Jefferies Thinks Microsoft Could Borrow $4.5 Billion (MSFT)

Jefferies & Co. believes that Microsoft MSFT could raise $4.5 billion in debt, after news outlets reported Microsoft may be in fact raising cash to buyback shares and raise its dividend. It has a $33 price target, and a Buy rating. In the research report, Jefferies writes, "Microsoft dividend payout is currently low vs the historical rate. We estimate each additional cent in repurchase-driven FY11 EPS accretion would require ~$500mm, while each additional 1c/share raise in the quarterly dividend would require an additional $350mm. We think they could borrow up to $4.5Bn." It went on to say, "We estimate that each additional cent of repurchase-driven FY11 EPS accretion would require ~$500mm in cash, assuming a $25 share price. We also estimate that each additional 1c/share raise in the quarterly dividend would require an additional $350mm in cash annually." Shares of Microsoft gained $1.26 to close at $25.11 yesterday, a gain of 5.3%. Get free trades at tradeMONSTER!