Microsoft May Need to Borrow Some Cash
This was made known by the company’s CFO Chris Liddell in a briefing to Wall Street analysts.
This would be the first time in the company’s history that the cash part of the half-cash, half-stock offer at $31 per share would be fulfilled through a borrowing.
The company had $21 billion in cash and short-term investments as of Dec. 31. The company is considered cash rich and it probably doesn’t need to beg for the money. "If you look at the cash component rather than focus on the stock component, that’s going to be over $20 billion worth of cash,…We could fund most of that through our cash holdings, but it’s likely we’re actually going to borrow for the first time," said Liddell. Moreover, he said that the finance would entail a mixture of the cash the company has in addition to the debt.
Further, that Microsoft is considering a loan underscores the magnanimity of the bid and that the company is even willing to take that risk. It seems to have good reasons to take the risk as it has been reporting over US$5.8 billion in net cash from operations in the previous quarter itself. But, the question of exactly how much debt Microsoft is eying is anyone’s guess.