As I looked over the business headlines today there was one headline that really, really stood out to me: Microsoft to raise $3.75B in first debt offering.
Why did this stick out? Simply because this company is flush with cash. As of 3/31/09 the company had roughly $25B in cash and short term investments, so, obviously, they were not having a hard time with funding.
If you look a bit into the justification MSFT gives as to why they are moving forward with the Debt Offering, you’ll see:
The software maker said it will use proceeds from the sale for general corporate purposes, including possible acquisitions and stock buybacks.
First – a stock buy back is usually a very poor idea. It really doesn’t help create that much value for the share holders.
Second – We’ve already established that Microsoft has piles of cash, why would they need to sell debt for “general corporate purposes?”. Again, makes no business sense and adds no share holder value.
I think the reason for the offering is the “including possible acquisitions” that is mentioned in the SEC filing. It would make more business sense to have cash reserves and funding acquisitions via debt – cheap debt – during times of economic hardship.
Has the target on Yahoo! suddenly increased in size?
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- CIT still might face bankruptcy after debt swap
- Coming 6 years late to the party, Microsoft Launches "open-source" blogging platform.