Microsoft’s $20 Billion Stock Repurchase

The largest segment of clients of Onsite Computer Services in New Orleans is small business owners who rely on Microsoft products to successfully operate their firms.  Most of these business owners invest in the stock market and their portfolios contain Microsoft stock.  Yesterday, as the stock market continued its roller-coaster ride of the past year, a client bemoaned the 20% decrease in value of Microsoft shares since the SNAFUs associated with the failed Yahoo purchase and lackluster Vista sales.  Microsoft is currently trading at the lowest price-earnings ratio since the software maker went public 22 years ago. 

Any student of corporate finance understands the importance of a public company’s share price and the expectations of investors and analysts.  Steve Ballmer is well aware of Microsoft’s poor stock performance since February’s failed Yahoo purchase, and Mr. Ballmer is addressing this issue with a $20 Billion repurchase of its stock.  According to CNBC, the stock repurchase plan should be completed within 90 days.  The net effect of the buyback is an expected ~50% increase in Microsoft’s share price to $40/share within the next year.  

Some contend Microsoft’s war with Google for online supremacy is all but lost.  Ballmer realizes Google’s critical mass in search engine and online advertising is significant and Microsoft must commit considerable investment in R&D and marketing in the next few years to pose a challenge to Google’s supremacy.

What do you think?  Should Microsoft invest the time and money to compete with Google in the online game?  Is one, super-large, online search engine and advertising firm good for consumers?

If you’re searching for New Orleans computer service or repair of your Microsoft based system or network, then call the Microsoft specialists at 504-469-6991. Onsite Computer Services, Inc. in New Orleans

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This New Orleans On-Site Computer Service post was provided by Eli Lucas. Eli can be reached at eli@onsitenola.com. Onsite Computer serves the Microsoft computing needs of small businesses throughout the Greater New Orleans area including Uptown, Lakeview, Broadmoor, Mid-City, Metairie, Jefferson, Kenner, Westbank, French Quarter, and the Warehouse District. Please visit our website for New Orleans Computer Service.