Microsoft Corporation (NASDAQ:MSFT) has just announced a huge $40 billion stock buyback. The company also announced that it was going to increase its dividend for the coming quarters. The announcement sent the price of Microsoft Corporation (NASDAQ:MSFT) shares up by more than 1% in pre market trading.
Capital return programs including buy backs and dividends have become popular among big tech companies with a lot of money to spend. Some companies, like Apple Inc. (NASDAQ:AAPL) began to start paying a dividend in recent years. Microsoft Corporation (NASDAQ:MSFT) is just the latest tech firm to send extra cash back to shareholders.
Microsoft capital return program
Microsoft Corporation (NASDAQ:MSFT) announced this morning that it was going to increase its dividend to 28 cents per share, a more than 20% increase on last year’s 22 cents per share. The company also announced a $40 billion buy back of its own shares.
The new share repurchase program replaces the company’s previous return program. That buyback was also valued at $40 billion, and was set to expire this month. The new share buyback reflects “a continued commitment to returning cash to our shareholders,” according to Amy Hood, Chief Financial Officer at Microsoft Corporation (NASDAQ:MSFT).
The Microsoft Corporation (NASDAQ:MSFT) buyback comes at a time of immense change for the company. Just a few months ago the company announced a massive restructuring of its business. That announcement was followed by a massive write down on its table business, and the resignation of the company’s CEO Steve Ballmer.
Since Ballmer resigned Microsoft Corporation (NASDAQ:MSFT) announced that it was going to acquire the Nokia Corporation (NYSE:NOK) smart phone business. That news met with disappointment from the market and shares in the company dropped a large amount of their value.
This mornings announcement that Microsoft Corporation (NASDAQ:MSFT) would seek to return shares in the company to stability, with each share becoming more valuable than it was in the past. The market has been impressed initially with the buyback, but the first glow may not last past the firm’s next big announcement.