Sun Microsystems' board authorized a stock buyback plan of $3 billion, the company announced Wednesday after the close of trading.
Shares jumped on the news, rising more than 4% in the after-hours session.
"With over $5.4 billion in cash and marketable debt securities, we have maintained a strong balance sheet and feel confident that this program will allow us to further pursue strategic opportunities for growth," said CFO Mike Lehman, in a prepared statement.
The Santa Clara, Calif.-based company said it implemented the repurchase plan in order to counter potential dilution related to its employee stock compensation program, as well as to raise shareholder value.
Sun's board canceled the company's old stock buyback plan, initiated in 2001, but did not set an expiration date for the new plan, the company said.