Microsoft is to buy back as much as $40 billion (£22 billion) worth of its own stock through the next five years.

The share re-purchase announcement is a follow-up to similar plans made in 2004 and 2006, when the company bought $30 billion and $40 billion of its own stock, respectively.

The company's board of directors also declared a quarterly dividend of 13 cents per share.

"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, the company's chief financial officer, in a statement.

Analysts had wondered what Microsoft would do with its cash after it was spurned by Yahoo, which it first offered to buy Yahoo in February for an estimated $44.6 billion. When Yahoo said the bid was too low, Microsoft withdrew its offer in May.

According to the most recent Microsoft financial statement, it had $23.7 billion in cash on hand on 30 June 2008.

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