Microsoft is to launch a $20bn (£10.8bn) share buyback despite seeing its profits fall over the past quarter.
Microsoft is bullish despite some product delays
The software giant plans to buy the shares next month - equivalent to 8% of its total stock - adding to the $30bn it has already bought in the past year.
Microsoft reported a fall in fourth quarter net income to $2.83bn from $3.70bn in the same period last year, thanks in part to one-off legal costs.
Revenues increased by 16% over the period to $11.8bn.
The trading update was the first since founder and chairman Bill Gates revealed he would be giving up his day-to-day responsibilities at the firm from 2008 to concentrate on charitable work.
The quarterly performance came in ahead of market predictions.
For the year as a whole, Microsoft reported profits of $12.6bn, compared to $12.2bn for the previous year.
Full-year revenues rose 11% to $44.28bn.
Microsoft has suffered some setbacks in recent months, being forced to delay the launch of its Vista operating system to next January.
It was also fined $353m (280m euros) by the European Commission for failing to comply with an anti-competition ruling.
Nevertheless, it issued a bullish forecast for 2007, predicting revenues of between $49.7bn and $50.7bn and operating income of up to $19.4bn.
"Our upcoming launches of Windows Vista, Microsoft Office 2007, Exchange Server 2007 and other key products position us to continue to deliver strong revenue growth in 2007," said chief financial officer Chris Liddell.
"With our share repurchase programs, we reaffirm our confidence and optimism in the long-term future of the company," he added.