Microsoft announces $40 billion share buyback plan

Microsoft has announced its plan to buy back $40 billion worth of its shares in its fourth buyback program.

Microsoft has authorised a share buyback program that will see the company reacquiring $40 billion of its own shares, just over 9 per cent of the company.

This is the fourth $40 billion buyback program launched by the company, which said that it will complete the first round by the end of this year. Microsoft's most recent buyback was first announced in 2013 and is scheduled to be completed by the end of 2016.    

The company's decision to buyback its shares is a move that will likely be popular with investors as it will raise share prices.  Microsoft also announced that it will raise its quarterly dividend by 8 per cent, to 39 cents a share for the quarter. After the announcement, the company's shares increased by 1.21 per cent in after-market trading and were at $57.50 per share.    

Microsoft is currently in a period of transformation as it moves from being a software business to a cloud computing business. The company is now more focused on providing a range of professional services to its customers as opposed to just selling software and its Windows operating system.

Earlier this year, the company purchased LinkedIn for around $26 billion in cash which was the biggest acquisition it has ever made. This move alone highlights how Microsoft has entirely shifted its focus to the cloud and the announcement of its latest buyback will surely entice any shareholders who may be slightly anxious regarding the state of its transformation. 

Image Credit: Sergei Bachlakov / Shutterstock

ABOUT THE AUTHOR

Anthony currently resides in South Korea where he teaches and experiences Korean technological advances first hand.