Microsoft announces $40 bn share buyback

Microsoft has reportedly announced a 40 billion dollar share buyback and will raise its dividend payout to shareholders by 22 percent.

The new share buyback replaces a previous scheme to repurchase shares which was launched in 2008 and expires this month and soon after the announcement, the company's shares rose 1.4 percent.

Microsoft said that the quarterly dividend would be raised by 5 cents a share to 0.28 dollars and the new share buyback will be open-ended, unlike the previous scheme, the BBC reports.

Chief financial officer of Microsoft, Amy Hood said that these actions reflect a continued commitment to returning cash to their shareholders.

According to the report, share buybacks are usually good for existing investors as they reduce the number of shares on the open market which should boost the value of available shares.

The software maker is looking for a new chief executive, after Steve Ballmer announced plans to step down, and earlier this month it paid 7.2billion dollars to buy Nokia's mobile phone business.