Microsoft Share Buyback Solidifies Stock Bottom

Microsoft Corp. (MSFT) is planning on a share buyback of between $15 and $20 billion. If there is something that can get the stock headed in the right direction in the post-Yahoo failed acquisition era, especially in light of a recent Jul. 17 fourth quarter earnings miss and an outlook that was a bit light - at least a penny shy of the consensus, this would be it. Bloomberg ran a story this morning quoting UBS analyst Heather Bellini who expects Microsoft to complete such a share repurchase, notably five times larger than its average per quarter in the last fiscal year, over the next three months (Microsoft slowed the pace of repurchases to $12.4 billion in its last fiscal year). The buyback would come at a time when the stock is off nearly 20% since February while Microsoft is trading at the lowest estimate price-earnings ratio since the software maker went public 22 years ago, according to Bellini, and could lift earnings per share by as much as $.10 annually. If anything, the buyback will further solidify the floor on Microsoft shares and perhaps might even begin to change investor perception that the stock is dead money.