Normally I don’t comment on stock related issues, but Microsoft’s announcement of a $40 billion stock buyback got me thinking. In a nutshell, Microsoft is offering to repurchase up to $20 billion of its stock by August 17 of this year. Another $20 billion will be purchased over the next several years. The goal is to strengthen Microsoft’s stock price.
I can imagine there are quite of few happy investors. This sure sounds like a lot of money–oh, yeah, cause it is.
I wondered, though, what other ways could a company of Microsoft’s resources spend $20 billion over a month’s time to give a shot in the arm to it’s image, it’s future, it’s valuation.
In no particular order, here are some ideas I came up with:
* Reward your employees — Share the wealth with the workers. Let’s assume there are 100,000 employees (yeah, I know there are fewer than this, but rounding up makes the calculation easier to do in my head). And let’s say the money is divided evenly. No merit calculations. A simple division suggests that each employee could get a one-time $200,000 bonus. I remember visiting the tri-cities area in Tennessee during a bonus period at Kodak back in the 80s. If I remember correctly, Kodak would give out $10 billion company wide in bonuses. The car dealerships were always happy. I imagine the same would be true here. Although in this case I imagine hybrid and BMW prices would go through the roof following unprecedented demand in the Seattle market. With everyone taking the day off for a drive in their new car, I imagine Vista’s ship date would slip. Ooops.
* Spur partner innovation — Yes, you could spend $20 billion inside Microsoft to spur innovation, but imagine what would happen if over one month Microsoft invested the $20 billion in startups. Some of the money could be outright grants. Some of the money could be used in equity investments. Let’s say Microsoft escrows $5 million per company. That means Microsoft could provide a jolt to 4,000 new businesses. There would be plenty of money to invest in partners committing to Microsoft technologies. There could be other investments made in those betting against Microsoft too–such as online Office competitors or services. Would this type of rapid investment pay off? For a few I’m sure. The VCs and analysts would have a field day trying to figure out what all this would mean.
* Donate the money — A company giving away $20 billion isn’t necessarily what you’d think a company should do with its war chest, but sometimes you have to do things just because. The easy approach here would be to gift $20 billion to the Bill & Melinda Gates foundation. That might look a little suspicious to some, so maybe Microsoft could take on another technological challenge, such as stem cell research. Imagine the impact.
* Invest in schools — There’s lots of ways to spend money here. There are plenty of schools in the US alone that need some major renovation–and there’s plenty of money that can be spent around the world. However, thinking in terms of tech (Microsoft is a tech company after all), what would happen if Microsoft purchased a Tablet PC for as many students as it could. At an average price of $2,000 per Tablet, that would mean 10,000,000 more students could have a Tablet PC in their hands this next school year. Could the WiFi networks handle the leap in inked IM traffic? Heh.
* Hire and acquire – With $20 billion you could hire quite a few people, but when it comes to acquisitions on the scale of Yahoo! or eBay, the money isn’t going to go so far. My instinct would be to acquire small companies because I could imagine the money going further. I wonder how much it would take to purchase PodTech.net and get Robert Scoble back, for instance. After all, Microsoft needs someone to lead a video blogging program too! OK, maybe that’s not the best way to spend the money. I’ll leave it up to the analyst crowd to suggest which investments make the most sense here.
(Sorry the comments are currently broken on this site. MovableType is working on it. In the meantime, you’ll have to post on your own blog. I’ll link back to any other ideas tomorrow.)