Yesterday saw Microsoft making a historic first time bond offering. While a first for the company, the $3.75B issue is relatively small. Indeed, it’s not like they’ll buy Yahoo or SAP with that money.
My own take is that there’s not much to see here—rational, low-risk, imminently sensible. (Which no matter what else anyone might say about Microsoft, it has *always* managed its finances extremely well.) From Microsoft’s point of view, it’s cheap money, about as cheap as they can get (aside of course from continuing to pull in free cashflow at $1B/month). With the equity markets still poor, MSFT is under $20 currently, its blue chip stock doesn’t have the same power it did. Might as well take their long-term debt: equity ratio to roughly 0.1, roughly a quarter of ORCLs.
I’d not be at all surprised to see MSFT announce a non-trivial buyback of stock, particularly post Office 2010 beta, and as W7 launch nears. The message will likely be to the market and to enterprise customers that a new wave of the desktop / netbook is upon us with high quality, on time releases from Microsoft.