Business | Markets
Microsoft 'considers $20b share buyback'
Microsoft chief executive officer Steve Ballmer, whose botched bid for Yahoo! helped drive the stock down 20 per cent since February, is about to make it up to shareholders with a buyback of as much as $20 billion, according to a top-rated software analyst.
- Bloomberg
- Published: 00:07 August 7, 2008
Seattle: Microsoft chief executive officer Steve Ballmer, whose botched bid for Yahoo! helped drive the stock down 20 per cent since February, is about to make it up to shareholders with a buyback of as much as $20 billion, according to a top-rated software analyst.
Investors should buy now, while Microsoft is trading at the lowest estimated price-earnings ratio since the world's largest software maker went public 22 years ago, said Heather Bellini of UBS, ranked the best software analyst by Institutional Investor magazine in 2007.
She expects Microsoft to complete the repurchase - at least five times larger than its average per quarter in the last fiscal year - over the next three months. "They won't announce it until it's done," Bellini said.
A buyback of between $15 billion and $20 billion would lift earnings per share by as much as 10 cents annually, Bellini said. She expects shares of the company to climb 53 per cent to $40 in the next year.
Microsoft slowed the pace of repurchases to $12.4 billion in the fiscal year ended June 30 as it tucked away cash to buy Yahoo.
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