Some major investors feel that as long as Microsoft management is breaking into the piggy bank to fight Google, maybe they ought to help out the shareholders with a stock buyback too. Bloomberg News:
At least two significant shareholders are meeting with Microsoft officials to seek a stock repurchase of as much as $60 billion, to bolster both the price and per-share earnings.
“How can you have a CEO who is really indifferent to the price of the stock?” said Joseph Rosenberg, chief investment strategist at New York-based Loews Corp. “He has his head in the sand.” Rosenberg has managed money for the Tisch family, which controls Loews, for more than 30 years.
As Microsoft is nearing the end of a $30 billion buyback announced in 2004, Ballmer is spending in areas to help compete against Google Inc., owner of the world’s most-used search engine.
Rosenberg said he told Microsoft officials the company should use $30 billion of its cash to repurchase stock and take on debt for the first time, to the tune of $30 billion. He is seeking an immediate tender for about 2 billion shares.
The calls for a buyback exemplify the new pressures that Ballmer, 50, and Chairman Bill Gates face as they try to balance shareholder demands with a desire to fuel growth.
Microsoft’s declining share price during the past five years has attracted value investors, who seek companies with steady growth and returns from buybacks and dividends. After the stock’s 11 drop this year, they are growing impatient to get a return on their investment.
Microsoft needs to show it is acting to boost the stock and appease shareholders, said Heather Bellini at UBS AG in New York, who is ranked the No. 2 software analyst by Institutional Investor magazine.
“Previously, the problem was apathy on the stock,” she said. “Now the apathy has been replaced with anger.”
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