Microsoft Plans Debt Sales, $40 Billion Stock Buyback
Sept. 22 (Bloomberg) -- Microsoft Corp., seeking to revive the share price after a 29 percent slump this year, plans to buy back as much as $40 billion in stock, raise its dividend and issue its first commercial paper.
Microsoft rose 4.7 percent in early trading after adding a $2 billion commercial paper program and saying it may ultimately sell as much as $6 billion in debt. Standard & Poor's gave its highest possible credit rating to Microsoft, the first company to get the AAA rating in a decade.
The world's biggest software maker is returning money to shareholders after its failed $47.5 billion bid for Yahoo! Inc. drove down the stock. Redmond, Washington-based Microsoft had slowed the pace of repurchases to $12.4 billion in the fiscal year ended June 30 as it tucked away cash to buy Yahoo.
Chief Financial Officer Chris Liddell called the stock price ``incredibly frustrating'' at a meeting with analysts in July and said a buyback ``makes more sense than it ever has.''
The new dividend will be 18 percent more than the previous payout, the company said today in a PR Newswire statement.
Microsoft is increasing sales faster than competitors on average and has ``strong'' profitability, Standard & Poor's said. That allows it to make acquisitions, buy back stock or pay dividends without risking its credit quality, the ratings company said.
The previous AAA was assigned to Automatic Data Processing Inc. in 1998. Exxon Mobil Corp., General Electric Co., Johnson & Johnson and Pfizer Inc. also have the rating.
Microsoft gained $1.19 to $26.35 at 8:55 a.m. New York time before the start of Nasdaq Stock Market trading.
BLOOMBERG
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