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UBS says Microsoft aims for $20 billion buyback: report

Microsoft Corp plans to buy back as much as $20 billion of its stock to boost its flagging share price, Bloomberg News quoted a top-rated software analyst as saying. Shares of the giant software company rose 2%. Microsoft declined to comment.

UBS analyst Heather Bellini expects Microsoft to complete the repurchase over the next three months, and said the amount is at least five times larger than its average share buyback per quarter in the last fiscal year, according to the Wednesday Bloomberg article.

Bellini in a July 25 note, after Microsoft met with analysts, had said the company should pursue accelerated share repurchases. “We continue to expect noise on this front at some point during F1Q09 (potentially as far out as when Microsoft announces September quarter results on October 23rd),” Bellini wrote. Bellini was ranked the best software analyst by Institutional Investor magazine last year. Analysts have been debating how Microsoft might revive its share price, which is down 26% so far this year.

Microsoft has been aggressive in buying back shares. It has roughly $3 billion remaining of a $36.2 billion five-year share repurchase program it started in 2006. Friedman, Billings, Ramsey & Co analyst David Hilal suggested late last month that Microsoft should issue debt for the first time in its history to fund a buyback. Hilal’s research showed that a $20 billion leveraged share buyback would boost its calendar 2009 earnings 7 cents a share. A $35 billion repurchase would add 13 cents and a $50 billion buyback would add 20 cents. Microsoft shares rose to $26.74 on Nasdaq in afternoon trade. (Reuters)