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Microsoft Debt Deal Not A Sign Of Pending Purchase

Tuesday, 12 May 2009 | 11:51 AM ET
Microsoft
Photo by: Robert Scoble
Microsoft

I know everyone is getting all hot and bothered about Microsoft’s $3.75 billion debt deal, speculating it is a forerunner to a coming acquisition by the software giant. But based on what I’m hearing, investors bracing for a big deal in the near term can relax.

Bankers who work with Microsoft tell me the company has been planning for a debt issuance for more than a year, having first laid the groundwork for such an offering when it was still in pursuit of Yahoo.

For Microsoft , another $3.75 billion in available cash is not going to make a difference when it come to pursuing a large acquisition, but by accessing the capital markets now, Microsoft does make it easier for it to do a far larger deal in the future, should it need to do so. “Once you’ve done $3 billion and the bonds are out there and trading, it makes it easier to come back with a bigger deal in the future,” explained one banker who worked on yesterday’s deal.

None of this is to say that Microsoft won’t be considering a large acquisition some time in the future.

It seems, based on what I hear from technology bankers, that plenty of firms are looking at the fragmented technology landscape coupled with the lack of organic revenue growth in the overall industry and wondering what deals would make sense.

That could well bring Microsoft to the negotiating table, but for now, it’s just happy to have its cheap money.

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Questions? Comments? Write to faberreport@cnbc.com.

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