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An informal, stream-of-consciousness reflection on business ideas, events and issues in modern business, modern life and with some specifics to the web-software industry by Paul Tomori, Internet Entrepreneur

Microsoft Issues Debt!
once again... the way capital is supposed to be generated

By Paul Tomori
Tuesday, May 12, 2009 at 09:57:10 (EDT)

As shocking as it seems, yes, Microsoft, with 25 Billion dollars in cash on its books, has issued a bond offering in order to take on debt.

The speculation is that Microsoft is looking to make a major acquisition and will need the extra cash OR that they are planning to buy back their extremely cheap shares.

Either way, it is an interesting proposition and the bond market has reacted very favourably even though the interest being paid on the bonds will be less than 1% above treasury bonds. This is a definite sign that the capital markets are thawing.

In reference to a previous post, this move by Microsoft is the legitimate way (or at least one of the legitimate ways) capital markets are supposed to get funding. All these government bailouts are an atrocity in the face of proper company financing.

Why? Because only people who are willing to take on risk in investment markets should be putting their hard-earned money into such markets. The government has no place investing future taxpayer's money that way... especially when many or most of those future taxpayers are so risk-averse. For example, I don't like the idea that today's government has decided that my children are going to have to pay the cost of today's government bailouts whether they want to or not.

Now, does this mean the government should not have done ANYTHING? I know my own opinion on the matter, but some very successful people hold contrary views to mine, so I guess the jury is still out on that...

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