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Microsoft announces $60 billion stock buyback after 31% surge

Posted on by angelo
Microsoft announces billion stock buyback after 31% surge

Microsoft announces $60 billion buyback and 10% dividend increase, following a 31% year-over-year share price increase.

Key points:

  • Microsoft announces $60 billion stock repurchase program, largest-ever share repurchase authorization, signaling confidence in its future performance.
  • The company is increasing its quarterly dividend by 10% to 83 cents per share, demonstrating its strong financial position and commitment to maximizing shareholder value.
  • Steadily rising revenue and profits have propelled Microsoft shares to a 31% gain over the previous year.
  • Microsoft Corp. announced a major deal with Vodafone Group Plc to use AI assistants for Office, as well as new AI tools designed to improve productivity in applications like Excel, Outlook and Teams.

New buyback program

Microsoft Corp. announced a new $60 billion stock repurchase program, its largest-ever repurchase authorization. The new program replaces a previous $60 billion repurchase program announced in 2021 and has no expiration date. The announcement comes as shares of the Redmond, Washington-based company have gained 31% over the past year. The repurchase program is seen as a move to return capital to shareholders and demonstrate confidence in the company’s future performance.

The share repurchase program is part of Microsoft’s broader strategy to manage its capital efficiently. By repurchasing shares, the company aims to reduce the number of shares outstanding, thereby increasing the value of the remaining shares. This move is often viewed positively by investors as it can lead to an increase in earnings per share (EPS) and potentially an increase in the stock price.

Dividend increase

In addition to the buyback program, Microsoft also announced a 10% increase in its quarterly dividend. Shareholders will receive a quarterly dividend of 83 cents per share starting November 21, up from 75 cents currently. This move is in line with Microsoft’s policy of returning capital to shareholders through dividends.

The dividend increase reflects Microsoft’s strong financial position and ability to generate substantial cash flows.

“The dividend increase and the new share buyback program are clear indicators of Microsoft’s strong financial health and its commitment to delivering value to shareholders,” said Harshita Mary Varghese, a financial analyst at Reuters.

Financial performance

Microsoft has been performing well financially, with the company’s stock up 31% over the past year. The company’s ability to generate consistent revenue and earnings growth has been a key driver of its stock performance. The new share buyback program and increased dividends are expected to further boost shareholder value.

The company has also scheduled its annual shareholder meeting on December 10, where more details on its financial results and future plans are expected to be discussed. Investors will be interested in Microsoft’s growth and capital allocation strategies.

Agreement between Microsoft AI Tools and Vodafone

Microsoft Corp. announced a major deal with Vodafone Group Plc to use AI assistants for Office, as well as new AI tools designed to improve productivity in applications such as Excel, Outlook and Teams. Vodafone will buy 68,000 licenses for the AI ​​assistants, known as Copilots, after early trials showed workers saved about three hours a week per person. Honeywell International Inc. and Finastra Group Holdings Ltd. are also among its customers.

Microsoft reported a 60% increase in Copilot customers in the last quarter, with the number of customers with more than 10,000 users doubling. Copilots, which costs $30 per month per user, is seen as a major new revenue stream. However, some features remain in development, including those involving content generation and tasks requiring contextual understanding.

The company is also introducing a new feature for Copilot’s chat app, called Pages, that lets coworkers collaborate using both AI-created and AI-generated data. Additionally, new AI features for Excel will help users create charts, pivot tables, and complete tasks using the Python programming language. Microsoft is also rolling out new AI features for Word, Teams, and PowerPoint, including a “Prioritize My Inbox” option in Outlook that analyzes and summarizes messages based on user behavior.