Reuters - Microsoft Corp shares rose 1% in early trading on Wednesday after the company announced a $60 billion share repurchase plan, its biggest ever.
The announcement comes just days after two US Senators unveiled a proposal to tax corporate stocks buybacks to help fund President Joe Biden's $3.5 trillion investment plan.
The senators said the Stock Buyback Accountability Act would encourage large corporations to invest in their employees rather than enriching investors and executives by boosting stock prices.
Democrat lawmakers also proposed a substantial roll-back of tax cuts implemented by Donald Trump's administration, including increasing the top tax rate on corporations to 26.5% from the current 21%.
Microsoft shares have soared about 35% this year, making it the second most valuable company in the world with a market capitalization of $2.25 trillion.
The buyback plan, which has no end date and can be terminated at any time, follows similar announcements by other tech giants.
Apple and Alphabet said earlier this year that they were returning $90 billion and $50 billion to shareholders, respectively, and have ramped up their plans since the corporate tax cut in 2017.
They have to be opportunistic. being well hedged given the ambiguity of the future tax laws, said Doug Ciocca at Kavar Capital Partners, which owns Microsoft shares.
Microsoft has accumulated a surge in both demand and cloud computing for laptops during the pandemic and benefited from an accelerated shift to cloud computing and cash equivalents of $130 billion. It announced its last repurchase program of $40 billion in 2019 for the total of services that cost more than 1 trillion.