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Microsoft reported quarterly sales and profits that surpassed Wall Street’s expectations yesterday, suggesting that early sales of its new Windows Vista operating system were off to a solid start.
The company, which is the world’s largest software maker, also delivered an outlook for its 2008 fiscal year, which begins in July, in the upper range of analysts’ projections. Microsoft said that revenue in fiscal 2008 should reach $56.5 billion to $57.5 billion, and earnings were expected to be $1.68 to $1.72 a share....
...Microsoft’s online services business remained a problem. Revenue in that division rose 11 percent, to $623 million, and losses rose sharply, to $200 million.
When a company buys back its own shares, it retires them (takes them out of the pool of ownership). That means each remaining share now owns a slightly bigger piece of the company. The companies overall value declines slightly (by the amount of cash used for the buyback), but overall each shareholder's value is increased.
Generally when a company does a buy back it is because they feel their stock is undervalued or they can't do anything with the cash that would return better than just giving it back to the shareholder.
Shareholder's like it because it increases their share value without a taxable event to them (such as a distribution would have).
Also, I think, the dividend increses since the same amount will be divided among less shares.