Microsoft: Mr. Acquisitive?

Published on May 11, 2009
by John Paczkowski

moneyWith $25 billion in its coffers, Microsoft isn’t exactly hurting for cash. So why is the company planning a bond offering that could raise billions in additional capital? Microsoft (MSFT) won’t say, exactly. “The company is not in need of financing,” a spokesperson explained in a statement. “It is taking advantage of good market conditions and Microsoft’s great credit rating,” adding that proceeds from the sale of the notes will be used for “general corporate purposes.” Those include working capital and share buybacks. They also include acquisitions, which, as investor Eric Jackson notes, the company could use more of.

And this is certainly a good time to buy. “To be successful in the long run, Microsoft needs people to green-light the best acquisitions and teams of people with the right skill sets to integrate them,” Jackson writes. “Frankly, Microsoft hasn’t shown it has either of those abilities. Microsoft investors don’t need another expensive aQuantive deal or Facebook investment that smacks of desperation and has questionable long-term value for the company’s shareholders. It needs to take a page out of IBM’s and Oracle’s playbook, though, and start doing deals to grow its top and bottom lines. A big debt issuance, with a skilled acquisition team, and evidence of some exciting growth-related deals could suddenly show the market that this elephant can dance again.”

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