Microsoft has run a repurchase program in order to support the prices of their shares
According to the Wall Street Journal, Microsoft, the world leader among software developers has announced a new program without a limitation period. This program means repurchasing of their own shares that amount to $ 40 billion. This is about 9% of the company’s market capitalization, which is equal to $ 442, 7 billion. In addition, the Board of Microsoft Directors blessed the payment of dividends in the amount of $ 0.39 per share, increasing them by 8%.
Microsoft is one of the most active companies from those that are practicing the share buyback. TWSJ draws attention that Microsoft has spent on this program about $ 140 billion in recent years. The share buyback program envisages the purchase of their shares on the open market. Most often this program is referred to if the company’s securities are undervalued.
However, the company has raised their dividends less than previously. For example, in 2015 the company’s Board of Directors established the payment of 36 cents per share. Due to this an increase amounted to 16%, while in 2014 the payment grew up to 11%. The Wall Street Journal noted that the company had been rapidly growing in the 1990s. This was due to the quick distribution of PCs in that period. Later, the growth rate decreased and Microsoft began to make their shareholders more generous offers regarding the dividends as well as a share buyback program.
These actions were intended to support the value of the securities, reducing their number and increasing their profitability. Even when PC sales slowed down, reducing Microsoft’s revenue from the promotion of the OS Windows, a constant flow of funds didn’t stop. This has happened because Microsoft is selling other software and services. Microsoft securities have risen by 31% for the last year.