Microsoft Buyback Story:
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Microsoft Cannot Buy Back Stock Until June - NYT
April 30, 2000 05:07 PM Eastern Time
Breaking News Headlines
NEW YORK (Reuters) - Any near-term rebound in the Microsoft Corp.'s (MSFT.O) stock price will have to take place without repurchases by Microsoft itself, which is not free to buy back its own shares until June, the New York Times said on Sunday.
The Redmond, Wash.-based company's $1.5 billion purchase of diagramming software maker Visio Corp. last January took Microsoft out of the market to buy back its own stock for six
months because the deal used a pooling-of-interests method of accounting, the Times reported. That restriction expires June 7.
``Microsoft's absence from the market helps explain why the shares have behaved so dismally,'' down 11.6 percent to close Friday at $69.75, the paper reported. ``The company is likely to come roaring back into the market on June 8.''
However, offsetting the positive impact of potential share buybacks are bets the company has made that its stock price would continue to soar. The Times report noted that ``put warrants,'' set to expire in June and priced between $69 and $78, could force the company to pay out in either cash or stock.
A put warrant grants the holder the right to sell shares at a specified price by a specified date, and in general favors the warrant seller if the price is moving upward.
Microsoft's stock has fallen as the government pursued its antitrust case against the company. Although Friday, after the government confirmed it was seeking to split the company, Microsoft shares rose 2 in after-hours trading after closing nearly unchanged at 69-3/4 on Friday.
Microsoft officials could not be reached for comment on the story.
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