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Microsoft Authorizes A Big $40 Billion Buyback; Ups Dividend

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imageWell, that’s one thing they can do with all their cash… Rather than buy anyone else, the Microsoft (NSDQ: MSFT) board has authorized the company to spend $40 billion on buying its own shares through September 30, 2013. In addition, the company is upping its quarterly dividend to $.13 per share, from $.11 previously. We’ve discussed several times in the past what Microsoft might do with all the cash burning a whole in its balance sheet. No doubt the company will keep making acquisitions, but once Yahoo (NSDQ: YHOO) fell through, there was nothing out there likely to move the needle. Hence a big share buyback was always a possibility. Just last month, UBS analyst Heather Bellini predicted a major buyback. Of course, the company isn’t obligated to spend the whole $40 billion. In the announcement, the company says it may tap the debt markets from time to time for working capital and to fund the share buy. Release.

Like many tech companies, Microsoft was, for a long time, reluctant to do anything that smacked of maturity, like buyback shares or issue a dividend. That changed in a significant way, in 2004, when it announced a special one-time, $3 per share dividend worth around $32 billion. Shares of Microsoft are up nearly 5 percent pre-market.

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