MSFT: Now's the Time to Buy

In my post Microsoft a Dhandho investment I made a point that Microsoft (MSFT) should aggressively buyback its shares: "As for Microsoft, I believe this is an ideal time to repurchase their own shares and finance the Yahoo deal with debt if they must."

Seems like such demands haven't gone unheard. Microsoft has decided to buy back 40B worth of shares. To fund this buyback they are taking debt, something this company has shied away from for a long time.

With Microsoft's earnings and low interest rate, it is the easiest way to increase EPS and reward the shareholders. Wall street apparently did not seem impressed by this news. It's good news for all the investors who intend to buy Microsoft shares. Now is the time.

Disclosure: Long

Comments

[MarvinMBA:]

Microsoft is the best information technology play out there. Everywhere and everything you do in this world has the Microsoft touch of technology.
This investment at this time will make your portfolio happy. I agree 100 percent with this recommendation by Agarwal. MarvinMBA

2008 Sep 23 10:15 AM

[ali k:]

On a long-term scale - is it possible that SAAS and the likes of Google will steal market share away from Microsoft?

2008 Sep 23 12:39 PM

[Stone Fox C...:]

This plan while increasing the dividend doesn't really add much to the past buyback. MSFT bought back $9M in shares over the last 12 months and this only works out to $8B. Still the Net Payout Yield is 6% so MSFT is attractive at these prices.

2008 Sep 23 12:52 PM

[jack dee:]

where do you get a payout of 6% from. I am not disputing it just asking you to point me there. Or show me how thanks

2008 Sep 23 01:56 PM

[whidbey:]

You are likely wrong. MSFT has become a collection of slobs who can sell only monopoly goods, and have not got a creative bone in the whole body corporate. Any company their size that finds its stock a better buy than R&D and new products is a loser. This is a firm that is on the long slow ride to death. Look else where. MSFT and YHOO are dead men walking, not the future.

2008 Sep 23 02:52 PM

[Chad @ Sent...:]

Have to agree with the last poster...making money is all that matters. Sure MSFT won't go to $80, but even if it just moves back to the mid-$30's you would make some money. The breadth and length of the downturn will be the final factor.

2008 Sep 24 09:34 AM

[Sud:]

To make their stock more attractive to investors MSFT should first of all increase their dividend payout. They are a mature company that and not investing much in R&D, so why are holding out to all that cash? Let the shareholders benefit.

2008 Sep 24 11:02 AM

[Norman Lepo...:]

We've been hearing that it is time to buy MSFT for the past 8 years. Why now?

2008 Sep 24 11:27 AM

[Tom B:]

" We've been hearing that it is time to buy MSFT for the past 8 years. Why now?"

Necause they are SO well positioned: Ballmer at the helm; Win Mobile getting creamed by the iPhone; Vista a paragon of OS perfection; Xbox still losing money.

I think MSFT should buy back even MORE stock. 60 Billion. And then when the stock price doesn't budge, all that cash has simply evaporated.

2008 Sep 24 12:52 PM