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Microsoft To Buy Back $40bn of Its Shares

CmdrTaco posted more than 6 years ago | from the that's-a-lotta-shares dept.

Microsoft 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!."

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BUY BUY BUY! (4, Funny)

davidangel (1337281) | more than 6 years ago | (#25125911)

...a mac. right now.

Re:BUY BUY BUY! (4, Funny)

sadgoblin (1269500) | more than 6 years ago | (#25126231)

I'd respond, but I'm more mature than you.

Re:BUY BUY BUY! (2, Informative)

davidangel (1337281) | more than 6 years ago | (#25126271)

Nice response.

Re:BUY BUY BUY! (1, Troll)

gnutoo (1154137) | more than 6 years ago | (#25126609)

You would have done better with Google. This little pump and dump exercise is going to be a good time to make that conversion. Advertising will sruvive a recession/depression, the non free desktop and office suit business model from the 1980s won't. No, they won't be saved by Xbox or Zune. Greedy restrictions systems are going to bite the dust sooner than later.

Re:BUY BUY BUY! (1, Informative)

Achromatic1978 (916097) | more than 6 years ago | (#25126745)

You have all the logic of... well, god only knows what.

"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.

$40,000,000,000 (4, Interesting)

Tubal-Cain (1289912) | more than 6 years ago | (#25125961)

Isn't that almost all of their spare cash?

Re:$40,000,000,000 (5, Informative)

mpapet (761907) | more than 6 years ago | (#25126099)

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.

Re:$40,000,000,000 (0, Offtopic)

Colin Smith (2679) | more than 6 years ago | (#25126225)

It's also putting all your eggs in one basket, so a single really big problem (like Linux, Open Document Format, or Google) could wipe out virtually all of your money at once.

 

Re:$40,000,000,000 (3, Insightful)

MightyYar (622222) | more than 6 years ago | (#25126337)

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 (-1)

Colin Smith (2679) | more than 6 years ago | (#25126577)

Yeah, but MS isn't a mutual fund - they should concentrate on making good (or at least profitable) products and not worry about investing.

You don't think that 40 billion might be handy for investing in the Next Big Thing? Y'know like the Internet, AI, or... Buying back your shares simply demonstrates that you have absolutely no clue where you should be taking your company.

Buhbye MS.

 

And, he's wrong. (-1)

right handed (1310633) | more than 6 years ago | (#25126409)

M$ has about $20 billion of what was a $60 billion pile three years ago. They will go into debt to make the purchase [guardian.co.uk] . They are doing it to prop their stock price, perhaps for the benefit of employees who's savings will go to zero otherwise. Others have called it a pump and dump scam. Any way you look at it, $40 billion dollars vanishing is a bad thing.

Re:And, he's wrong. (0)

Anonymous Coward | more than 6 years ago | (#25126631)

As opposed to the trillions of dollars vanishing in the stock market?

right... (2, Insightful)

Anonymous Coward | more than 6 years ago | (#25126831)

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 explaining how the stock market works here. I have a feeling it would do no good whatsoever.

I don't particularly like or dislike Microsoft. I use some of their products, and they are OK sometimes. But people like you are really weird.

Re:$40,000,000,000 (1)

Tubal-Cain (1289912) | more than 6 years ago | (#25126425)

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 (4, Funny)

gbjbaanb (229885) | more than 6 years ago | (#25126895)

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?

Re:$40,000,000,000 (0)

Anonymous Coward | more than 6 years ago | (#25126457)

....
Are share buybacks good or bad? As is so often the case in finance, the question may not have a definitive answer. If a stock is undervalued and a buyback truly represents the best possible investment for a company, the buyback - and its effects - can be viewed as a positive sign for shareholders. Watch out, however, if a company is merely using buybacks to prop up ratios, provide short-term relief to an ailing stock price or to get out from under excessive dilution.

Re:$40,000,000,000 (1)

NatasRevol (731260) | more than 6 years ago | (#25126551)

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 (4, Interesting)

Intron (870560) | more than 6 years ago | (#25126773)

1. Announce plan to buy Yahoo!
2. Watch stock plummet
3. Buy back $40bn
4. Profit. Yahoo!

Re:$40,000,000,000 (1)

Reziac (43301) | more than 6 years ago | (#25126847)

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.

Re:$40,000,000,000 (1)

yerpo (1370359) | more than 6 years ago | (#25126199)

Well, they are giving it to themselves, so no fuss there :P

Re:$40,000,000,000 (3, Informative)

Penguinisto (415985) | more than 6 years ago | (#25126267)

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).

/P

well (1)

ionix5891 (1228718) | more than 6 years ago | (#25125979)

the couldn't but yahoo, so they had to do something with all that money

tho they should have done this earlier, good thing the yahoo deal collapsed, it would have been a bad idea

Re:well (1, Insightful)

Ethanol-fueled (1125189) | more than 6 years ago | (#25126153)

Now if they would only buy back all those crappy Vistas they pushed on PC manufacturers.

Why do companies do this? (2, Interesting)

Finallyjoined!!! (1158431) | more than 6 years ago | (#25125989)

Why not spend $40bn on other stock.

Doesn't make sense to me, come on you stockmarket guys, explain the rationale.

Re:Why do companies do this? (2, Informative)

Rayeth (1335201) | more than 6 years ago | (#25126063)

Essentially this is a move to prop up their stock price to make the other investors (the ones who don't sell the stock) happy.

Re:Why do companies do this? (5, Informative)

Ubergrendle (531719) | more than 6 years ago | (#25126083)

You improve your P/E ratio, ultimately meaning that your dividends get spread across a smaller pool of stocks...makes the stocks more valuable as a blue chip commodity, raising their price. its a good strategy when you're taking a long view, and don't anticipate any future rapid growth. The $40b is controlled by the board of directors, and ultimately belongs to the shareholders. its not a funny money fund. Ultimately the best use of the $ is to improve the shareholder's value.

Re:Why do companies do this? (5, Funny)

Anonymous Coward | more than 6 years ago | (#25126157)

Could you rephrase that in a car analogy?

Re:Why do companies do this? (5, Insightful)

Anonymous Coward | more than 6 years ago | (#25126251)

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? (0)

Ubergrendle (531719) | more than 6 years ago | (#25126353)

Ummmm....ok.

Instead of have 4 shitty Chrystler Neons performing badly, Microsoft is selling them and buying one BMW. Which one looks shinier?

Re:Why do companies do this? (0)

Anonymous Coward | more than 6 years ago | (#25126431)

You improve your P/E (Power/Engine) ratio, ultimately meaning that your car races with a smaller pool of other stock cars...makes your car more valuable with its blue chip mod, raising its price. It's a good strategy when you're driving the Indy 500, and don't anticipate many pit stops. The $40b is controlled by the car's sponsors, and ultimately belongs to the shareholders of the sponsor. it's not a Funny Car. Ultimately the best use of the $ is to improve the sponsor's value and your car's ability to compete.

Re:Why do companies do this? (1)

morgan_greywolf (835522) | more than 6 years ago | (#25126877)

Sure. The pool of outstanding stocks is like a gas tank. You make each drop of gasoline more valuable decreasing that gas tanks' size.

(Bet you didn't think I could do it! Ha!)

Re:Why do companies do this? (3, Interesting)

Rayeth (1335201) | more than 6 years ago | (#25126215)

Mod Parent Up Informative

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

Which begs the question ... (0)

Anonymous Coward | more than 6 years ago | (#25126407)

WTF did they sit on the cash for so long?

Ny captcha is "stupid". How fitting.

Re:Why do companies do this? (0)

Anonymous Coward | more than 6 years ago | (#25126287)

That's a bunch of crap. MS could use that money to pay a dividend to their shareholders rather than buying up stock. Yes, buybacks do reward shareholders, because they create market demand for the stock and result in a low number of shares on the market (in finance speak, the float of the stock is reduced). There are about 9B shares of MS stock outstanding. They could pay a dividend of over $4/share with their $40B rather than buying back stock!

Better for shareholders than a dividend (5, Informative)

paulthomas (685756) | more than 6 years ago | (#25126449)

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.

Thanks Ubergrendle (1)

Finallyjoined!!! (1158431) | more than 6 years ago | (#25126499)

I have an answer I can understand.

However, $40bn is an awful lot of moolah, couldn't they improve shareholder value in some other more productive, or revenue generating way?

Re:Why do companies do this? (1)

Tubal-Cain (1289912) | more than 6 years ago | (#25126091)

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.

Re:Why do companies do this? (1)

AuMatar (183847) | more than 6 years ago | (#25126105)

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.

Re:Why do companies do this? (0)

Anonymous Coward | more than 6 years ago | (#25126585)

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.

MS will buy the stock on the open market or arrange private deals at near-market prices. The stock is presently trading at $26. They are NOT going to bid for 1B shares at $40. Think about what happens if they bid $1B for 40 shares. As soon as their order is filled, the price tanks back to $26. There are plenty of mutual funds that own more than $1B in MS stock and would unload at a heart-beat for $40.

M$ is going to buy shares slowly over a period of time, at market value, to create a steady demand for shares which puts upward pressure on share price.

Re:Why do companies do this? (1)

Amouth (879122) | more than 6 years ago | (#25126709)

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 the amount avaliable is lessened. ontop of that the people who keep invested see their wealth increase and don't have to pay taxes on that at the moment.. and theones that want to cut their losses get to sell their shares. on top of that with the new higher stock price if MS needs quick funds they can just resell some of the shares they are holding at the new increased market price

when dealing in the volume of shares that they are dividens just don't make sence.. they sound nice.. but they don't add any value to the company.

Re:Why do companies do this? (0)

Anonymous Coward | more than 6 years ago | (#25126121)

When a company buys back its own stock, it is reducing the number of outstanding shares, so therefore the earnings of the company increases per the remaining shares.

Re:Why do companies do this? (0)

Anonymous Coward | more than 6 years ago | (#25126123)

Check out this article for a decent breakdown of motives.

http://www.investopedia.com/articles/02/041702.asp [investopedia.com]

see the section labeled "motives"

Re:Why do companies do this? (0)

Anonymous Coward | more than 6 years ago | (#25126501)

1. Sell shitty Os (Vista) and cause share price to fall
2. Buy stock back at low point.
3. Release proper OS (windows 7) and watch Share price rises
4. ???
5. Profit !!


sorry, just couldn't resist :-)

Re:Why do companies do this? (1)

dgatwood (11270) | more than 6 years ago | (#25126155)

There are only two good reasons I can think of to buy back stock:

  • To allow a reverse stock split to avoid delisting.
  • To defeat a hostile takeover attempt by ensuring that the company and its board own more than 50% of the 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 have been thinking for years, so I guess that's nothing new....

Re:Why do companies do this? (4, Informative)

jmauro (32523) | more than 6 years ago | (#25126203)

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.

Re:Why do companies do this? (1)

Stan Vassilev (939229) | more than 6 years ago | (#25126179)

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.

Re:Why do companies do this? (1)

dvice_null (981029) | more than 6 years ago | (#25126241)

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 eating their bread, OpenOffice is eating their butter and people are getting more and more aware of Linux. Not to mention iPod and Wii beating their other products.

Re:Why do companies do this? (4, Informative)

moderatorrater (1095745) | more than 6 years ago | (#25126437)

IE loses them money and is still the dominant browser, Open Office just got passed up by Google Docs, and Linux hasn't even captured 10% of the market. Last numbers I saw put Linux + Mac at less than 10% of the total market. The 360 is the console that gets the most love for games with serious graphics.

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.

Re:Why do companies do this? (2, Funny)

nomadic (141991) | more than 6 years ago | (#25126649)

Linux hasn't even captured 10% of the market.

But Linux has only been around for 16 years; I promise you, next year will finally be the year of Linux on the desktop!

Re:Why do companies do this? (2, Insightful)

dave562 (969951) | more than 6 years ago | (#25126769)

But their products keep getting worse. I have been using Microsoft products since DOS 3.3. They have boxed themselves into a business strategy that requires forced upgrades. The room for serious innovation in the market place is petering out. There might be some new features here and there, but there isn't much that can be done with an entire office suite, or operating system. Just look at Vista and Office 2007. I've used both and they suck compared to XP and Office 2003. There isn't any value added for the consumer that would incline the consumer to purchase the newer versions. Microsoft has to force consumers into newer versions by end of lifing (EOL) the previous version. That makes for unhappy consumers when they are forced to replaced something that works just fine. In the long term, Microsoft is destined to fail if they keep up the same strategy. What they should do is freeze things where they are and refine them before they completely destroy them.

Re:Why do companies do this? (1)

McBeer (714119) | more than 6 years ago | (#25126247)

Buying it back reduces the amount of outstanding stock, so the earnings per share from future dividends is likely to be higher. 40 billion is about 6% of the outstanding MSFT stock, so all future dividends will be split among the other 94% and each share will be a bit larger. From an investors standpoint, this is roughly equivalent to issuing a dividend. The advantage, from MSFTs perspective over a dividend is that this will A) make the stock stats look better longer and B) gives the investment world a signal that they believe their stock to be undervalued. Also executive bonuses are often tied to EPS :/

Re:Why do companies do this? (1)

lavalyn (649886) | more than 6 years ago | (#25126257)

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? (4, Informative)

vux984 (928602) | more than 6 years ago | (#25126327)

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.

Re:Why do companies do this? (1)

OpenSourced (323149) | more than 6 years ago | (#25126395)

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.

But, as said, is basically Microsoft saying that they cannot think of any investment, enterprise, new product, etc that is worth its salt, for using that money. Which is all well and good, of course, only a bit disappointing.

Re:Why do companies do this? (1)

Culture20 (968837) | more than 6 years ago | (#25126509)

Yahoo might want 40bn in MS stock as partial payment.

Re:Why do companies do this? (5, Interesting)

OldManAndTheC++ (723450) | more than 6 years ago | (#25126611)

Listen to the words of the oracle of Omaha, Warren Buffett, from the Berkshire-Hathaway 2005 Annual report:

Too often, executive compensation in the U.S. is ridiculously out of line with performance. That
won't change, moreover, because the deck is stacked against investors when it comes to the CEO's pay.
The upshot is that a mediocre-or-worse CEO - aided by his handpicked VP of human relations and a
consultant from the ever-accommodating firm of Ratchet, Ratchet and Bingo - all too often receives gobs
of money from an ill-designed compensation arrangement.

Take, for instance, ten year, fixed-price options (and who wouldn't?). If Fred Futile, CEO of
Stagnant, Inc., receives a bundle of these - let's say enough to give him an option on 1% of the company -
his self-interest is clear: He should skip dividends entirely and instead use all of the company's earnings to
repurchase stock.

Let's assume that under Fred's leadership Stagnant lives up to its name. In each of the ten years
after the option grant, it earns $1 billion on $10 billion of net worth, which initially comes to $10 per share
on the 100 million shares then outstanding. Fred eschews dividends and regularly uses all earnings to
repurchase shares. If the stock constantly sells at ten times earnings per share, it will have appreciated
158% by the end of the option period. That's because repurchases would reduce the number of shares to
38.7 million by that time, and earnings per share would thereby increase to $25.80. Simply by withholding
earnings from owners, Fred gets very rich, making a cool $158 million, despite the business itself
improving not at all. Astonishingly, Fred could have made more than $100 million if Stagnant's earnings
had declined by 20% during the ten-year period.

Fred can also get a splendid result for himself by paying no dividends and deploying the earnings
he withholds from shareholders into a variety of disappointing projects and acquisitions. Even if these
initiatives deliver a paltry 5% return, Fred will still make a bundle. Specifically - with Stagnant's p/e ratio
remaining unchanged at ten - Fred's option will deliver him $63 million. Meanwhile, his shareholders will
wonder what happened to the "alignment of interests" that was supposed to occur when Fred was issued
options.

A "normal" dividend policy, of course - one-third of earnings paid out, for example - produces
less extreme results but still can provide lush rewards for managers who achieve nothing.
CEOs understand this math and know that every dime paid out in dividends reduces the value of
all outstanding options. I've never, however, seen this manager-owner conflict referenced in proxy
materials that request approval of a fixed-priced option plan. Though CEOs invariably preach internally
that capital comes at a cost, they somehow forget to tell shareholders that fixed-price options give them
capital that is free.

It doesn't have to be this way: It's child's play for a board to design options that give effect to the
automatic build-up in value that occurs when earnings are retained. But - surprise, surprise - options of
that kind are almost never issued. Indeed, the very thought of options with strike prices that are adjusted
for retained earnings seems foreign to compensation "experts," who are nevertheless encyclopedic about
every management-friendly plan that exists. ("Whose bread I eat, his song I sing.")

Getting fired can produce a particularly bountiful payday for a CEO. Indeed, he can "earn" more
in that single day, while cleaning out his desk, than an American worker earns in a lifetime of cleaning
toilets. Forget the old maxim about nothing succeeding like success: Today, in the executive suite, the alltoo-
prevalent rule is that nothing succeeds like failure.

I'm going with "never" (2, Funny)

Just Some Guy (3352) | more than 6 years ago | (#25126007)

Can we vote on this?

It's funny, they've been having a lot of trouble (3, Interesting)

jollyreaper (513215) | more than 6 years ago | (#25126017)

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 (4, Insightful)

Locutus (9039) | more than 6 years ago | (#25126487)

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

Vista Sales (0, Insightful)

Anonymous Coward | more than 6 years ago | (#25126523)

"Vista has been such a tremendous flop"

Do you have any idea what an idiot making such an inane assertion makes you look like?

Re:Vista Sales (3, Interesting)

jollyreaper (513215) | more than 6 years ago | (#25126751)

"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 even shipped.
5. Microsoft forced to unveil Windows 7 years early to convince people that better is coming.
6. The name Vista is such poison that Microsoft had to base an entire ad campaign around the whole Mojave thing, getting people to try the OS without the Vista name because they knew just hearing "Vista" puts a bad taste in the consumer's mouth.

Vista represents what, six years of development, $12 billion? And all that additional DRM crap is thrown in to reduce your system's performance.

By any rational, unbiased inspection of the facts, Vista is a colossal failure.

Re:It's funny, they've been having a lot of troubl (0)

Anonymous Coward | more than 6 years ago | (#25126907)

See pathetic loser. If you can at least READ the commentary right above yours you will see that IT IS A GOOD THING for M$, and is happening because they have WAY TOO MUCH MONEY they cannot spend it anymore, so they buy stock to increase share value.
But pathetic morons that used to get beaten and have their lunch stolen at school can't understand that because they are locked at their mom's basements living on an oblivion of Linux and WoW.

No Slashdotter would admit to owning any... (1)

mi (197448) | more than 6 years ago | (#25126049)

Or would you?

Re:No Slashdotter would admit to owning any... (1)

roc97007 (608802) | more than 6 years ago | (#25126089)

Sure I would, especially if I'd just sold it back.

Re:No Slashdotter would admit to owning any... (4, Funny)

mi (197448) | more than 6 years ago | (#25126189)

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... (3, Funny)

roc97007 (608802) | more than 6 years ago | (#25126699)

> and a nursing of an orphaned baby-penguin for 6 months.

Man, I hate that. It makes my nipples hurt.

Re:No Slashdotter would admit to owning any... (1)

Tubal-Cain (1289912) | more than 6 years ago | (#25126195)

Some of us hope to eventually reach a majority shareholder position and liquidate the company.

*wakes up*

Re:No Slashdotter would admit to owning any... (2, Informative)

GIL_Dude (850471) | more than 6 years ago | (#25126513)

Sure I would. I used to own some - about 50 shares I believe. I sold them the last time Microsoft did a tender offer as they were just stagnating (very slowing going down). This was a couple of years ago. I had originally gotten them through a program called ShareBuilder that let's you diversify through being able to buy partial shares in several things through a small monthly payroll deduction. I don't really recommend it, but I will admit that I used ShareBuilder. Anyway, why would slashdotters not admit they had some MS shares?

Re:No Slashdotter would admit to owning any... (1)

JeanBaptiste (537955) | more than 6 years ago | (#25126589)

no, I'm still wagering my SCO stock makes a comeback...

Re:No Slashdotter would admit to owning any... (1, Interesting)

Anonymous Coward | more than 6 years ago | (#25126715)

I don't own any but this is a positive sign that'll get me to take another look at their stock. Some people - like the Motley Fool crew (whose self-proclaimed performance charts exemplify the saying about "lies, damned lies, and statistics") - say that buybacks aren't a good sign, that the company has run out of ideas or is weak. Personally, it says to me that they're focused on creating shareholder value and buybacks are a solid way to do that, especially when the company has a dividend. Buybacks and dividends are two policies I take as signs that a company's leadership may not have that kind of "double-digit growth ad infinitum" mindset. It's not a perfect policy, but it's a reason to check them out.

The problem most every publicly traded company has is that the expectations of Wall Street are almost always short-term, unforgiving, and unrealistic. It'd be nice to think that after the internet bubble and the collapse of the financial sector, that perhaps investors would grow a brain and set more realistic expectations for their investments and thus companies would start to think past one or two quarters in the future. Instead the likely result of the recent problems is that a lot of Wall Street are going to run to gold, commodities, foreign investments, and Berkshire Hathaway for a few months and then go back the same old routine.

Should I ever start up a company and need the kind of money an IPO can bring, I'd only do it if I had a solid plan for how to get the company back to being a private enterprise in some number of years. Private companies are the only ones allowed to have much sense; they're also the only ones allowed to treat their employees well without eventually shrinking the benefits more and more because it helps the next quarter's expenditures - even if it lowers productivity.

Probably Better than Losing it Bit by Bit (3, Interesting)

CodeBuster (516420) | more than 6 years ago | (#25126057)

This is probably better than losing the whole pile bit by bit to enterprising attorneys and their clever lawsuits AND with the markets being so depressed right now and the number of good alternative investments diminished it probably does make sense to recapture some of those outstanding shares while the price is still attractive.

What does that mean? (1)

FunkyELF (609131) | more than 6 years ago | (#25126097)

What does it mean when a publicly traded company buy's its own stock?
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? (0)

Daimanta (1140543) | more than 6 years ago | (#25126137)

If you have shares you get a certain amount of money per stock you own. If Microsoft owns more of their own stock, they get to keep more. Furthermore it increases the scarcity of the stock thus driving up prices.

Re:What does that mean? (3, Informative)

Dan667 (564390) | more than 6 years ago | (#25126259)

stock is like printing money for a company. When they buy back their stock there are less shares out in the wild so they hope the price will go up. If the current price of the stock is significantly less than what they think it is worth, it is a no brainier to buy it back and they get more influence over the company as well (less investors to complain about problems).

A better plan (5, Funny)

dingbatdr (702519) | more than 6 years ago | (#25126107)

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 (4, Interesting)

zubikov (1172699) | more than 6 years ago | (#25126109)

All this means is that debt is a cheaper and more risk-averse way for them to finance their crappy commercials and world takeover plans. In this market, you can see billions in capital evaporate in minutes. Not to side with Microsoft, but it was a good move as the market is about to take a dump.

Could someone explain to me... (1)

roc97007 (608802) | more than 6 years ago | (#25126163)

...in small words, what this means? What is Microsoft's motivation for doing this, and what do they hope to achieve? Is it a sign that they're in trouble, or is there some financial advantage to reducing the number of shares in play? For instance, if a company is cash-heavy, does that trip something with the analysts, requiring Microsoft to shed cash somehow? I'm not even sure what questions to ask.

Re:Could someone explain to me... (5, Interesting)

zubikov (1172699) | more than 6 years ago | (#25126261)

Microsoft can loose a lot of money quickly being in the equity markets, especially when the markets move +/- 5% a day. Their CFO concluded that going forward, it will be cheaper and less risky for them to raise new money with bonds, rather than stocks. This is not a sign that they're in trouble, rather a move to hedge against a sharp decline in the overall stock market.

Re:Could someone explain to me... (4, Informative)

dkleinsc (563838) | more than 6 years ago | (#25126595)

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: (2, Interesting)

rssrss (686344) | more than 6 years ago | (#25126169)

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 ?? (5, Interesting)

pacificleo (850029) | more than 6 years ago | (#25126181)

Mark cuban recently wrote a post about the correlation between shares Buyback and Collapse of Financial powerhouse like AIG-Lehman and ML . I hope MSFT can avoid that fate. http://blogmaverick.com/2008/09/16/the-aig-lehman-merrill-lynch-link/ [blogmaverick.com]

Re:Mark Cuban was right ?? (1)

Tubal-Cain (1289912) | more than 6 years ago | (#25126345)

I hope MSFT can avoid that fate.

I don't, with exception to the possible impact it could have on the economy.

Re:Mark Cuban was right ?? (0)

Anonymous Coward | more than 6 years ago | (#25126497)

Dude, have you SEEN the economy lately? At this point, what's one more log on the inferno?

Who owns Microsoft? (2, Informative)

megamerican (1073936) | more than 6 years ago | (#25126187)

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

Re:Who owns Microsoft? (1)

Otter (3800) | more than 6 years ago | (#25126673)

Composite government funds own 82% of Microsoft according to this website.

Given the implausibility of that figure, I'd prefer to see it confirmed by a less psychotic-looking source.

Re:Who owns Microsoft? (1)

Otter (3800) | more than 6 years ago | (#25126947)

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.

mod Dowpn (-1, Offtopic)

Anonymous Coward | more than 6 years ago | (#25126217)

been sitting here officers. otZhers the NetBSD project, of business and was

HP buying back 25,000 fired employees stocks (-1, Troll)

Locutus (9039) | more than 6 years ago | (#25126347)

there was about to be a whole bunch of HP stock dumped on market as those fired 25,000 HP employees filed through HR and headed out on the street.

Is Microsoft doing the same, ie they are purchasing back stock so that the employee 'benefits' in stocks don't look like a worthless benefit? Or is Microsoft looking to be one of the last standing on Wall Street by saying "look, our stock has kept its value far better than others so buy ours so we ar not the only ones doing it."?

Or have there been any MS firings lately that I missed? When's Balmer leaving?

LoB

Re:HP buying back 25,000 fired employees stocks (1)

FourthLaw (1365279) | more than 6 years ago | (#25126663)

Now then, if Microsoft could just buy all of HP's stock, then they'd be just like Apple with their own hardware platform...no, wait...on second thought...

Dividends maybe? (0)

Bryansix (761547) | more than 6 years ago | (#25126349)

I know this is a really new and novel idea for tech companies but there used to be this method that stocks had to put money directly into the hands of the shareholders. I think they called it a dividend or something. Now I know that no tech company has ever issued a dividend but maybe they can think of starting such a practice? Make it small like 2-3 cents per share and see how it goes. It's likely to be way more profitable for the shareholders then a stock repurchasing plan.

Re:Dividends maybe? (1)

ShadowRangerRIT (1301549) | more than 6 years ago | (#25126539)

Microsoft offers a dividend and has for a few years. And I believe concurrent with this announcement they upped it, from 11 cents per share per quarter to 13 cents per share per quarter.

Shoulda bought AAPL or GOOG instead (1)

melted (227442) | more than 6 years ago | (#25126401)

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:Shoulda bought AAPL or GOOG instead (1)

Actually, I do RTFA (1058596) | more than 6 years ago | (#25126771)

I think MS owns as much of Apple's stock as the DOJ will let them.

"It's Now Or Never" (1)

Dystopian Rebel (714995) | more than 6 years ago | (#25126405)

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]

Buy Merril Lynch! (0)

Anonymous Coward | more than 6 years ago | (#25126423)

Or Bear Stearns. Or Lehman Brothers.

Generate some good press & goodwill with the American people.

It's about the issuance of high-quality debt (5, Interesting)

matthaak (707485) | more than 6 years ago | (#25126451)

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.

And How Much From Gates? (1)

Nom du Keyboard (633989) | more than 6 years ago | (#25126601)

And how much of this will come directly from Bill Gates, who has nominally been selling a million shares a month for seemingly forever now?

But, wait... (1)

No2Gates (239823) | more than 6 years ago | (#25126615)

Or you can buy 600000000 pair of The Conquistador shoes at the Shoe Circus

A very clear message to Yahoo (5, Funny)

RealGrouchy (943109) | more than 6 years ago | (#25126687)

This sends a very clear message to Yahoo: Let us buy you, or we will buy ourselves instead!

- RG>

Sign of a Dying Company (5, Interesting)

Nom du Keyboard (633989) | more than 6 years ago | (#25126695)

Once I read an insightful article that pointed out how a stock buyback is the sign of a dying company.

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.
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