23 September 2008 | Team Tamar

Microsoft’s $40 billion buy back

Microsoft has made the quite extraordinary decision to buy back its shares from investors, this would make it the biggest buy back plan in history.

Top analysts believe the rationale behind the move is to support the companies falling share price by using some of its spare cash.  Microsoft is sitting on a profit mountain of around $23.7bn, and often proclaims that in its celebrated 33 year history it has never been in debt.

Following the company’s failed attempt to buy the internet portal Yahoo! it has a lot of funds available that need to be used resourcefully, and the share buying scheme would be the perfect use of such capital in the current climate.  Michael Holland, co founder of Holland and Co commentated: –

"When companies have come in to buy their own stock subsequent to a financial crisis, they’ve bought at attractive prices and it’s been a good use of liquidity,"

Team Tamar