A lot of changes have been going on at Microsoft Corporation (NASDAQ:MSFT) lately. The company announced a major reorganization. Then CEO Steve Ballmer said he would retire sooner rather than later. Then one of the biggest bombshells of all—Microsoft announced it would buy Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s devices division.

Microsoft

ValueAct takes a stake in Microsoft

All of these changes started happening not long after the activist investment firm ValueAct Capital took a stake in Microsoft, so it’s natural to question how much the firm has been involved. The firm received approval to go activist on the company not long after taking a stake, but it’s starting look more and more like the only thing ValueAct is influencing Microsoft Corporation (NASDAQ:MSFT) is its capital allocation plans.

Expectations for Microsoft’s analyst day

Barclays analysts Raimo Lenschow, Chris Hogan and David Wang issued a report to investors this week explaining why they believe some catalysts may be coming soon for Microsoft. The company’s analyst day is set for Sept. 19, and they expect management to talk about the financial aspect of the Nokia devices purchase. They also expect to hear more about Microsoft’s monetization strategy for Office 365 and an enhanced cash return program.

According to the analysts at Barclays, the expanded cash return program is likely the result of activism from ValueAct. They note that Microsoft Corporation (NASDAQ:MSFT)’s share repurchasing program expires at the end of this month, and there have been other indications that ValueAct might push for greater cash return to investors. Barclays analysts believe Microsoft may choose to return capital by increasing its dividend yield to somewhere in the 4 percent range and / or accelerating a share repurchase program over the $5 billion the company spent annually over the last two years.

When ValueAct Bought Microsoft

A look at ValueAct’s first quarter investor letter sheds some light on chief Jeff Ubben’s thoughts regarding Microsoft Corporation (NASDAQ:MSFT) at the beginning of the firm’s investment into the company. They compared it to their investment into Adobe Systems Incorporated (NASDAQ:ADBE) more than a year ago.

Like Adobe, Microsoft has traded sideways for years, and Ubben sees value in Microsoft in spite of this. At the time of the initial investment, ValueAct believed that Microsoft suffered from a “perception problem” because of the declining PC industry. However, the firm noted that almost 70 percent of the company’s earnings come from its enterprise businesses, which are growing. ValueAct also said that it believed Microsoft will be able to make a similar shift to cloud-based subscription services the way Adobe did with its Creative Cloud.

At this point ValueAct’s stake in Microsoft Corporation (NASDAQ:MSFT) is worth almost $2 billion, but that’s still just a very small fraction of Microsoft’s worth. So while it’s interesting that the changes at Microsoft started happening when ValueAct bought shares, this may be nothing but a sign that Microsoft realized that change was long overdue.