Microsoft received a modest vote of confidence from Wall Street as it emerged that few investors had been willing to sell back their stock to the company in an unusual $20 billion (€15.59 billion)Dutch auction.
The fact that the software company was only able to purchase about a fifth of the stock it had offered to buy back suggests that there are relatively few sellers of the shares at current levels and could help to support the stock in the future, according to analysts.
The shares rose 3.4 per cent yesterday morning on news of the auction results.
Microsoft said it had bought back 155 million shares at the maximum price it had offered of $24.75, or $3.8 billion in all. The remaining $16.2 billion that had been set aside for the auction will be added to the company's existing stock repurchase plan, raising the total authorised repurchases to $36.2 billion by 2011.
The $20 billion auction, announced a month ago, was part of a series of actions by Microsoft to revive its dormant share price by returning more of its cash to shareholders.
However, at $25.53 yesterday, the shares were trading at roughly the level of five years ago. When Microsoft announced the Dutch auction a month ago, the price of up to $24.75 a share represented an 8 per cent premium to the market price.
News yesterday that only 155 million shares had been tendered in the auction appeared to suggest that there were few willing sellers on Wall Street. - (Financial Times service)
