Microsoft intends to spend up to $40bn (£21.7bn) buying back its own shares in a move designed to increase share value and please shareholders.
The announcement follows the completion of Microsoft's stock repurchase programme.
The company said that it has returned over $115bn (£62bn) to shareholders over the past five years through a combination of share repurchases and dividends.
"These announcements illustrate our confidence in the long-term growth of the company and our commitment to returning capital to our shareholders," said Chris Liddell, chief financial officer at Microsoft.
Market watchers had expected such a move following Microsoft's failure to purchase Yahoo, which had sent its share value tumbling.
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