Microsoft today announced it would be buying back up to $40 billion of its own shares, and that it would raise its quarterly dividend by 22%, to 28 cents per share for the next quarter.
The share buyback program is less significant news, because it effectively replaces a similar scale program that was set to expire on September 30th. But what’s worth noting is that the new scheme has no expiration date. This suggests Microsoft is very serious about the move. A dividend hike, meanwhile, could easily be read as MS feeling the need to please its investors with a cash payout. Both moves are probably intended as a sign that it’s business as usual, and that the company has confidence in its own products, near future revenues, and profits. This message comes after a confusing period that saw Microsoft take a nearly billion-dollar write-down on the failure of its Surface RT tablets; the company and management structure was radically overhauled into the new “One Microsoft” pattern; CEO Steve Ballmer announced his departure from the firm; and a huge, potentially risky, purchase of Nokia’s smartphone division was made.
Microsoft’s great rival Apple made similar moves a few years ago, also to appease its investors–though in this case it was a move to spend some of the company’s vast cash stockpile.