Written by Norman Isaac Mwambazi

Microsoft announces $60B share repurchase program, increases dividend

Microsoft Corporation (ticker: MSFT) has announced that its board approved a share buyback program worth $60 billion to continue its …

Microsoft Corporation (ticker: MSFT) has announced that its board approved a share buyback program worth $60 billion to continue its practice of announcing a share repurchase program every three years since 2013. Microsoft announced a share buyback program worth $40 billion in 2013, $40 in 2016, and $40 in 2019. The company has already spent $23 billion in share repurchases on that 2019 budget. For the 2021 $60 billion share repurchase program, the company said that it does not have a specific timetable and that it can be terminated at any time if need be.

Microsoft’s announcement comes when Democrats are drafting a proposal to levy a 2% excise duty on stock buybacks by publicly traded companies in a range of new tax hikes the Biden Administration is introducing. In 2018, publicly listed companies announced a share buyback budget of $1.1 trillion, but this dropped by 30.8% during the coronavirus pandemic last year, but share repurchase programs are picking up pace this year as the economy recovers from the effects of the pandemic.

Microsoft is not the only big tech company to announce share repurchases. Its competitors like Apple Inc. (ticker: AAPL) has spent $77 billion on share buybacks in the past four years, while Alphabet Inc. (ticker: GOOG, GOOGL), Google’s parent company, had spent $11.4 billion on share repurchases as of the first quarter of the 2021 fiscal year (Q1 FY2021) that ended in March. Social networking giant Facebook Inc. (ticker: FB) had also spent $3.9 billion on share buybacks in the same period.

Investors see share repurchase programs as an indicator that the company trusts its performance in the near and long term. Still, critics say that such programs are behind stock market gains and rising market valuations of the companies that implement them. Critics claim that when companies buy back their stock, such stock becomes artificially scarce on the market, which boosts their market value and Earnings Per Share (EPS). Scarce stock most times means an increase in its price.

To back up this claim, Microsoft’s stock price has surged in the recent two years, thanks to share buyback programs. Currently, Microsoft is the second most valuable publicly-traded company globally by market capitalisation, only behind Apple. These two are the only $2 trillion-dollar companies in the world. Since September 2019, Microsoft’s stock has surged from $130.90 to $305.22 by this writing. The newly announced buyback program may push it even further. By the end of April 2021, Microsoft’s share buyback programs had reduced its overall share count in public markets by 1%.

However, it is worth noting that share repurchases are not the only reason the company has performed so well in this period. It is worth noting that Microsoft has some of the most popular products globally in each of its business segments, and sales of these have been high, especially during the coronavirus pandemic time. Its popular operating system Windows had a new version released a few months ago; the Xbox gaming console is fighting for the top spot with other video game consoles like Sony’s PlayStation, its cloud computing enterprise Microsoft Azure is going toe-to-toe with Amazon’s Amazon Web Services (AWS), among a range of other products that keep earning the company big revenue every other quarter. 

Microsoft has performed so well that it feels it should reward its shareholders handsomely. In the same share repurchase program announcement, the company also raised its quarterly dividend by 11% from 56 cents a share to 62 cents. This will be paid to shareholders on December 9, 2021, who will have held Microsoft stock by November 18, 2021.

In other Microsoft news…

Microsoft will now let its users log in without passwords

One of the most annoying things about tech is forgetting passwords. Passwords are inevitable, and yet they are easily forgettable. Forgetting a password prompts the system to have you reset it,

which presents a difficulty.

If you wished there was another way of securing your data without worrying about forgetting the password, Microsoft has a solution for you. On Wednesday, September 15, 2021, the company announced that it would introduce a “passwordless account” option for all users of its several products like Microsoft Outlook and cloud storage service OneDrive in the coming weeks. This feature has been only available to corporate accounts using the Microsoft services since March this year.

Writing on a Microsoft blog, the company’s Vice President of Security Compliance and Identity, Vasu Jakkal, said that users would be able to completely do away with the password from their Microsoft account.

Microsoft will replace passwords with other more accessible but secure sign in options like its Authenticator app, which provides users with a unique numbered login code every few seconds. Other sign in options include Windows Hello, which utilises a user’s unique physical characteristics like facial recognition or a fingerprint. Alternatively, users will also have the option of using a unique numeric PIN, register a phone number that Microsoft can send a verification code for signing in, and if they don’t want any of that, they can buy an external security key, like a USB drive with login information stored on it.

Over the past year, there has been a steady increase in cyberattacks because most corporate employees were forced to work from home by the COVID-19 pandemic, sometimes on less secure networks vulnerable to hacker attacks. When hackers infiltrate company systems, they compromise their operations by launching Denial of Service (DoS) attacks, asking for a ransom, or selling passwords on the dark web for others that would like to cause even more malicious damage to these companies.

According to Microsoft, hackers launch 18 billion password attacks every year, which means that 579 password attacks are launched every second around the world.

Malice aside, cybersecurity experts say human behaviour is the weakest link to cybersecurity, where users set easy-to-guess passwords like their birthdays, partners’ names, favourite food, children’s name, among others.