Time was when tech companies didn’t do share buy backs or dividend payments. That was the preserve of traditional mature companies, operating in established markets. Tech companies were all about the future, and growth. This started to change when Microsoft announced a big share buyback some time ago. At the time its seemed unprecedented, but it’s beginning to look a little like a big tech giveaway. Yesterday we brought news of eBays’ plans to buy back $2 billion in shares. Today it’s Microsoft’s turn, again.
The software giant has announced its second share buy back of the year, this time, it’s forking out $20 billion buying shares worth 8 percent of total stock. The move gave the Microsoft share price a big lift in after hours trading, it was exactly the fillip the stock needed, because, yesterday, the company also announced a 24 percent fall in quarterly profit.
In all, net income came in at $2.38 billion. But there was nothing too sinister behind the fall in profits. Microsoft blamed legal expenses and higher costs, in fact sales were up, with fourth quarter revenue of $11.80 billion, that’s 16 percent up on a year ago.
In addition to the $30 billion share buy back that has already gone through, and the $20 billion just announced and which is due to go ahead in August, the company also announced plans to buy back a further $20 billion shares between now and 2011.
As for the future, its chief financial officer Chris Liddell was bullish. . “Our upcoming launches of Windows Vista, Microsoft Office 2007, Exchange Server 2007 and other key products position us to continue to deliver strong revenue growth in 2007,” he said.
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