Microsoft CEO Steve Ballmer at CES last year. (Microsoft photo)
Microsoft CEO Steve Ballmer at CES last year. (Microsoft photo)

Microsoft is boosting its quarterly dividend to 28 cents a share, a 5 cent increase — slightly more than Wall Street analysts had been expecting. The company also says its board has authorized another $40 billion in share repurchases, replacing a previous repurchase program that was set to expire.

“These actions reflect a continued commitment to returning cash to our shareholders,” said Amy Hood, Microsoft chief financial officer, in a statement.

The increase, announced this morning, is the latest change at the company as it comes under increased pressure to boost value for shareholders. The move comes after Steve Ballmer announced plans to retire as CEO, the company reached a $7.2 billion deal for Nokia’s devices business, and Microsoft’s board agreed to give a seat to activist investor ValueAct Capital.

“We view this as a further indication that things are changing at Microsoft with respect to corporate governance that we believe could benefit shareholders over the next 6–12 months,” says analyst Rick Sherlund of Nomura Equity Rsearch in a note to clients this morning. “The new CEO search could result in a tighter focus on its lines of business (we have suggested search and Xbox lose money and are not essential, but Windows, Office and Server and Tools belong together just as hamburgers, fries and chicken nuggets are complementary and all make sense in Value Meals at McDonalds).”

The announcement comes in advance of Microsoft’s meeting with financial analysts Thursday afternoon in Redmond.

 

Comments

  • Ryan Parrish

    Microsoft increases dividend pretty much every year, and the buyback program has already been around for quite a while too. So, nothing new here.
    Do you have a Microsoft story quota or something?

    • Guest

      Nothing new per se, but probably much more than the board would have done if not for recent pressure from activist investors. Which in turns means they no longer believe they can do whatever they want, as they have for the last thirteen years. That alone is a huge change, without even getting into Ballmer’s departure or ValueAct being offered a board seat.

      • Ryan Parrish

        What a load of bullshit. The stock buyback and dividend increase were predictable and ValueAct has nothing to do with it. They will only have impact in the next fiscal year. This fiscal year, planning wise, is basically over, so they can only hope to effect change in the next year.

        • Guest

          If it was so predictable, you should have no trouble providing a link to any analyst who correctly did so, right? And since you’re not privy to any board discussions between ValueAct or any other large investor, your statement that they had “nothing to do with it” is opinion, not fact. In mine, ValueAct already had an impact before the year even started. Which is why Ballmer is suddenly out when every indication in the weeks previous was he’d be staying for years more, and this dividend and buyback is larger than anyone expected. And just because budgets were close to set, doesn’t mean ValuAct and other investors weren’t successful in getting MS to increase payouts beyond what they originally intended. It merely means the company will have to make cuts elsewhere during the course of the year in order to stay on budget.

          • Ryan Parrish

            Microsoft increases dividends every year like clockwork since the stock price hasn’t moved in a decade, hence the predictability of that. The stock buyback is predictable for the same reason. With continual insider shares being issued and the stock price not moving on its own, buybacks are another way to shore up the stock price. This “new” $40 billion program is exactly the same as the $40 billion program it replaces, and is being instituted for the same reasons. Microsoft has already been doing this for half a decade which is why continuing exactly what they’ve been doing is 1) nothing new and 2) not surprising in the least unless you’ve been asleep for 10 years. So, to think that ValueAct has anything to do with it other than approving of a plan that already existted is to ignore the history of how Microsoft has been handling its stock the last 5 years.

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