Microsoft announced yesterday that its board of directors has approved a new $40 billion share repurchase program (via Business Insider). As the company’s market capitalization reached $442,7 billion yesterday, this means that Microsoft will buy back roughly 9% of its own shares. This is not the company’s first stock repurchase program as the company explained in a press release that it expects to complete a current $40 billion stock repurchase program by December 31, 2016.
Companies often use stock buybacks to deal with excessive cash and reward shareholders, by using some of that cash to repurchase outstanding stocks, making the remaining stocks more valuable. Dividend payouts is an alternative solution to do it, and Microsoft’s board of directors also announced yesterday that it has agreed on a quarterly dividend of $0.39 per share, which represents an eight percent increase over the previous quarter’s dividend. The company also announced that their annual shareholders meeting will be held on November 30, 2016.