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[News] [Rival] Budget at Microsoft Gets the Axe

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Microsoft to cut budget up to $500 million

,----[ Quote ]
| The unexpected news in today's Microsoft's earnings conference call? The 
| company's statement that it would cut up to $500 million from its budget this 
| year.  


Microsoft closes the quarter with less cash than Apple

,----[ Quote ]
| Buried in the first quarter earnings report from Microsoft is an astounding 
| fact. For the first time that I can remember, Microsoft closed the quarter 
| with less cash than Apple. Cash, cash equivalents and short-term investments 
| for Microsoft add up to $20.7 billion. Apple, meanwhile, closed the quarter 
| with $24.5 billion.    


Chart here:

Chart: Apple tops Microsoft in cash


Munchkins should know that Microsoft's revenue can rise simply because they
throw away $40 billion or so buying assets. They lose money in the bank while
giving the illusion that the stock is OK (buybacks) and business is expanding
(at the expense of savings).


Buybacks take a beating

,----[ Quote ]
| Last month, Microsoft announced it was going to spend $40 billion buying back
| its own stock. Traditionally, that would have meant a payday for its
| investors. With Microsoft using its own spare cash to reduce the number of
| outstanding shares, earnings per share should have improved, and the stock
| price should have ticked upwards.


Microsoft: The Giant Buyback Theory Resurfaces

,----[ Quote ]
| Bloomberg published a story today which said that the company is about to
| unveil a plan to buy back as much as $20 billion of its stock. The notion was
| attributed to UBS analyst Heather Bellini, who actually floated the idea in a
| July 25 analyst report. And she is not the only one who thinks a huge buyback
| would be a good idea: in a July 22 post, I noted a report from Friedman
| Billings Ramsey analyst David Hilal, who theorized that the company could do
| a leverage buyback and repurchase as much as $50 billion of its shares.


Microsoft to buy $20B shares: UBS

,----[ Quote ]
| Microsoft's share price is down 26 per cent so far this year. It has about $3
| billion remaining of a $36.2-billion, five-year repurchase program it started
| in 2006.


Data: Cash balances at large tech companies

,----[ Quote ]
| PictureMicrosoft has reduced its legendary cash balance by tens of billions
| of dollars in recent years through a series of buybacks, dividends and
| acquisitions. The importance of cash was evident in the Microsoft-Yahoo saga:
| Had the Redmond company succeeded in the proposed $44.6 billion acquisition,
| it would have needed to borrow money for the first time in its history to
| fund the deal.


Microsoft sees slide in profits

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