Microsoft has decided to fling handfuls of cash at its shareholders, in the form of a 22 percent increase in its quarterly dividend, and renewing its $US40 billion share buyback program.
The decision comes as Microsoft seeks a replacement for outgoing CEO Steve Ballmer, and seeks to digest its $US7 billion acquisition of its best-friend mobile vendor Nokia. While $US40 billion is a hefty amount of bling to fling, Redmond will still have the remainder of what Reuters calls a “$70 billion cash hoard”.
Reuters adds that the five-cent increase in dividend per share is three cents more than was expected. Even so, investor response was muted, with shares rising just 0.39 percent on the day.
Most commentators – Reuters and the Wall Street Journal among them – believe agitation from $US2 billion stockholder ValueAct lies behind the dividend and buyback announcement.
ValueAct has been agitating for larger payouts and has been a sharp critic of Ballmer, and Israel Hernandez of MKM Partners told the WSJ the dividend is “absolutely a nod to the activist shareholders”. However, Reuters quotes analyst Fort Pitt Capital's Kim Forrest interprets the same announcement as “Microsoft saying no” to ValueAct's agitations.
Microsoft is expected to face vigorous questioning in an investor meeting on Thursday, September 19. ®
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