Wells Fargo On Microsoft: 'Debt Raise Supports Buyback But We'd Like Consumer Deals'

Jason Maynard of Wells Fargo on Thursday commented in a note that

recent announcement of a debt offering doesn't signal a change in Microsoft's capital allocation plans, rather the financing was needed since over 90 percent of the company's cash balance is offshore. "In our opinion, the remaining $31 billion buyback over the coming two years is substantial," Maynard wrote. "However, we don't think buybacks are the only appropriate use of cash." Maynard adds that Microsoft may benefit from using the cash to finance more acquisitions along with larger scale moves to "reinforce" the consumer business lines. The analyst adds that Microsoft needs to spend money to address the material challenges from

,

Google

and others. Bottom line, additional buybacks and dividends may not be the best path for sustained returns and saying so could be disappointing to some investors that are "yearning for more financial engineering" and that it is "critical" to keep consumer mind-share in order to grow the enterprise business.