News

Microsoft Unveils $30 Billion Stock Buyback

Microsoft is finally doing something with that big pile of cash.

Company executives on Tuesday announced plans to buy back up to $30 billion worth of Microsoft stock over the next four years, issue a special one-time dividend of $3 per share and change Microsoft's regular dividend payments from 16 cents per share per year to 8 cents per share per quarter -- effectively doubling the dividend.

All told, the steps add up to $75 billion in value for shareholders over the next four years, Microsoft CEO Steve Ballmer said. Microsoft currently has $56 billion in cash and short-term investments.

Microsoft's huge cash hoard served as a hedge as the company faced potentially disruptive antitrust actions by the U.S. government, state governments and foreign governments, along with class action lawsuits and intellectual property disputes. The shareholder payout serves as a huge vote of self-confidence that future legal risks from U.S. antitrust fallout, the ongoing European Commission antitrust action and a newly announced Japanese inquiry are under control.

"We have resolved the large majority of our legal issues, which the company has always said was a prerequisite to addressing our cash management plans," Brad Smith, Microsoft's general counsel, said in a statement. "While we still have a number of legal issues and we take them seriously, we have reduced the legal uncertainties facing the company." Smith said Microsoft has a much clearer understanding of the potential risks involved in the European Commission case and other remaining cases.

Ballmer said the stock repurchase plan showed that Microsoft feels its potential for future growth is significant. "We are confident in our long-term ability to grow revenue, profits and shareholder value through our innovation and execution," Ballmer said. He asserted that all seven of Microsoft's businesses are growing. While that was true in Microsoft's third quarter, only three of the segments -- client, information worker and MSN -- were profitable. The server and tools segment appeared to lose money in that quarter only because of charges associated with the Sun Microsystems settlement deal. Microsoft is scheduled to report its fourth quarter earnings on Thursday.

The special one-time dividend would be payable in December, assuming shareholder approval of stock plan amendments that would adjust employee equity compensation awards. That dividend would cost Microsoft $32 billion. The 8 cents per share quarterly dividend will come to $3.5 billion per year, about $14 billion over the four year period.

Microsoft chairman and chief software architect Bill Gates vowed that the payout would not affect research and development.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

Featured

  • Microsoft Appoints Althoff as New CEO for Commercial Business

    Microsoft CEO and chairman Satya Nadella on Wednesday announced the promotion of Judson Althoff to CEO of the company's commercial business, presenting the move as a response to the dramatic industrywide shifts caused by AI.

  • Broadcom Revamps VMware Partner Program Again

    Broadcom recently announced a significant update regarding its VMware Cloud Service Provider (VCSP) program, coinciding with the release of VMware Cloud Foundation (VCF) 9.0, a key component in Broadcom’s private cloud strategy.

  • Closeup of the new Copilot keyboard key

    Microsoft Updates Copilot To Add Context-Sensitive Agents to Teams, SharePoint

    Microsoft has rolled out a new public preview for collaborative "always on" agents in Microsoft 365 Copilot, bringing enhanced, context-aware tools into Teams channels, meetings, SharePoint sites, Planner workstreams and Viva Engage communities.

  • Windows 365 Cloud Apps Now Available for Public Preview

    Microsoft announced this week that Windows 365 Cloud Apps are now available for public preview. This aims to allow IT administrators to stream individual Windows applications from the cloud, removing the need to assign Cloud PCs to every user.