Microsoft announces a $60 billion repurchase and a 10% dividend increase, following a 31% increase in share price over the previous year.
TakeAway Points:
- Microsoft announces a $60 billion stock buyback programme, matching its largest-ever repurchase authorisation, in an indication of its confidence in future performance.
- The business increases its quarterly dividend by 10% to 83 cents per share, demonstrating its sound financial standing and dedication to maximising shareholder value.
- Consistent rise in revenue and profit has propelled Microsoft’s shares to a 31% gain over the previous year.
- Microsoft Corp. announced a significant deal with Vodafone Group Plc to use AI assistants for Office, along with new AI tools designed to enhance productivity in applications like Excel, Outlook, and Teams.
New Buyback Program
Microsoft Corp. has announced a new $60 billion stock-buyback program, matching its largest-ever repurchase authorization. This new program replaces the previous $60 billion buyback program announced in 2021 and has no expiration date. The announcement comes as the shares of the Redmond, Washington-based company have gained 31% over the past year. The buyback program is seen as a move to return capital to shareholders and signal confidence in the company’s future performance.
The buyback program is part of Microsoft’s broader strategy to manage its capital efficiently. By repurchasing shares, the company aims to reduce the number of outstanding shares, thereby increasing the value of remaining shares. This move is often viewed positively by investors as it can lead to higher earnings per share (EPS) and potentially boost the stock price.
Dividend rise
In addition to the buyback program, Microsoft has also announced a 10% increase in its quarterly dividend. Shareholders as of November 21 will receive a quarterly dividend of 83 cents per share, up from the current 75 cents. This marks a continuation of Microsoft’s policy to return capital to shareholders through dividends.
The dividend increase reflects Microsoft’s strong financial position and its ability to generate substantial cash flow.
“The dividend increase and the new buyback program are clear indicators of Microsoft’s robust financial health and its commitment to delivering value to shareholders,” said Harshita Mary Varghese, a financial analyst at Reuters.
Financial output
Microsoft’s financial performance has been strong, with the company’s shares gaining 31% over the past year. The company’s ability to generate consistent revenue and profit growth has been a key driver of its stock performance. The new buyback program and dividend increase are expected to further enhance shareholder value.
The company has also scheduled its annual shareholders meeting for December 10, where further details about its financial performance and future plans are likely to be discussed. Investors will be keen to hear more about Microsoft’s strategies for growth and capital allocation.
Microsoft AI Tools and Vodafone Deal
Microsoft Corp. announced a significant deal with Vodafone Group Plc to use AI assistants for Office, along with new AI tools designed to enhance productivity in applications like Excel, Outlook, and Teams. Vodafone will purchase 68,000 licenses for the AI assistants, known as Copilots, after early trials showed that workers saved about three hours a week per person. Other clients include Honeywell International Inc. and Finastra Group Holdings Ltd.
Microsoft reported a 60% increase in Copilot customers in the most recent quarter, with the number of clients having more than 10,000 users doubling. The Copilots, which cost $30 a month per user, are seen as a potential major new revenue stream. However, some features remain a work in progress, particularly those involving content generation and tasks requiring contextual understanding.
The company is also introducing a new feature for Copilot’s chat application called Pages, which allows coworkers to collaborate using both created and AI-generated data. Additionally, new AI features for Excel will help users create charts, pivot tables, and perform tasks using the Python programming language. Microsoft is also rolling out new AI features for Word, Teams, and PowerPoint, including a “Prioritize My Inbox” option in Outlook that analyzes and summarizes messages based on user behavior.
