Microsoft Reaches a Milestone
Microsoft Windows and Office reach a new high in their stock price this month.
November 2015
Aaron Gersh '16
Since late October, Microsoft has been on a hot streak over on Wall Street as two of their products, Microsoft Windows and Office, continue to produce the big bucks. In fact, they’ve been so hot that they’ve risen past their old peak stock price of $53.60 from way back in December 27th, 1999. The tech giants finished the work week in early November at $54.92. This is especially great for Microsoft because in the tech industry, companies often live in dog years; this means Microsoft is still going strong at the senior citizen center. While these numbers seem like a godsend for the company who has struggled in the past, these numbers may not seem as good as they appear. Firstly, if inflation is accounted for, that $53.60 from way back during the Dotcom boom, is worth around $75 today. In this sense, for Microsoft to return to its former glory, it still has a way to go.
Another, more interesting asterisk that must noted with Microsoft's new high is the method they’ve used to raise their stock prices, called buybacks. This extremely popular yet controversial stock trading method involves the company buying back its stock from the stock market. By doing this, their market share increases, and the number of stocks available for outsiders to purchase decreases. With less stocks in circulation, their price per share increases. Since 2004, no company has spent more money buying back their stocks than Microsoft. In the past eleven years, Microsoft has bought back around $136 billion dollars of stock; to put that into perspective Apple, who is quickly catching up, has only bought back $90 billion in stock. This method of raising stock prices without real “prosperity” can be quite dangerous as it can cover a company's true financial situation, and when a chief executive’s salary is based on stock price it can be egregiously misused.