In August, Bloomberg reported that top-rated software analyst Heather Bellini expected Microsoft to rev up its share buyback engine in the coming months.

Bellini of UBS told Bloomberg that the time was right to buy Microsoft stock, trading at historically low price-earnings ratios, because she expected the company to execute a $20 billion share repurchase between August and November.

In the last five fiscal years, Microsoft has repurchased more than $70 billion of its shares.

It slowed the pace of repurchases in the 2008 fiscal year in part to keep more cash on hand for its planned acquisition of Yahoo. The deal fell apart over the course of this year.

The new debt program begins with a $2 billion commercial paper program, Microsoft said. The company will use the proceeds for "general corporate purposes, which may include funding for working capital and repurchases of stock."

Analysts have criticized Microsoft for keeping so much cash on hand -- it had nearly $23.7 billion in cash and short-term investments on hand June 30 -- and not take advantage of its solid credit. The company said it earned top corporate credit ratings of "AAA and Aaa by Standard & Poor's Rating Services and Moody's Investors Service Inc., respectively. The commercial paper is rated A-1+ by Standard & Poor's and P-1 by Moody's, the highest ratings available from both agencies."

Why now?

George Zinn, Microsoft's treasurer, explained in this statement: "The company's strong credit quality coupled with investors' current appetite for high quality paper provides a unique opportunity for the company to establish its first-ever commercial paper program and enhance its capital structure."

Check back later today for more coverage and analysis of Microsoft's moves.

Update, 11:13 a.m.: Analysts are sounding off on Microsoft's moves. Friedman Billings Ramsey, which had advocated for a leveraged stock buyback in July, issued a note to investors applauding Microsoft's buyback and debt plans.

"While MSFT is not taking on as much debt as we would have liked (see our July 22, 2008 brief "Come on Steve, How About a Levered Buyback?"), we think it is a step in the right direction. Taking on debt to fund buybacks: (1) is nicely accretive; (2) improves ROE; (3) provides the flexibility to execute larger buybacks, while maintaining its ability to be acquisitive; and (4) provides the company with an improved capital structure."

Also worth noting, Hewlett Packard announced authorization for an additional $8 billion stock buyback today.

Update, 11:52 a.m.: Goldman Sachs analysts, including Sarah Friar, weighed in, also calling Microsoft's move positive in a note to investors.

"We believe that the announcement this morning is a welcome catalyst to a moribund stock demonstrating the company's commitment to returning cash to shareholders. Timing will be everything, since a $40 bn buyback through 2013 would do little to change the current buyback pace, however the debt decision signals some more urgency than we have previously seen from the company. This action also lowers the likelihood of a large acquisition, another overhang on the shares."