Microsoft Flaunts Fiscal Strength With $40bn Stock Buyback

23 September 2008

REDMOND, Washington: As if to double-underscore its financial stability - and revive a flagging stock price - Microsoft on Monday announced plans to buy back up to $40 billion (€27.22bn; £21.64bn) in stock, raise its dividend and issue its first commercial paper.

In yet another flaunting of its financial muscle, the planet's largest software maker also revealed it is mulling the sale of up to $6bn in debt securities.

All of which chest-beating had the desired result: the Gates Goliath was garlanded with the highest honor in the cosmos: an AAA credit rating from Standard & Poors – its highest possible valuation and the first conferred on any company anywhere during the last ten years.

According to insiders, the software colossus is trying to win back shareholders after its failed bid for Yahoo this year. It might also indicate the absence of any serious Big Game grazing on the takeover prairie.

Notes Donovan Gow, an analyst at American Technology Research: "They've been seeing some pressure from investors to use more of their cash for buybacks. They're not seeing a lot of really attractive acquisitions, particularly following the Yahoo debacle, so the view is this is the best thing to do with their huge cash balances."

Microsoft shares were up 82 cents at $25.98 yesterday afternoon, dipping from the day's high at $26.32.

Data sourced from International Herald-Tribune; additional content by WARC staff