Rare Interview with Jeff Ubben on Microsoft [VIDEO]

Following Microsoft’s announcement of a 22 percent dividend increase. CNBC’s Kate Kelly spoke to ValueAct’s Jeffrey Ubben about his new seat on the board at Microsoft. And John Netto, M3 Capital president, shares what you should be watching ahead of tomorrow’s FOMC statement.

Transcript:

we are live at the nasdaq market site. let’s turn to news about microsoft. 40 billion $stock buy back. we sat down to discuss microsoft. that’s right, melissa. it was a little tough getting details on microsoft because they are in the middle of stuff. up is the activist investor whose firm disclosed a $2 billion stake earlier this year a few months before steve balmer announced plans to resign. in the meantime, microsoft is searching for a successor to make other moves to be more shareholder friendly. in an interview just about an hour or two ago, he talked me through why he preferred microsoft’s business model. generally speaking, i think it’s a low fee business to get on a hampster wheel and not sell more of a product and black box every year. they like the slow change not the rocket change. as for google, he sees two problems. the first being a fickle ad market. is — could work for a long period of time. we have seen models get discounted over time. at some point the government says you can’t have 100% of search he said to the broader audience. all in all it seemed like a withering critique of microsoft competition. thank you very much for the latest. and of course, you know, the dividend interpretation was that it was a 22% increase. i’m a little bit surprised. i would have thought what could they do? i’m surprised they got a board seat? i don’t know if that was related to him leaving. as you know i’m bitter in the name and out. they talk about buy backs but they have 40 billion with a b. that’s a significant number. and the stock had a good take today and went effectively nowhere. you would have hoped to see a little more than what you have got. 40 billion buy back versus perception of a dying business and no ceo on the horizon? and that is the signal that a dividend says we have nothing to reinvest in so let’s give it back to everybody. this looked terrible. that’s the issue that we get at which have been breakneck pace. the $507 billion have been announced. and then you have microsoft and qualcomm. this is the highest level since 2007. what happened in 2007? a market peak. what does that tell you? it doesn’t tell you that there is a peak coming. i know there are s a lot of people who don’t like buy backs. my thought is look, if you can buy an asset that has value, then fine. put the money to work. in most cases i would rather have a buy back as a shareholder as opposed to just doing the dividend. it does matter what company is doing the buy back. some companies are notoriously bad at buying their own shares and some are very good. it is interesting to see. i was surprised to see that green mountain who is actually exceptionally good at buying back their own shares. would you be the chairman of that committee? chairman? chair person. okay? it’s 2013 for you. let’s get another market flash for you. this time on another buy back out there. dom? that’s right. we are looking at what’s happening with dollar tree, dlt the ticker. this company, a dollar store has announced that they have authorized a $2 billion share buy back. it’s not as big as microsofts. also saying that a billion dollars of it will be in accelerated repurchase. so again, $2 billion in the buy back. in addition, another $1 billion variable buy back subject to different ma isturety and that will be financed by debt. what should you be watching for? let’s get the fed play book. john? great to have you here on set. good to be here. let’s say it’s exactly what the market expected. what’s your first play? the first play, equity markets are going to sell off. it’s more than just 10 or 15 billion. the biggest thing is the possibility for misinterpretation. and whether or not they will possibly lower the employment threshold combined with the forecast. unemployment in gdp will all play a factor in how the market reacts. i think the first reaction will be that knee jerk based on the size of the taper. what is more important is how much the fed emphasizes as it pertains to equities. okay. so give me the best case scenario in terms of what they can say and which sectors would you pick to play that? specifically to risk assets. they come out with no taper and no conference. remember the fed only does press conferences on a quarterly basis. especially emerging markets. they couldn’t at some later time announce another press conference? or is that another conference? they don’t do that ever? the next over the halloween. clearly it is open to if the labor day improves significantly, which we see jobless claims. the payroll data has been weaker. and the big question out there is if they don’t do the taper, i suspect that the fed has to do a mandate. maximum appointment and price stability. and then putting a press conference over december. thanks for your time. coming up next, the former chairman of sun micro, a look at