Microsoft plans $40B buyback By Byron Acohido, USA TODAY http://news.yahoo.com/s/usatoday/20060721/tc_usatoday/microsoftplans40bbuyback
(my comment: from what i've been hearing about vista.. RIP microsoft) Microsoft (MSFT) on Thursday announced plans to buy back up to $40 billion of its shares, signaling confidence in a slate of new products and initiatives keyed to the launch of Windows Vista and Office 2007 next year. That news came as it reported a 24% quarterly decline in earnings from the year-ago quarter, due partly to a fine levied by European antitrust regulators. The software giant also raised its outlook for its current fiscal year, as early orders for the upcoming new versions of Windows, Office and related products exceeded expectations. "Our upcoming launches ... position us to continue to deliver strong revenue growth in fiscal year 2007," CFO Chris Liddell said. In its fiscal fourth quarter, Microsoft had net income of $2.8 billion, or 28 cents a share, on revenue of $11.8 billion. That reflects a 3-cents-a share charge, or $351 million, largely related to a fine levied by the European Commission for defying an order to remedy illegal practices. Also contributing to lower profit: higher spending in the MSN and Xbox units, where Microsoft competes against Google, Yahoo, Sony and Nintendo. Net income a year earlier was $3.7 billion, or 34 cents a share, on revenue of $10.2 billion. Microsoft reported results after markets closed. In after-hours trading, shares climbed 5.5%. In regular trading, shares closed at $22.85, down 55 cents. The big stock buyback will come in two stages. The first, starting today, will be a $20 billion tender offer at prices from $22.50 to $24.75 a share and is scheduled to end Aug. 17. The second will be a more traditional buyback for another $20 billion worth of shares through 2011. "The buyback is a fairly aggressive statement that they believe the stock is undervalued," says Alan Davis, tech stocks analyst at D.A. Davidson. Since the company's last quarterly report in late April, Microsoft shares have dropped about 16%, while the S&P 500 index slipped 5%. "The big mountain in front of Microsoft is the stock hasn't done anything for four years," says Mike Tarsala, tech stocks analyst at Briefing.com. "They have some dominoes lined up, but they've got to follow through and make something happen." Liddell projected Microsoft will generate revenue of $49.7 billion to $50.7 billion in fiscal 2007, and earn $1.43 to $1.47 a share in profit, slightly more than Wall Street's forecasts. A bright spot in the just-ended quarter: The company reported unearned revenue - a key benchmark - of $10.9 billion, up 19% from the year-ago quarter, signaling interest in the oft-delayed Vista and in the new Office, says Andy Miedler, software analyst at Edward Jones. "This shows customers are willing to sign up for longer-term agreements - and what they think of new products coming out of the company," Miedler says. Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
