Microsoft Boosts Dividend, Announces Share Buyback

SEATTLE (The Seattle Times/MCT) -

Microsoft Corp.’s board of directors on Tuesday boosted its quarterly dividend to 28 cents per share, up from the 23 cents per share that has been paid out for the past several quarters.

In addition, the board approved a new $40 billion stock-buyback program, which replaces the one set to expire Sept. 30. The new buyback program has no expiration date.

The 22 percent increase in the quarterly dividend was “a bit larger than the 15 percent” Wall Street analysts had expected, longtime Microsoft analyst Rick Sherlund wrote in a note to investors Tuesday morning.

Sherlund, who works for investment bank Nomura, added in his note that the move “likely signals some ongoing changes in corporate governance.”

The dividend is payable Dec. 12 to shareholders of record as of Nov. 21. The ex-dividend date will be Nov. 19.

Among the big changes sweeping Microsoft in recent months are a huge company-wide reorganization, the announcement that CEO Steve Ballmer will retire within 12 months once his successor is appointed, a board-seat option for activist investor ValueAct and the purchase of Nokia’s entire handset operation.

Sherlund noted that the new share-buyback program replaces one that was also worth $40 billion, and that “the pace of share repurchase had slowed at the company so it is not clear that the new program implies any more aggressive plans.”

He sees Tuesday’s announcements “as a further indication that things are changing at Microsoft with respect to corporate governance that we believe could benefit shareholders over the next 6-12 months. The new CEO search could result in a tighter focus on its lines of business (we have suggested search and Xbox lose money and are not essential, but Windows, Office and Server and Tools belong together),” he wrote.

The moves come ahead of a financial analysts meeting that Microsoft is holding Thursday, at which Ballmer, CFO Amy Hood and COO Kevin Turner are expected to talk about the company’s reorganization and shift toward becoming a devices and services organization.