Microsoft Delays WM7 & Buys Back Record $40bn Shares

One predictable and one brave move this week.

Is this the start of a worrying trend?

Within 48 hours Microsoft has twice been forced to take drastic action, firstly announcing a world record buy back of shares totalling over $40bn (£22bn) and secondly (though surely it would have been better to be first) admitting its much needed Windows Mobile 7 operating system will be… guess what? Delayed.

Getting the economics out the way first, the software giant has taken this drastic action after seeing its share price plummet by almost 30 per cent since the start of the year. Justifying its decision Microsoft said the move was made out of “confidence in the long-term growth of the company and our commitment to returning capital to our shareholders.”

In short: it thinks its stock is undervalued and can make a bit of cash when it turns around.

Fair enough and ultimately it’s a fairly impressive move for any business to gamble that much of its own cash reserves and put its money where its mouth is concerning its long term future prospects.

That said, just this morning Microsoft followed this up by confirming a fast spreading Internet rumour that Windows Mobile 7 (beta pictured) will be delayed. Initially (and optimistically) expected to arrive in early 2009, Microsoft admits the OS will likely slip into the vast vagary known as “the second half of the year”.

Considering the speed at which the mobile phone market moves, the plans for Symbian to go open source, the launch of Android, the momentum of RIM and last and possibly by then by no means least Apple’s mobile Mac OS X and there couldn’t be a worse time for Microsoft to slip back into its usual habits.

Yup, buying back all that stock was one brave move…

Microsoft UK

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