💰 Microsoft's big buyback

Self-absorbed shopping spree... Last week, Microsoft's board approved a plan to buy back as much as $60B of the company's own stock — the software giant's largest share repurchase program ever. Stock buybacks are (kind of) like gifts to shareholders: by reabsorbing their own shares, companies can potentially improve their stock prices by reducing the number of available shares.

• When shares outstanding decrease, investors' ownership in the company pie can increase. Think: owning 1 share out of 10 total, vs. owning 1 out of 5.
• Slightly awk: Microsoft shares are already sitting near records, and have soared 38% this year. But it's also sitting on a $130B cash pile, so it has money to spend.

Takeout or delivery?... Corporations have different options when it comes to spending extra $$$. They can invest it back into the business (think: hiring, R&D, building factories) — or, they can return value to shareholders through dividends and stock buybacks. Microsoft has used its ginormous cash pile to fund acquisitions, boost dividends, and do buybacks. Many companies flush with excess cash are doubling down on buybacks, too.

• Spending on buybacks increased much faster than capital expenditures (think: buildings, equipment) in the first half of 2021.
• S&P 500 companies spent more on buybacks than on capital expenditures in the first half 2021. Share repurchases hit $370B, up ~30% from the first half of 2020.
• For example: Lowe's, which thrived on the DIY House Hype, spent $6B on share repurchases — compared with barely $850M on capital expenditures. Target, another corona-conomy thriver, recently announced $15B in buybacks.

To boost or not to boost... With 65% of US adults fully vaxxed and Delta cases surging, President Biden hoped to start distributing Pfizer booster shots this week. But on Friday, scientists overwhelmingly advised the FDA not to recommend boosters for the general public — only for people 65 and older, and those at high risk. Third shots are already controversial since many countries still don’t have first shots. The FDA’s final decision on boosters is expected this week, and it usually follows scientists’ counsel.

Nemo’s loving the WiFi... Google just completed a 3.9K mile-long undersea internet cable between the US and Europe. Since 98% of global web traffic flows through undersea cables, e-giants like Facebook, Amazon, Microsoft, and Huawei pay big bucks for bandwidth on shared cables. But Google’s cable is Google-exclusive, and can handle more traffic than all existing cables combined. As the cloud computing boom continues, internet giants will either compete to buy more bandwidth — or to build it.

The Chipotle of homebuilding... Instead of BYOB, Lennar and KB Home help you build-your-own-home. The housing market has been #thriving since millions of Americans ditched city-living for pandemic-friendly suburbia. Demand is still sky high, with housing inventory sitting at 40-year lows. But last month, home sales dropped for the first time in over a year. We’ll see if homes are still booming when Lennar and KB Home, two of America’s largest homebuilders, drop earnings this week.

Limited breadsticks… As eager foodies return to indoor dining, restaurants are having a hard time keeping up with demand. Supply chain and labor shortages have forced some eateries to trim menu items and shorten hours. And many small restaurant owners have seen a surge in operating costs due to rising prices (#din-flation). Last quarter, Cracker Barrel and Olive Garden-owner Darden Restaurants said sales were almost back to pre-pandemic levels. We’ll see if the rebound continued when they serve up quarterly earnings.

• Flyer: Design startup Canva notched a $40B valuation, making it the world’s most valuable female-founded and female-led startup.
• Hike: House Dems proposed a $2.9T tax hike for high earners and big businesses to pay for President Biden’s $3.5T social agenda.
• Juicy: Rivian became the first to bring a fully electric pickup truck to the consumer market, beating Tesla, Ford, and GM — who merely unveiled prototypes.

• Energize: How to beat your mid-day slump, without chugging espresso.
• Mapped: The biggest companies by market cap in 60 countries.
• Elevate: Nine skills that could help you get promoted faster at work.
• Step: How a simple, unstimulating walk can lead you to metaphysical truths.

• Monday: Earnings expected from Cognyte
• Tuesday: Earnings expected from Adobe, FedEx, AutoZone, Lennar, Stitch Fix, Cracker Barrel, InnovAge, and Aurora Cannabis
• Wednesday: Fed Chair Jerome Powell news conference. August existing home sales. Earnings expected from General Mills, BlackBerry, and KB Home
• Thursday: Jobless claims. Earnings expected from Nike, Accenture, Costco, Darden Restaurants, and Rite Aid
• Friday: August new home sales

Authors of this Snacks own shares of: Microsoft, Google, GM, Starbucks, and Amazon

ID: 1842926