24 Sep 2008

$US40b buy-back by Microsoft

9:50 am on 24 September 2008

Microsoft has announced plans to spend $US40 billion buying back its shares from investors - the biggest single buy-back plan in history.

Analysts say the move is an attempt by the giant software company to use its spare cash to prop up its share price which has fallen by almost 30% this year.

Personal computer-maker Hewlett-Packard and Nike have also announced major buy-back programmes.

HP will buy back $US8b of shares, while Nike's plan is worth $US5b.

Microsoft said the buy-back plan showed its "confidence in the long-term growth of the company and our commitment to returning capital to our shareholders."

Shares in Microsoft have declined this year, partly due to a failed $US47.5b bid to buy the internet portal Yahoo.

At the end of June this year, the company had $US23.7b in cash. Microsoft has never been in debt in its 33-year history.

The buy-back, which will run until 2013, is reported to be the largest single announced share-buyback in history.

It follows a previous 2004 plan which started as a $US30b project and was later boosted by another $US10b.

Last week HP announced it was cutting 24,600 jobs in the wake of its acquisition of Electronic Data Systems Corp.