Strategic Initiative Paper.

1324 Words Mar 28th, 2011 6 Pages
Running head: MICROSOFT STRATEGIC INTIATIVE 1 MICROSOFT STRATEGIC INTIATIVE � PAGE * MERGEFORMAT �7�

Microsoft Corporation - Strategic Initiative Paper

Ruby Lee, Edward Abaunza, Brian Hammock

University of Phoenix

Finance for Business

FIN 370

Grace Reyes

August 29, 2010





Microsoft Corporation - Strategic Initiative Paper

Over the past few years the economy in the United States has taken a downturn. It has been so bad, that some businesses were not able to survive. However, Microsoft Corporation (Microsoft) was not one of those companies. The fiscal strength of Microsoft played a large part in providing the company with the ability and resources to survive the difficult financial markets (Microsoft Corporation, 2009). As a
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It is the goal to maximize the wealth of shareholders and Microsoft was able to use their excess cash to repurchase stock that led to a large return. The repurchase of stock has taken place over the last few years and has helped to increase the shareholders return. Another impact of costs would be operating expenses. The cost of revenue has been rising over the last few years. (Microsoft Corporation, 2009)

When companies set out to repurchase shares of its own stock, they are generally thinking that doing so will increase earnings per share rather than having a direct effect on its sales. In other words, there is no direct relationship on a company's sales if they decide to repurchase their stock. However, there are potential tax savings to shareholders. Companies can do a few things when providing value to their shareholders, they can either pay a dividend, which is a certain amount per share, per quarter, that puts money back into the investors original investment, or they can decide to repurchase their own stock, boosting earnings per share and the potential for their stock to grow exponentially because the number of shares outstanding is reduced.

In the case of Microsoft, they have announced the potential to repurchase up to $40 billion of their own stock by September 30, 2013 if they see the need to do so. They have also decided to stick with their dividend program boosting it to .13 per

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