outstanding shares.  The company also announced a $0.03 (8%) increase in its quarterly dividend.  Per the press release:

The board of directors also approved a new share repurchase program authorizing up to $40 billion in share repurchases. The new share repurchase program, which has no expiration date, may be terminated at any time. The company reaffirmed that it is on track to complete its current $40 billion stock repurchase program by December 31, 2016.

The incremental buybacks for Microsoft come just a couple of months after the company was forced to lay off 5,000 people due to lackluster smartphone sales and a corresponding restructuring of its sales force. 

Microsoft stock traded up only slightly (1%) after hours on the announcement. 

MSFT

 

Pushing MSFT back to its opening price only... not very impressive...

 

Microsoft started its buybacks in 2008 when the stock traded around $25 per share and has continued buying with the shares now over twice the original price. 

MSFT

 

The news comes just a month after Microsoft completed its largest bond offering ever, selling $20BN of new notes with maturities ranging from 10 - 30 years and yields ranging from 2.42% - 3.75%.

MSFT

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SomethingSomethingDarkSide's picture

 

Can a tech company be TBTF? 

If so, why not push it to the brink of financial destruction and get the label and job security for life? 

Then their actions start to make sense..

 

 

Mr Pink's picture

The Federal Reserve- Making the rich richer since 1913

Angry White Guy's picture

"Privitizing gains and socializing losses since 1913" <- I think this one is better.

Unknown User's picture

Selling debt buying equities, i.e., shorting the dollar.

back to basics's picture

Way to go Yellen, recovery baby, recovery  ///s

 

 

 

 

Antifaschistische's picture

Hello Mr. Stockholder....let me introduce you to my friend...Mr. Bondholder.

ps. when the S hits the F....Mr. Bondholder gets paid first.  Never forget that.

Umh's picture

Only if the government lets the rule of law work.

pickupthatcan's picture

Exactly. Tell that to the bondholders of GM and Chrysler.

How sweet it must be to borrow money from saps (pension funds), then buy back your own stock, therefore driving up the share price, then turning around and exercising your stock options at the higher price that you artificially drove up.

It really is good to be king.

azusgm's picture

Let me see if I understand this correctly.

MSFT borrows $40B by issuing bonds.

MSFT announces a $40B stock buyback program and an 8% dividend hike.

Smart money will sell at these inflated prices (trailing P/E ~ 27, debt/equity ~ 75).

Granny's broker will call and tell her the good news that MSFT has increased their dividend. She buys more.

Smart money buys MSFT bonds at a better yield that the dividend on the equity.

If MSFT goes BK, Granny gets wiped out and the money is used to make the bondholders whole or the bondholders have a debt to equity conversion putting them back to being shareholders but in a MSFT with a much improved balance sheet.

Who ever said there is no Santa Claus? Thanks, Granny for being such a generous muppet.

 

LadiesLoveCoolJames's picture

Borrowing from Peter to pay Paul(Allen)

WayBehind's picture

Shopping on a credit card ... true American way 

Creative_Destruct's picture

...and encouraged mightily by the CBs. 

Massive excess liquidity for buybacks available form ZIRP & previous QE in the Socailism for the Rich scheme.

Paul John Smith's picture

I last worked for MSFT, as a contractor, in April 2014.

I must say, I only spent 1.5 years contracting there, but it was a horrid place. Sociopath/Aspberger central and frankly a lot of really shitty code.

Paul John Smith's picture

Thanks, but I meant "ass burgers".

Freddie's picture

Be nice to Creepy Clowns. 

Windows 10 blows chunks - biggest piece of shit ever.   Makes old ME and other crappy versions of Windows look great.

How do they have $50 b in debt?  They still mint money even though I doubt their coders are any good.

I had a neighbor who had been employee #25 and was pretty close to Gates.  A bit arrogant and liberal plus a serial adulterer.

Creative_Destruct's picture

Could not agree more. Initailly seemed good. Then the demons came out. Crashed during an up-date on my son's computer and entire OS was lost! THAT should NEVER happen!

Just one example of this SW Shit-show.

risk.averse's picture

...it's actually "aspERgers" (with apologies to the Pedant-Phobic out there...oh hang on: err, isn't being obsessively pedantic one of the symptoms of Aspergers?)

Creative_Destruct's picture

Shitty code is the MS way. Don't know how a company with such massive resources can possibly keep putting out such horrendous software. Takes some effort to be that bad. 

Paul John Smith's picture

Microsoft Amalga (now GE/Caradigm) ...

What a story I could tell you about that peace of shit ...

https://youtu.be/XGlkGlaTkjc

adanata's picture

 

Got rid of Steve Jobs; the competition, and still can't make it work. Ass-burgers is too kind.

mc225's picture

part of it is the move away from c/asm to c++ and 'development frameworks' and whatnot. ymmv

Creative_Destruct's picture

My personal mileage with MS products sucks :)

risk.averse's picture

...and Mr Paul John Smith I'm currently a HR manager at MSFT and onto our employment blacklist you go.

(just kidding...but seriously bro I hope Paul John Smith isn't your real name!! although getting shunned at MSFT may not be such a bad career move)

Shitty code, eh? Why am I not surprised. A major concern if one is a MSFT stock holder.

Yen Cross's picture

  Is Elon Musk on the Board of Directors?

Pigeon's picture

Solar-powered Windows 10 which then lights itself on fire?

Mroex's picture

What else to expect from them, for months I would get a popup offering a FREE upgrade to Windows 10. Imagine having to give away for free your latest OS. Two failures in a row Windows 8 and 10.  Never took the offer BTW I will stay With Win 7 till this PC dies

Allen_H's picture

Same, 7 is the last stop.

Barnaby's picture

Word is they're going to have a price rollback again during the holiday shopping period.

My suggestion is to replace the power supply (if a desktop), clone the old HD and swap it out. You can always go back to it by physically installing it. Your new HD (preferably a SSD) with Win7 is ready to be upgraded to 10. It's nice 'n' cheap, and adds years of life to older PCs.

Allen_H's picture

Not me, thanks anyway. Never windows 10. The buck has stopped.

Barnaby's picture

I can totally respect that. Omit the upgrade and the clone method will gain you many happy years. I try to do it every 3. I maintain even Vista boxes like this. Cheers.

Mroex's picture

Heck, I'm trying to figure how to get a legal copy of Win 7 to run on new equipment. I have not tried it as everything I have read indicates that Intel and other equipment vendors have been strongarmed by MSFT into not writing Win 7 drivers for their new products. I am very old school, I like to create and manage my own folders. I need and use a "My Computer" access to my HDD. I am just lost with the 8 & 10 interfaces

Barnaby's picture

It's all there, in the same user folder structure. 8 is bad and 10 is a fair compromise.

Computers are built daily with W7 on new hardware, it just takes compromises,

Mroex's picture

I will accept compromises, I am retired now, I only use a PC for access to the internet and Word and Excel. I imagine when you say new computers are built everyday with Win 7, that this is being done by folks such as yourself, not that HP or any other OEM is still selling new PCs with windows 7 ?

Yen Cross's picture

  WTF? All he needs to do is an image of WIN-7 on an external SSD.

 Power supply has nothing to do with it. He can also partitian the HDD on his desktop and run both programs.

 I have Linux and Win 10 running together on one of my laptops. You just disable the UEFI interface, change the boot order, and create a new partition.

 BTW, Win 10 is even lighter than Win-7 which I love. Just remove all the bloatware, unless you like the tiles, and you're basically running Win-7 on roids.

Barnaby's picture

So many weird things conspire at the 3-year mark or past. PS is one. :)

Yen Cross's picture

  Dude you picked the wrong week to STOP sniffing Sharpies.

mc225's picture

MSFT needs to find the next big wave, and ride it. they did pretty well with dos/win/www, but haven't done so well with phones. so what's the next 'big app' that's going to be 'everywhere'? answer that question in a timely manner, and ... cha-ching.

 

 

Barnaby's picture

You should've tried it with an older PC. You'd be amazed by how great an improvement it is on a dual-core. Throw in a SSD and you're cruising.

It took a while to win me over but Windows 10's actually not too shitty.

Mroex's picture

I am totally lost with it. A friend visited who had a new Dell Laptop with Win 10. I was completely lost , The new interface was useless to me. It seemed all I had learned since Win 95 was lost. I think this is why so many companies have not upgraded to it. I can see large corporations afraid of lost productivity as many employees would have a steep learning curve, such as I have.