Microsoft To Buy $40 Billion In Stock -- WSJ
September 21 2016 - 3:03AM
Dow Jones News
By Don Clark and Josh Beckerman
Microsoft Corp. announced plans to buy back up to $40 billion in
stock and boost its dividend by 8%, the latest in a series of moves
by the software giant to share a steady flood of cash with
shareholders.
The latest repurchase target is the same size as a buyback plan
announced in 2013, which the company said Tuesday it expects to
complete by the end of this year.
Microsoft didn't set an expiration date for the new buyback,
which represents about 9% of Microsoft's market value of $442.7
billion. The company has been among most active in buying back
shares, having spent nearly $140 billion on the tactic over the
years.
Microsoft tends to announce dividend increases in September. The
8% increase announced Tuesday is a smaller rate of increase than
those of recent years. Last year, the company raised its quarterly
payout by 16% to 36 cents from 31 cents, after an 11% increase in
2014.
This year's increase, to 39 cents per quarter, from 36 cents,
raises Microsoft's dividend yield to 2.7% from 2.3%. The dividend
is payable Dec. 8 to shareholders of record Nov. 17. Microsoft,
based in Redmond, Wash., enjoyed torrid revenue growth in the 1990s
fueled by the spread of personal computers. After its growth
slowed, the company began offering increasingly generous dividends
as well as buybacks. The latter tactic tends to prop up a company's
stock price by reducing total shares outstanding, thereby
increasing earnings per share.
Though a slowdown in unit sales of PCs has tended to hurt sales
of Microsoft's Windows operating system, the company sells other
software and services that generate a steady flow of cash.
Microsoft reported $113 billion in cash and investments at the end
of June. Meanwhile, investors have become more optimistic about the
company's plans to build a big business in cloud services since
Satya Nadella took over as chief executive in February 2014.
Underscoring his bet on services, Microsoft agreed in June to buy
professional social network LinkedIn Corp. for $26.2 billion.
The company's shares are up 31% over the past year. They rose
1%, or 54 cents, in after-hours trading. In 4 p.m. trading,
Microsoft shares fell 12 cents, to $56.81.
Strength in Microsoft's cloud business helped the company beat
sales and profit expectations in its fiscal fourth quarter, which
ended June 30, although revenue fell 7% to $20.61 billion.
Brad Reback, a Stifel Nicolaus & Co. analyst, called the
stock buyback in line with expectations. He said the dividend
increase was the smallest since 2010, but in line with expectations
given the LinkedIn acquisition.
Write to Don Clark at don.clark@wsj.com and Josh Beckerman at
josh.beckerman@wsj.com
(END) Dow Jones Newswires
September 21, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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