Microsoft announces $40 billion share buyback, boosts dividend 22%

Microsoft Corporation has increased its quarterly dividend by 22% and announced a $40 billion stock buyback plan.

According to FactSet, Microsoft’s market value is $273.2 billion. The new stock repurchase plan replaces a previous program for the same amount and has no expiration date.

Microsoft’s quarterly dividend has been raised by 5 cents, from 23 to 28 cents a share, increasing the company’s annual yield by approximately 3.4%.

The company said the dividend will be paid on December 12th to shareholders of record as of November 21st.

In September 2012, Microsoft raised the dividend payout by three cents, that was the last time dividends were boosted.

Microsoft has been paying a regular quarterly dividend since 2004. Today’s is the eighth increase and will cost the company an extra $422 million per quarter.

Recent changes in Microsoft

Microsoft, which says it is to focus more on tablets and smartphones, announced in August that Chief Executive Steve Ballmer, who has held that post since January 2000, planned to retire within a year.

Early this month Microsoft agreed with Nokia Corp. to acquire its floundering cellphone business for $7 billion. Most analysts see this as a daring plan to try to catch up with a market now dominated by Apple and Samsung.

Investors have criticized Steve Ballmer for relying too much on personal computers and not focusing enough on Internet services and mobile devices. Microsoft eventually responded by developing and marketing its own Surface RT tablet.

On July 19th this year, Microsoft shares suffered their largest one-day percentage sell-off since 2000 after investor concerns following its fourth-quarter report showing poor performances of both the Surface tablet and Windows 8 – with a more than 11 percentage points fall, Microsoft suffered a loss in excess of $32 billion.

This morning, Microsoft share price rose 17 cents to $32.97, approaching its 52-week high on July 16th of $36.43. In December 2012 it traded as low as $26.26.

Bill Gates remains the largest individual Microsoft shareholder, with 6.4 percent of the common stock.