Microsoft sells $3.75 billion in bonds

Microsoft sold $3.75 billion in bonds, the first long-term debt the company has issued in its history.

The company plans to use the money for working capital, capital expenditures and repurchases of stock and acquisitions, according to a Monday filing with the Securities and Exchange Commission.

The company detailed the debt offering in a news release Monday: $2 billion of 2.95 percent notes due June 1, 2014; $1 billion of 4.2 percent notes due June 1, 2019; and $750 million of 5.2 percent notes due June 1, 2039.

The debt sale is part of a $6 billion debt issue the board of directors approved in September. A day later, the company issued $2 billion in commercial paper, short-term debt it intended to use for corporate purposes and to repurchase company stock.

The board also authorized the company to buy back $40 billion of its own stock in the next five years, and Chief Financial Officer Chris Liddell reaffirmed the company's commitment in an earnings call in April.

The company had $25.3 billion in cash and short-term investments as of March 31.

"They said a few months ago they would like to leverage the balance sheets; that's what they're doing," said Sid Parakh, an analyst at McAdams Wright Ragen. "Lowering the cost of capital will probably benefit shareholder value in the long term."

While the amount triggered speculation that Microsoft might use the proceeds to make a large acquisition, Parakh doubted it.

"It seems unlikely they would engage in a large-sized acquisition at this time," he said. "They've been pretty clear about not making too large acquisitions."

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com