Unable to sell stock to raise money, M$ will sell bonds which will deplete the company of it's cash, in an attempt to raise it's declining stock value.
Microsoft Corp. may sell debt in what would be the world's largest software maker's inaugural bond offering. Microsoft may offer senior unsecured debt securities, according to a regulatory filing today with the U.S. Securities and Exchange Commission. The shelf registration clears the way for the company to issue debt at any time.
The move comes amid suspicions of hidden weakness and demonstrated threats to it's cash cows Windows and Office. It is part of a previously announced plan to enter debt for $20 billion worth of stock buybacks. M$ had $20.7 in cash left as of September 30th, which was down from a high of $60 billion just a few years ago. At the time of announcement, USB analyst Heather Bellini predicted:
Microsoft to complete the repurchase -- at least five times larger than its average per quarter in the last fiscal year -- over the next three months. ``They won't announce it until it's done,'' Bellini said.
Despite this news, M$FT has hit a 52 week low of $18.00 today and continues to float there, down from peaks of $36 at the start of the year and $56 in 1999. Stock options were once an important mechanism to attract talent to the company.