Microsoft to buy back another $16.2 billion in shares

Microsoft plans to buy back almost double the amount of shares than originally anticipated, increasing its 2011 buy-back initiative's spend by $16.2 billion.

Following on from a dutch auction tender, the software giant announced that it will execute the first phase of the regime by buying 155 million shares back at a total value of $3.8 billion. The long-term plan is to spend $36.2 million in the same vein.

Against the backdrop of some poor industry results, Microsoft is looking very healthy financially.

The company's cash and short-term investment pool stood at $34.16 billion at the end of financial year in June. It also enjoyed a healthy financial quarter with record revenues of $11.8 billion, which is a 16 per cent increase for the same period in 2005.

This re-investment is indicative of that vitality, according to analysts.

"This is very much business as usual," said Tony Lock, research director at Sageza.

"It's a incredibly common among successful IT businesses who sell lots of shares to get the initial cash for investment and then buy some back as they mature. This is not an alternative to acquisitions for Microsoft; it's literally another part of its strategy."

Back in May, Microsoft announced plans to acquire enterprise security specialist Whale Communications. The company also hopes to make it big in the entertainment marker, replicating the success it has enjoyed with desktops and servers.

Chief executive Steve Ballmer laid out plans at Microsoft's annual financial analyst meeting last month, promising the future would benefit shareholders.

"I know that there are certainly also some questions that people have, but I think that this next era of Microsoft will be more exciting, we'll be able to generate more shareholder value, we'll be able to generate more innovation and have more impact that changes the world positively than even the last 10, 15, 20, 30 years," he said.

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