Microsoft is considering selling bonds for the first time in its history, Bloomberg reports, a curious move considering the software giant's $20 billion cash hoard. An SEC filing noted that the
company is now free to issue debt at any time.
What does Microsoft need to raise capital for?
Silicon Alley Insider reminds us that the software giant sought to at least
partially pay for a Yahoo acquisition by issuing debt. Of course, that deal fell apart, leaving no obvious reason as to why the company would continue with the registration process. Is Microsoft
preparing another bid for Yahoo? Not if you've been listening to Microsoft CEO Steve Ballmer recently. Maybe Microsoft wants to buy Salesforce.com or Facebook, or maybe both? SAI thinks the company is
most likely preparing a massive stock repurchasing program. At $17.53 per share, or 9 times trailing earnings, Microsoft thinks its stock is undervalued.
Brad Lutz, vice president of
investment research at Declaration Management & Research LLC, says a bond offering from Microsoft would be in high demand among investors, who are anxious to find sound investments outside the realm
of finance. "Non-financials have generally received a warm reception by the investment-grade capital markets," Lutz said. "There's certainly demand for higher-quality issuers."
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