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Microsoft to Issue Bonds: Will it Go Shopping?

Microsoft on Monday said in a regulatory filing that it will issue bonds for the first time to raise and undisclosed amount of capital. And given that Microsoft doesn't exactly need the money you can't help but wonder what the software giant will do with the dough.

For the record, Microsoft is using the net proceeds from the bonds "for general corporate purposes, which may include funding for working capital, capital expenditures, repurchases of our capital stock and acquisitions."

Bloomberg reckons that Microsoft will buy back shares. Boooorrrrrinnnngggg. Let's go the acquisition route. Microsoft has an AAA credit rating and will have Wall Street fawning over these bonds. Wall Street already fell in love with IBM, Cisco and Oracle bonds. What's not to love about companies with gobs of cash issuing bonds?

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GWAVE3813d ago (Edited 3813d ago )

Microsoft's piles of cash are running out? Awwwwwww.

Or are they just trying to make their piles even bigger?

KionicWarlord2223813d ago

"And like Cisco and Oracle Microsoft could become acquisitive (more than it already is). Microsoft could buy Yahoo’s (YHOO) search business (highly likely) or maybe take a run at SAP (less likely). Activist shareholder Eric Jackson urges Microsoft to go shopping and notes that the software giant can easily ramp up its debt."

The title says it already MS? Will it go shopping.

3813d ago
GiantEnemyCrab3813d ago (Edited 3813d ago )

@fat-american: So where is your bucktooth-European account biggot?

Are the mods on this site sleeping again? We've got more euro trash that needs to be taken out.

I figured they would of banned you after your racist N word comments.

GWAVE: Sounds like MS piles of cash are about to get bigger. Thus the reason your in here doing your PS3 civic duty and trolling trying to get that negative spin in right at comment #1.

Again making me wonder how you can keep 9 bubbles.

4pocalyps33813d ago

fat-american is doing my nut in. how has he not been banned in some/any form. where the hell are u mods?!

Anon19743813d ago (Edited 3813d ago )

I've been involved in discussions before where fans have claimed Microsoft has no debt and mountains of cash. I give you exhibit A, Microsoft bonds. This is debt. This is money Microsoft is borrowing from investors.
Not that there's anything wrong with that, there isn't. Most larger corporations issue debt instruments of some kind. I just wanted to point this out in an attempt to educate.

Now, as for what they're doing with those funds, I have noticed that MS Entertainment has lost 400 million in profit the last two quarters. They've said ramped up R&D is behind the bulk of it.
Let's think on that a moment. $400 million goes missing suddenly from the division responsible for the Xbox on increased R&D spending and now MS is raising even more cash. Whatever could they be working on?

sack_boi3812d ago

There was a time Microsoft almost bought out Nintendo for $26 billion. That's a lot of DLCs and timed exclusives.

joemayo763812d ago

this issue of bonds DOES NOT mean the company is running out of money or in trouble, as issuing debt is a form of financial leverage successful companies partake in as it INCREASES the value of the firm as opposed to one being financed by 100% equity, as the poster a couple spots above me wrote. Its how much leverage the company seeks which has gotten firms in trouble in the past(financing on 100% debt is a no-no obviously) A mistake MSFT surely will not make.
i could go into details (FINANCE MINOR HERE) but theres a chance that the doom and gloom ppl (i.e. fanboys) won't listen anyways

IdleLeeSiuLung3812d ago (Edited 3812d ago )

I completely agree.

This is pretty smart of MS. They are raising bonds in a time when rates are fairly low, they then use this to buy their own shares at a bargain price. This overall bolster their stock price and when the economy recovers their stock price will further go up. Win-win situation!!!

As the article pointed out, MS is full of cash and can operate at a loss for years, but why spend cash when you can borrow. Remember borrowing is harder when a company is going through tough times than when a company is healthy like MS.

Jihaad_cpt3812d ago (Edited 3812d ago )

joemayo you could disagree and see it as MS wealth would be mostly liquid (cash/shares), since there primary company has very little non-current assets relatively speaking, so if they fail to invest this money properly they would be forced to give up shares = giving up revenue source but with out looking at there books I couldn't fully say if this is anything. I said all this because the core business of MS is not based on non current assets like machines, factories or equipment. I have one them degrees too. Though could just be business as usual, but issuing of bonds does mean a liquidity issue of some kind

DeadlyFire3812d ago

Of course its the Microsoft Xbox 720 or Xbox Cloud platform. Set for 2010/2011. Possible unveiling at E3 2009. Either one is possible. Microsoft said in 2005 next consoles wouldn't need discs. Its quite possible that Microsoft has a Live Cloud platform in the works. Hopefully something that works for PC and Xbox Live. It would be funny if it was duplicate of OnLive, but from Microsoft and using Xbox Live and Games 4 Windows Live merged together as one platform. That way Microsoft could support Windows gaming and Xbox gaming and all will like them again maybe. I still hate the idea of a closed in system though.

+ Show (7) more repliesLast reply 3812d ago
Sonyslave33813d ago

How much cash are we talking here if billion dollars MS can make 20 first party studios developers with that money.

Fishy Fingers3813d ago (Edited 3813d ago )

MS have far more going on than just the 360 and their gaming devision in general. It a commen thing with N4G (users) that anything MS or Sony related directly relates to their consoles. When largely it doesnt.

7thNightvolley3812d ago (Edited 3812d ago )

every company is in crap right now no one is escaping totally.

in fact the xbox part of MS is a little toy compared to the software side of the company and MS hardly rely on it for funding or business as such. but from the news we got a few posts ago
http://www.businessweek.com... seems sony would be relying on the playstation gaming side to make money to get out of its mess.(ps3 gamers make sure u buy lots of sony games to help em properly rather than troll)

IMO i wish them both gd luck with the cash flow and business planning.

Sonyslave33813d ago

It about time MS start ruling the game industry with a iron fist lol ps3 owners beware MS is going on a shopping spree ps3 just lost a exclusive.

SonyRulz3813d ago

Who knows....could be ramping up for R&D and pre-production for the next XBOX. Only MS really knows how that money will be appropriated. :)

Erratic3813d ago

Now, why would they put all that into their Entertainment Division? I think most of that money will go to advertising for Windows 7, 'cause MS can't afford it to be a fiasco like Vista. Windows is their main income, it doesn't matter how profitable the 360 becomes, if the OS side starts to go bad, they'd still be receiving the most cuts.

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