MSFT: $60B Buyback, 10% Dividend Boost
$Microsoft(MSFT)$ announced a new $60 billion stock buyback plan, replacing the previous plan announced in 2021. This buyback plan has no set end date.
Alongside this, the tech giant is raising its quarterly dividend by 10%, from $0.75 to $0.83 per share. The new dividend will be paid on December 12, 2024, to shareholders on record as of November 21, 2024.
As the world’s second-largest company by market value, Microsoft has benefited significantly from the AI investment boom in recent years.
The company has integrated AI technology from its partner OpenAI into its products, claiming these tools enhance its business applications like Teams, Word, and Outlook. Earlier on Monday, Microsoft also launched a suite of new AI tools.
After the buyback announcement, Microsoft’s stock rose less than 1% in after-hours trading but closed at $431.34 in regular trading, up 31% over the past year. The stock had already been climbing for six consecutive days before the announcement, fully recovering from any declines since the July earnings report.
The July 30 earnings report showed Microsoft’s revenue exceeded expectations with a 15% increase, and both earnings per share and operating income grew in double digits, surpassing Wall Street forecasts.
However, Azure’s quarterly revenue growth fell short of expectations, and capital expenditures surged by 77.6%, almost entirely for AI-related investments. Microsoft also indicated it will continue increasing spending, which has raised concerns about the long-term returns from AI investments.
As of June 30, Microsoft held $75.5 billion in cash and equivalents. In July, the company reported a free cash flow of $23.3 billion for Q4 of the fiscal year, an 18% increase year-over-year, reflecting higher capital expenditures due to cloud and AI investments.
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