Although it is one of the richest companies in the world, Microsoft Corp. can take advantage of financial flexibility that comes from borrowing money at current rates of interest.
Although it has almost 40,000 million dollars in cash and investments, the software giant announced Tuesday it would raise another $ 1,150 million by selling debt instruments that may be convertible for shares.
These new funds will be used to repay debt previously contracted and give the company more flexibility to increase its dividend or buy back shares.
Analysts said Microsoft is under pressure from its investors to use its large cash reserves in the expansion of the same company and thus strengthen shareholder returns.
"They can take on more debt and reinvest in the stock buyback, which would have much more value" for investors, said Sid Parakh, an analyst with McAdams Wright Ragen in Seattle.
When a company repurchases its shares and removed from the market price of remaining in increase in value because they often have a greater stake in the company. Shares of Microsoft could build on this momentum, because their actions today are worth about the same as what they were worth last October.
As of March 31, Microsoft had 40,000 million dollars in cash and short-term investments to another 6,000 million dollars in debt to the short and long term.
The debt is relatively low considering that the company generated U.S. $ 7,400 million cash transactions only in its most recent quarter.
Microsoft pulled the debt sale for the first time in May 2009, the documents provide 3,750 million dollars in papers with maturities of five, 10 and 15 years and with interest rates ranging from 2.95% to 5 2%.
Until March 31, Microsoft had debts of $ 2,300 million in instruments known as commercial paper on their books, which have expiration period from next month until the next seven months.
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