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Buyback programs, when timed right, can supercharge a company's returns. By reducing the outstanding share count, they increase the portion of earnings that each remaining share of stock is entitled to.
In this clip from Industry Focus: Tech, Sean O'Reilly and Dylan Lewis talk about Microsoft's (NASDAQ:MSFT) beautifully executed buybacks during the 2000s, and how they accomplished everything a buyback should. The two look at the company's timing, exactly how it executed the share purchases, and the impact it had on the Redmond giant.
A full transcript follows the video.
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This podcast was recorded on April 15, 2016.
Sean O'Reilly: Yeah, and actually, that's a great segue to the company that I wanted to highlight, which is Microsoft. They have arguably had a monopoly since the late '80s. (laughs) Like, 90% market share the entire time, of the PC market, probably higher. They didn't start paying out a dividend until 2003.
As I'm going to point out in a second here more in depth, they didn't really start buying back shares in earnest until the mid-2000s. They bought back a few, I think we looked earlier, it was like a couple hundred million dollars, in the '90s. And that was clearly just to take care of the dilution from all the options they were giving employees. They have a monopoly, they're generating billions of dollars in free cash flow, and they didn't even do what GoPro did until way later. I mean, that's just ...
Dylan Lewis: It's baffling.
Lewis: So, what else do you have, in terms of Microsoft's strengths in capital allocation?O'Reilly: So, bringing it around, what I wanted our listeners to know was, most of us probably know, Microsoft shares have kind of languished a little since the bubble popped in 2000. The stock was at huge multiples, and they didn't really go anywhere until very recently, until Ballmer stepped down and they got the new CEO, Nadella.
After the bubble popped, they bought back anywhere from 3 to 6.5 billion worth of shares in 2001 and 2005. The stock kept languishing, so they were like, "We're making more and more money every year." Profits went from $7 billion in 2001, they were $12 billion in 2005, they kept growing over $20 billion by the early 2010s. So, the business is doing fine this whole time, but the shares just aren't going anywhere. So, clearly, as responsible capital allocators, they're going to be like, "Maybe we should buy back some shares."
Lewis: Yeah, let's slice this pie a few less times.
O'Reilly: Exactly. That's what they started doing in 2005, in a big way. In 2005, they bought back $8 billion shares. In 2006, $19 billion. 2007, $27 billion, and all of this is after paying that $32 billion special dividend in 2003. It's really funny to see huge $2-3-4 --
Lewis: Boop!
O'Reilly: Yeah, it's like boom. $12 billion in 2008 and 2009, $11 billion in 2010, and this whole time, at the depths of the Great Recession, the year when Microsoft bought back $9 billion worth of shares, and the previous year they'd bought back $17 billion, the P/E on Microsoft got as low as 9. [These are] crazy awesome purchases that they are making. The stock went from the mid-teens, it touched bottom in 2009 at $15 per share. All those repurchases were made over the last 10 years, and now Microsoft is at $55. That is awesome!
Dylan Lewis has no position in any stocks mentioned. Sean O'Reilly has no position in any stocks mentioned. The Motley Fool owns shares of and recommends GoPro. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Source : http://www.fool.com
Libellés :
Microsoft CEO Satya Nadella. Image: Microsoft.
The stock market closed out a successful week on Friday, with the Dow regaining the 18,000 mark and the S&P 500 posting gains of about half a percent during the week. Yet the final numbers hid considerable volatility related to the first-quarter earnings season, and in particular, technology companies seemed to fare particularly poorly. Oil prices climbed, providing some support to the energy sector, but weakness in other financial markets showed just how conflicted investors appear to be with the current economic situation.
Microsoft (NASDAQ:MSFT) was one of the poorest performers in the tech sector on the day, but other stocks outside tech posted big declines as well, and Hawaiian Holdings (NASDAQ:HA) and Tempur-Sealy International (NYSE:TPX) also showed up among the weak players in the market Friday.
Microsoft dropped 7% after reporting fiscal third-quarter earnings that fell short of expectations. The company's transformation into a cloud-computing giant continued, with annualized revenue reaching the $10 billion mark during the quarter. The adoption of Windows 10 has continued strongly, and that has helped other aspects of Microsoft's business, including the Bing search engine and the Office 365 business software package. Yet investors seemed to ignore the long-term progress that CEO Satya Nadella has made in making a transition away from a failing business model, instead focusing on some of the short-term pain the company will inevitably go through. That makes today's drop a potential buying opportunity for those who believe Microsoft is now on the right path.
Hawaiian Holdings slid 11% in the wake of its Thursday afternoon earnings report. Adjusted earnings for the airline doubled from year-ago levels, and pre-tax margins climbed by more than 5 percentage points to 12.6%. Yet the airline's guidance didn't live up to expectations, and Hawaiian believes operating revenue per available seat mile could end up in a range of down 1.5% to up 1.5% for the second quarter. Full-year available seat mile figures are expected to rise 2.5% to 5.5%, but some investors had hoped for even stronger growth given the relatively strong economic situation within the U.S. market. Given how strong the airline industry has been, expectations have been ratcheted up, and Hawaiian's drop today shows the price stocks pay when those expectations aren't met.
Finally, Tempur-Sealy International dropped 6%. The mattress-maker got a downgrade from an analyst company that argued the company might not receive as strong demand for its namesake Tempur-Pedic memory-foam products. The acquisition of Sealy has led the company to launch new mattress products, but competitive pressures and consolidation elsewhere in the industry threaten to make it more difficult for Tempur-Sealy to maintain the positive momentum it has built up. As a result, the analyst cut its price target on the stock by more than 20%, and Tempur-Sealy will have something to prove when it releases its quarterly report next week.
A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early, in-the-know investors! To be one of them, just click here.
Source : http://www.fool.com
Microsoft has released its Q3 fiscal 2016 earnings report, revealing that it sold only 2.3 million Lumia phones in the quarter.
The figure is down 73% compared to the same quarter last year, when the Redmond, Washington-based company sold a total of 8.6 million Lumias. Compared to last quarter, when the company sold 4.5 million Lumia units, the number is down around 50%.
Microsoft also revealed that the sales of non-Lumia units stood at 15.7 million units, down from the 24.7 million figure it reported the same time last year. Talking of phone revenue, it was down $662 million, which is a drop of 47% year-on-year.
Source : www.gsmarena.com/
The Switch Alpha appears to be Acer's take on the Microsoft Surface. This hybrid device comes packed with a Skylake CPU, (i3, i5, or i7) and features a 12-inch display with a resolution of 2160x1440. Much like Microsoft's Surface line, it has a detachable keyboard, as well as an optional Acer Active Pen. The device's kickstand will also let it sit comfortably at any angle up to 165 degrees.
So why the decision to integrate liquid cooling into the Switch Alpha? The company wanted to be able to create a thin hybrid device that didn't need to rely on fans to keep it cool. With this in mind, going with a small liquid cooler allowed them to achieve this goal. They also mention that an added bonus to this is that there is no necessary venting that can eventually cause issues, due to airflow issues and dust accumulation.
The Switch Alpha will come with storage configurations of 128GB, 256GB, or 512GB. If that's not enough space for you, they've also included a microSDXC slot to expand it. As for RAM, you'll find either 4GB or 8GB, depending on the model you choose. There aren't many ports to be found on the device, but it looks like you'll be able to find one USB Type-C port, as well as a regular USB 3.0 port, and a headphone jack.
The Switch Alpha will ship in June of this year, and will start off at $599.
Source : www.slashgear.com
Last year there was a bit of a kerfuffle involving Microsoft's cloud storage service, OneDrive. The company announced plans to cut free storage from 15GB to 5GB, and also get rid of the additional 15GB camera roll bonus altogether.
A big backlash followed, and just a few weeks later Microsoft backtracked somewhat. It allowed users to keep their 15GB + 15GB free allotment if they went to a special page and clicked on a big blue "Keep your free storage" button by January 31, 2016.
But what if you've had a OneDrive free account since at least last year and didn't bother to go through the aforementioned procedure? Well, at some point your storage would have been cut to 5GB, but up until now we didn't know exactly when this would happen.
The date is July 27, so make sure to mark that in your calendar if you have more than 5GB of stuff stored in your OneDrive. Beginning on July 27, you'll only get 5GB of storage in total, down from the 15GB plus 15GB bonus at the moment. Do note that for new accounts, the 5GB limit is already in place.
Source : www.gsmarena.com/
The figure is down 73% compared to the same quarter last year, when the Redmond, Washington-based company sold a total of 8.6 million Lumias. Compared to last quarter, when the company sold 4.5 million Lumia units, the number is down around 50%.
Microsoft also revealed that the sales of non-Lumia units stood at 15.7 million units, down from the 24.7 million figure it reported the same time last year. Talking of phone revenue, it was down $662 million, which is a drop of 47% year-on-year.
Source : www.gsmarena.com/
More than 80 million units of the console have been sold since it was launched in 2005.
Xbox 360 also introduced Microsoft's Kinect motion-sensing game device. It was the company's primary gaming console, until it launched the Xbox One in 2013.
The Xbox 360 launched with a number of popular video games including Activision Blizzard Inc's "Call of Duty 2" and Electronic Arts Inc's "Need for Speed: Most Wanted".
Microsoft said in a blog post it would continue to sell existing inventory of the consoles, and that it would continue to provide customer support.
The company's Xbox Live network, which allows online multi-player gaming, will continue to be available for the Xbox 360.
Sales of older-generation consoles, such as the Xbox 360 and Sony's PlayStation 3, have been declining as consumers shift to newer versions of the consoles from the companies.
"While we've had an amazing run, the realities of manufacturing a product over a decade old are starting to creep up on us," said Phil Spencer, the head of Microsoft's Xbox division.
The company has also introduced the ability for users to play games launched for the Xbox 360 on its latest console. Microsoft currently offers over 100 video game titles as a part of its "backward compatibility" feature.
Source : http://economictimes.indiatimes.com/
Microsoft is soon going to make it compulsory for the manufacturers of Windows 10 PCs, tablets and smartphones to include TPM (Trusted Platform Module) for bolstered security.
In a TechNet post which covered the topic of TPM 2.0 compliance for Windows 10 devices in the future, Microsoft said it would be introducing the cast-iron requirement for systems to include TPM on the day before the anniversary of Windows 10's launch.
Redmond stated: "All shipping devices for Windows 10 across all SKU types must be using TPM 2.0 discrete or firmware from July 28, 2016. This requirement will be enforced through our Windows Hardware Certification program."
TPM is already present on a large number of business-targeted computers and notebooks, where security is always a heightened concern, but it's not so common for consumer machines. That will all change soon enough.
Pi exception
All hardware running Windows 10 desktop editions – that's Windows 10 Home, Pro, Education and Enterprise – must implement TPM 2.0 and ship with it enabled, along with all Windows 10 Mobile devices.The exception to the rule is Windows 10 IoT Core where TPM will remain optional, so the likes of the Raspberry Pi won't be bound by this new Redmond directive.
TPM encompasses a raft of security mechanisms designed to protect a device from tampering and would-be intruders if the hardware falls into the wrong hands, and the newer TPM 2.0 standard offers a number of clear advantages over TPM 1.2 including support for SHA-256 hashing.
It can be implemented either in discrete form (a separate chip) or as firmware TPM.
Via: PC World
Source : www.techradar.com/