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Microsoft Announces Dividend and Stock Buyback Program

michael posted more than 10 years ago | from the more-than-3000-patents-this-fiscal-year dept.

Microsoft 411

neile writes "Microsoft just announced some of their plans for their large cash reserves. This includes moving to quarterly dividend payments of $0.08 a share (up from $0.16 annually), and a special one-time dividend of $3.00 a share in December. The Board of Directors also approved a four-year, $30 billion, stock buyback plan."

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THE FP IS MINE!!!111 (1, Offtopic)

Bold Marauder (673130) | more than 10 years ago | (#9753866)


"We are confident in our long-term ability to grow revenue, profits and shareholder value through our innovation and execution. We have been successful in addressing a significant portion of our ongoing legal exposure, and all seven of our businesses are growing," said Steve Ballmer, Microsoft's chief executive officer.

That's a couple of things that SCO can't say right about now.

Say It Loud: Impeach George W. Bush: +1, Patriotic (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#9754069)


Please convey my urgent message to the United Nations for supervision of the November 2004 presidential election in the Untied States to prevent another election scam to select the world's most dangerous leader and fundagelical extremist [whitehouse.org]

Thanks in advance,
Kilgore Trout

Why don't they buy VA Linux stock instead? (1)

Hot Summer Nights (771962) | more than 10 years ago | (#9753869)

They could get much more of it for their money.

FREE IPOD (-1, Offtopic)

FreeIPODs (797372) | more than 10 years ago | (#9753871)

Free iPod [freeipods.com]

I'd recommend doing the ancestry.com one, you can cancel it right after you sign up. Use your junk e-mail address of course :)

Yeah (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#9753872)

Frist p0st1!!!!!!!!!!

wow (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#9753875)

whoppee

sdfds (-1, Troll)

Anonymous Coward | more than 10 years ago | (#9753880)

sdfsdddfdf

Outstanding (4, Interesting)

PhreakinPenguin (454482) | more than 10 years ago | (#9753883)

I knew I bought their stock for a reason. I know I will get modded down for this or flamed but you'll never see a company like Redhat do this. Regardless of your opinion of MS, this is a good move to reward stockholders.

No doubt about it (5, Insightful)

tux_deamon (663650) | more than 10 years ago | (#9753947)

Microsoft is great at one thing; making money. Unfortunately, being good at making money doesn't necessarily mean they have to be good at making software (at least considering how they've gone about it).

Re:No doubt about it (2, Insightful)

Anonymous Coward | more than 10 years ago | (#9754087)

I hate to break it to you, but MS got rich by selling a decent 'consumer' product for a decent price. People don't NEED to run Windows, they choose to do so because, unlike Linux, it was designed with your everyday user in mind. Sure it has bugs, but it's easy to use and the machines are cheap that run it.

Re:No doubt about it (5, Informative)

tux_deamon (663650) | more than 10 years ago | (#9754208)

I guess you missed the Microsoft Antitrust Trial [wikipedia.org] that was in all the papers the last few years?

Re:Outstanding (2, Interesting)

Moofie (22272) | more than 10 years ago | (#9753962)

So you think that buying stock in an unethical company is ethically neutral?

I think you're wrong.

Re:Outstanding (1, Insightful)

scowling (215030) | more than 10 years ago | (#9753978)

Because the defining purpose of any public corporation is to maximize profit for the shareholders, then by definition all public corporations behave unethically.

Re:Outstanding (4, Insightful)

tux_deamon (663650) | more than 10 years ago | (#9754031)

The defining purpose of a public corporation isn't to maximize profit by any means necessary. We live in a society of laws and regulation. So no, not all corporations necessarily engage in unethitcal activity in pursuit of profit.

Re:Outstanding (3, Insightful)

scowling (215030) | more than 10 years ago | (#9754072)

It is to do so by any legal means necessary, because failure to do so could set up the CEO and the Board as the defendants in a civil suit by the shareholders.

One can be unethical and still remain within the law; my point stands.

Re:Outstanding (1)

slavetrade55 (444917) | more than 10 years ago | (#9754131)

Except that maximizing profit isn't prima facie immoral. So no, your point doesn't stand.

Re:Outstanding (2, Insightful)

tux_deamon (663650) | more than 10 years ago | (#9754145)

No, this was your original point (nice try):

Because the defining purpose of any public corporation is to maximize profit for the shareholders, then by definition all public corporations behave unethically.

I submit that a corporation can behave ethically, and still maximize profit. Ethical behavior does not preclude the possibility of maximizing profit.

Re:Outstanding (2)

Vancorps (746090) | more than 10 years ago | (#9754174)

Case in point, Ben and Jerry's before they were bought out.

They used research they funded to produce environmentally sound cartons and they backed countless charities. Might add they were vary profitable as well.

Re:Outstanding (1)

scowling (215030) | more than 10 years ago | (#9754204)

And that's where you and I disagree. I maintain that because a company is beholden to its shareholders by civil law, that the copany is *required* to be unethical in order to maximize value.

One can always make more money unethically than ethically. I think that's axiomatic.

Re:Outstanding (4, Insightful)

hazem (472289) | more than 10 years ago | (#9754079)

Because the defining purpose of any public corporation is to maximize profit for the shareholders, then by definition all public corporations behave unethically.

It's actually to maximize value rather than profit.

A company can sell all of its assets and fire all its employees and they'll show great profits for that quarter. Unfortunatley they did not maintain the value of the company.

Acting unethically has an impact on the value of a company, but only as much as the society and pool of potential investors estimate that value. A company can only act as unethically as the society will allow.

Re:Outstanding (1)

scowling (215030) | more than 10 years ago | (#9754136)

Yes, good point re: value.

Of course, re: ethics, the consumer base has shown repeatedly that it really doesn't care about how companies act. Sure, there are a few anti-Exxon/Microsoft/Union Carbide folks out there, but those companies jst keep making money hand over fist.

Re:Outstanding (2, Insightful)

LordSah (185088) | more than 10 years ago | (#9754064)

So, how many companies can you invest in, ethically?

Re:Outstanding (1)

Moofie (22272) | more than 10 years ago | (#9754148)

Very, very, very few.

Re:Outstanding (0)

Anonymous Coward | more than 10 years ago | (#9754089)

What color is the sky in your world?

Re:Outstanding (5, Funny)

pilgrim23 (716938) | more than 10 years ago | (#9753973)

I used to have Microsoft stock, but one day I opened my portfolio and all the certificates had turned blue with incomprehensible writing on them. When I called my broker he assured me everything was all right, it was all a part of doing business and that I should put the stocks back in my old shoe where I stored them. So...I rebooted...

First Flame (1, Insightful)

Auckerman (223266) | more than 10 years ago | (#9753974)

This could be because MOST public companies pay their profits every quarter to investors rather than store it in the bank. Microsoft begins to actually give their profits to their investors, which off the top of my head Redhat has always done (should they make a profit), and it's something "(I'll) never see Redhat do". I don't get the reasoning.

Re:First Flame (1)

ProtonMotiveForce (267027) | more than 10 years ago | (#9754101)

Umm, what?

You're confused, my fellow. Most companies do not give their profits to investors.

Some companies give some portion of profits in the form of dividents. Most tech companies don't. Most of them reinvest the money, be it in the bank or in expansion.

Re:First Flame (4, Informative)

AT (21754) | more than 10 years ago | (#9754157)

Huh? Most public companies take their profits and reinvest them in the company. This may or may not help the company grow and reward investors by making the company more valuable. Some companies pay out dividends (i.e. pay out profits to investors), usually because the company is not easily able to expand so growth is not an option. This is commonly seen in large companies in mature fields; think heavy industry, mining, railways, etc..

Redhat most definately does not give their profits to their investors; they are focused, like most tech companies, on growth, so they reinvest it in the company.

Re:Outstanding (0)

Anonymous Coward | more than 10 years ago | (#9753997)

You mean stockholders like Bill Gates and Steve Ballmer? How much cash will they be pocketing in this deal?

Re:Outstanding (1)

zogger (617870) | more than 10 years ago | (#9754220)

bing & go, you nailed it. And most likely, gates wuill be buying more precious metals mines with his cut, no idea what ballmer will do.

Re:Outstanding (1)

Kedyn's Crow (566552) | more than 10 years ago | (#9754013)

... but you'll never see a company like Redhat do this.

I'm not very familiar with investing so I have to ask, Why not? Isn't Redhat also a publicly traded company? Don't they have the option to pay dividends to their stockholders as well?

Re:Outstanding (3, Interesting)

tux_deamon (663650) | more than 10 years ago | (#9754082)

No, most tech companies don't pay dividends, rather they reinvest their profits (would they ever see them) into R&D. Most tech shareholders bank on the speculation that the share value will increase as the company grows very quickly.

Paying a dividend is usally something only mature companies do when growth slows down. Microsoft is one of the few tech companies that pays a large dividend.

Re:Outstanding (0)

Anonymous Coward | more than 10 years ago | (#9754175)

Thats because there is nowhere to go from here for microsoft but down.

Re:Outstanding (1)

DAldredge (2353) | more than 10 years ago | (#9754176)

They SAID they will do a buy back of UP TO 30 Billion. They don't have to buy back that much stock and most companies that announce a buy back don't buy back new what they authorized to. I would be shocked if MSFT buys back more than 10 Billion over the next 3 years.

And cutting employee benifits isn't a good way to keep your best employees, and that is a negative in regards to their long term stock price.

Re:Outstanding (4, Insightful)

Nakito (702386) | more than 10 years ago | (#9754197)

Pre-announcing a major ($3) dividend to be paid many months from now seems kind of funky. This will be immediately priced into the share value, of course -- every share is immediately worth that much more since everyone knows the distribution is coming. It's analogous to the "ex dividend" period of that occurs when a distribution is pending, except that the amount is huge and it's much longer in the future (almost half a year!). On top of that, a major buyback plan means that there will be sustained buying pressure on the stock.

So call me cynical, but this is the first thought that came into my head: These events will cause all of the executives to hit the strike price on their stock options.

Does this mean.. (0, Funny)

Anonymous Coward | more than 10 years ago | (#9753884)

I get a refund to the full retail value of the malware that was preinstalled on my notebook?

YES! (0)

Anonymous Coward | more than 10 years ago | (#9753885)

Now I can finally collect on my M$ stock and buy some of them $CO shares!

They pay us (1)

KaSkA101 (692931) | more than 10 years ago | (#9753887)

Now's when it actually pays to have a piece of microsoft.

hopes dashed (4, Funny)

kippy (416183) | more than 10 years ago | (#9753901)

Crap, I was hoping for a Mars mission.

Re:hopes dashed (0)

Anonymous Coward | more than 10 years ago | (#9753926)

I work at MS, and I was too.

Re:hopes dashed (1)

zoefff (61970) | more than 10 years ago | (#9753940)

Crap, I was hoping for a Mars mission.

you DO remember the first Ariane 5 mission, don't you?

Re:hopes dashed (1)

kippy (416183) | more than 10 years ago | (#9753987)

Good call [umn.edu]

trol6lkore (-1, Troll)

Anonymous Coward | more than 10 years ago | (#9753910)

seven businesses? (5, Funny)

hostyle (773991) | more than 10 years ago | (#9753915)

"... and all seven of our businesses are growing," said Steve Ballmer

Seven businesses? Can anyone enlighten me on this? OS, Software, Xbox, MSN, selling hotmail addresses to spammers?

Re:seven businesses? (0, Troll)

Anonymous Coward | more than 10 years ago | (#9753935)

Troll
MS is the biggest force in behind shutting spammers down today.

Re:seven businesses? (-1, Flamebait)

sTalking_Goat (670565) | more than 10 years ago | (#9753995)

MS is the biggest force in behind shutting spammers down today.

ROFLMAO!! I haven't so hard all day.

next you'll be telling me IE keeps my computer safe from worms...

Re:seven businesses? (2, Funny)

JamesP (688957) | more than 10 years ago | (#9754054)

You forgot AdTI and SCO...

Oh, wait...

Re:seven businesses? (5, Informative)

Anonymous Coward | more than 10 years ago | (#9754104)

Sure thing:

1 - Windows Client, including the Microsoft® Windows® XP desktop operating system, Windows 2000, and Windows Embedded operating system.
2 - Information Worker, including Microsoft Office, Microsoft Publisher, Microsoft Visio®, Microsoft Project, and other stand-alone desktop applications.
3 - Microsoft Business Solutions, encompassing Great Plains and Navision business process applications, and bCentral(TM) business services.
4 - Server and Tools, including the Microsoft Windows Server System(TM) integrated server software, software developer tools, and MSDN®.
5 - Mobile and Embedded Devices, featuring mobile devices including the Windows Powered Pocket PC, the Mobile Explorer microbrowser, and the Windows Powered Smartphone software platform.
6 - MSN, including the MSN® network, MSN Internet Access, MSNTV, MSN Hotmail® and other Web-based services.
7 - Home and Entertainment, including Microsoft Xbox®, consumer hardware and software, online games, and our TV platform.

It's how the corporation is structured from a business perspective. http://www.microsoft.com/mscorp/articles/business. asp

Re:seven businesses? (2, Informative)

illuvata (677144) | more than 10 years ago | (#9754130)

since i wondered the same thing, i looked here [microsoft.com]

Windows Client, including the Microsoft® Windows® XP desktop operating system, Windows 2000, and Windows Embedded operating system.

Information Worker, including Microsoft Office, Microsoft Publisher, Microsoft Visio®, Microsoft Project, and other stand-alone desktop applications.

Microsoft Business Solutions, encompassing Great Plains and Navision business process applications, and bCentral(TM) business services.

Server and Tools, including the Microsoft Windows Server System(TM) integrated server software, software developer tools, and MSDN®.

Mobile and Embedded Devices, featuring mobile devices including the Windows Powered Pocket PC, the Mobile Explorer microbrowser, and the Windows Powered Smartphone software platform.

MSN, including the MSN® network, MSN Internet Access, MSNTV, MSN Hotmail® and other Web-based services.

Home and Entertainment, including Microsoft Xbox®, consumer hardware and software, online games, and our TV platform.

Re:seven businesses? (0)

Anonymous Coward | more than 10 years ago | (#9754132)

My guess would be: OS, Office, MSN, Xbox, Halo, Hotmail, Input devices

they got the tools to dig ... (1)

turnin (698827) | more than 10 years ago | (#9753919)

graves or new foundations?

The Linux caveat..... (5, Informative)

i_want_you_to_throw_ (559379) | more than 10 years ago | (#9753925)

Pay attention to the Forward Looking Statement..

"the availability of competitive products or services such as the Linux operating system at prices below our prices or for no charge; "

At least they noted it (1)

Engineer-Poet (795260) | more than 10 years ago | (#9754133)

Lots of companies which faced competition from disruptive technologies have failed to acknowledge that their markets were under pressure. Microsoft is even trying to respond, within the constraints (handicaps) imposed by their business model.

Got to be a catch in their someplace (4, Interesting)

Marxist Hacker 42 (638312) | more than 10 years ago | (#9753928)

Oh yeah- the catch is Bill Gates Sr. He's always taught his son that vast accumulation of wealth was bad for the economy overall. The one redeeming factor of the Gates family has always been small estates (for the socioeconomic class they're in anyway- MY parents can't afford to give me a $100,000 loan to drop out of college and start a business). Maybe Bill Gates Jr. finally convinced his board what his father always taught him.

Re:Got to be a catch in their someplace (0, Troll)

johannesg (664142) | more than 10 years ago | (#9754143)

If Bill Gates had any care for the economy overal, he wouldn't have raped and pillaged the software industry until nothing was left but smoking ruins. The fact he has done this means he cares for nothing but the accumulation of wealth and power.

Re:Got to be a catch in their someplace (1)

mingot (665080) | more than 10 years ago | (#9754215)

Please. The man has given more money to charity than you'll ever see in your life. And before you try to tell me how good it is for his taxes ask yourself if you really think he managed to drop himself into a lower tax bracket because of it.

Re:Got to be a catch in their someplace (4, Interesting)

blackmonday (607916) | more than 10 years ago | (#9754207)

His dad's a real interesting guy. He's a big supporter of inheritance taxes [forbes.com] . if I remember correctly, he believes society got you where you are, so you need to give back when you go away.

Well, good. (2, Interesting)

scowling (215030) | more than 10 years ago | (#9753932)

It doesn't make sense (to me) for a company to sit on top of massive cash reserves which represent, essentially, profit made by from the investment of stock buyers.

But on the other hand, it wouldn't make sense for them to blow all of their reserves on dividends and buybacks. After all, not even Microsoft could be so arrogant as to blithely assume that they're going to keep making the kinds of profits they have been until the end of time.

Um. Never mind.

Re:Well, good. (5, Insightful)

Tackhead (54550) | more than 10 years ago | (#9754165)

> But on the other hand, it wouldn't make sense for them to blow all of their reserves on dividends and buybacks.

If, however, you're not sure whether President Bush will continue to tax long-term capital gains and qualified dividends at 15%, or President Kerry will demand that Congress undo the tax cuts, resulting in marginal tax rates on long-term capital gains of 20%, and all dividents at up to 39%, blowing some of those reserves on one-time dividends and buybacks over the next 12 months is a pretty good idea.

Google for "special dividends", and you'll see that a lot of companies are doing this sort of thing (one-time "special" dividends of 5-10%, rather than merely raising their dividend by a few cents per share indefinitely) these days. You'll also notice that the trend started in the past six months -- right about the time people realized that the election is shaping up to be a statistical dead heat.

Quarterly dividends better than Cisco (5, Insightful)

GPLDAN (732269) | more than 10 years ago | (#9753941)

These are the actions of a company that realizes they are no longer a growth stock and is no longer looking to finance things via the market but rather reward consistent investors and enter into a "slow, continuous growth" mode instead of acting like a start-up. Investors will like quarterly dividends and the buyback will shore up the flagging stock price.

Now, if only Cisco would buyback their stock (way too many shares floating), start expensing their options like a proper company and start paying some dividends, maybe they could be considered a grown-up stock as well.

Re:Quarterly dividends better than Cisco (1)

aralin (107264) | more than 10 years ago | (#9754068)

The dividend is about 1.08% return on investment, you can get almost twice as much from that ING savings account without risk. True, that 10% one time payback is nice, but thats one time... :(

Panic! (2, Interesting)

nzgeek (232346) | more than 10 years ago | (#9753942)

Man, I knew MS were worried about their lacklustre share price performance [cnn.com] compared to Apple [cnn.com] , but this is a desperation move if ever I've seen one.


Basically, this is a quick way to pump up your share price by almost three bucks, only to have it plummet by the same amount when it goes ex-dividend.


Either that, or they are trying to lose that cash-mountain to make it less of a target for something over the horizon that we haven't seen yet. Think patent infringement lawsuit or something like that.



Pump up stock price? (1)

Engineer-Poet (795260) | more than 10 years ago | (#9754171)

The value of the company is the same after this announcement as it was before, but ex-dividend it goes down by three bucks a share. The only reason to bid up the price is if you expect the stream of dividends to continue, which it may well fail to do. [slashdot.org]

Re:Panic! (0)

Anonymous Coward | more than 10 years ago | (#9754178)

You misunderstand completely. Why would MSFT care about it's short term stock price? They have billions in cash and no debt, so what good would a higher share price give them?

This is for the good of the investors (including Gates and other MSFT employees). Why would shareholders want MSFT to have all the cash when they use it instead?

Re:Panic! (1)

spundun (723158) | more than 10 years ago | (#9754190)

Giving out dividends when a company is making profits is how the entire share based economy system is supposed to work. Especially when you have cash in reserve that you dont know what to do with.

And god knows MS has got cash in reserve.

Overall this is great because this gets money out again to flow crazy like sperms. Each of the stock-holders is going to decide on his own what to do with the money. I think thats how capitalism is supposed to work in a healthy state.

Who owns the bought-back stock. (1, Interesting)

Flat Feet Pete (87786) | more than 10 years ago | (#9753944)

So does a buy back program mean that msft is buying shares in msft? This seems a bit odd as it creates a circular loop in the owenership. I own 0.0001% of msft, but that 0.0001% of msft owns 0.00000001% of msft.

I understand that this is mainly to drive up stock prices, but could a company theoretically own itself. This stuff's confused me for a while.

Re:Who owns the bought-back stock. (1)

Flat Feet Pete (87786) | more than 10 years ago | (#9753989)

arse.

that last line should have been:

I understand that this is mainly to drive up stock prices, but could a company theoretically own itself? This stuff's confused me for a while.

Re:Who owns the bought-back stock. (0)

Anonymous Coward | more than 10 years ago | (#9753994)

Of course a company should own some of it's own shares. How else is it going to issue stocks to employees? Or buy other businesses. Rarely does a company pay all in cash for business, they usually just issue a certain amount of their stock to the owners of the business they decided to purchase.

in effect, it's canceled (3, Informative)

davidwr (791652) | more than 10 years ago | (#9754005)

It has the same effect as if the stock was bought back then the shares canceled. If I own 25% of MSFT, and MSFT buys back half of its outstanding stock from other people, I now own 50% of MSFT. I say "in effect" it's canceled because depending on where MSFT is incorporated, it may "hold" this stock as "treasury stock" so it can resell it later without "issuing" new stock. If it does not hold treasury stock, the stock is "canceled" and will have to be re-issued if MSFT wants to "sell" it.

Re:Who owns the bought-back stock. (1)

blugu64 (633729) | more than 10 years ago | (#9754056)

When they buy back shares it's not recursive. It basicly decreases the total amount of shares avaible. Thus making every other share more valuable, and a bigger "cut"/percentage of the company. (See Business Admin Majors are good for something!)

Re:Who owns the bought-back stock. (4, Insightful)

nzgeek (232346) | more than 10 years ago | (#9754067)

There is no feedback loop. They buy back your shares, you no longer own them, so yes MSFT owns another 0.0001% of itself.

Yes, a company could theoretically own itself. Much like a million and one Mom-and-Pop corner stores own themselves.

The sharemarket exists as a way to distribute risk. A long time ago (in a galaxy fa...) MSFT said: "Hey we have this great idea to make software to sell to computer users, and we need money to do it. Rather than take out a bank loan, how about you guys (Mr and Mrs Mutual Fund Owner) shoulder some of the risk? If it works out, we'll both make lots of money!"

If MSFT happens to make so much money that they can afford to buy the risk back from Mr and Mrs Shareholder, then more power to them. This is not the way it happens in reality though, because the risk always exists, and if MSFT happens to go down the toilet, they don't want to shoulder the entire burden. Better that Mom & Pop Shareholder take some of the pain too.

Strange isn't it that most Fund Managers and Brokers never ever mention the 'Risk' part of the equation eh? They always talk about 'equity' and 'investment'.

I'll say it again: the sharemarket is simply a way of distributing business risk. If you can't take the risk, invest in fixed income. Not as sexy and not as much possible upside, but not as much risk.

Re:Who owns the bought-back stock. (0)

Anonymous Coward | more than 10 years ago | (#9754142)

Really? You own $300,000 of MSFT? That's a pretty hefty dividend cheque you'll be getting in the mail. Maybe you could spend a bit of it on a finance textbook.

Re:Who owns the bought-back stock. (1)

kalamazoo904 (312444) | more than 10 years ago | (#9754199)

You've got the wrong image.

Once the shares are bought back, they no longer exist. As you surmise, the ownership value of the shares is evenly divided among the remaining shareholders. But that's it. If the company decides to sell new shares, it works in exactly the opposite manner. The company creates new shares and *poof* everyone else's shares lose some of their ownership value. (That's why it takes a vote by shareholders to authorize either share issue or share buy-back.)

What you have to do is keep an eye on the number of "shares outstanding". That's the total number of shares ever isued in all public offerings. The number (1 / shares outstanding) is how much of the company you own when you buy one share. If new shares are sold, "shares outstanding" goes up and your shares go down in value. If shares are bought back, "shares outstanding" goes down and your shares go up in value.

A company can't own itself. (It can be non-owned, however - that's a voluntary association.) If a buy-back is taken far enough, you get down to a point where there are only X investors left and none that are willing to sell. At that point no shares are traded (nobody in the group will sell to each other or anyone else), and the stock is no longer publicly traded, but privately held.

Say everyone but one person uses the buy-back. In that case, 100% of "outstanding shares" are held by the last person (call him Bill), and Bill owns the company (in "fee simple", as the ancient legalese says).

If Bill then "sells" his shares to the company, it's just funny accounting on Bill's ledger book. Bill still owns the company, he's just not describing that ownership in terms of "shares" anymore.

I advise trying "Railroad Tycoon" or reading Heinlein's Time Enough For Love, the section set on New Beginnings; either one will give you a feel for how this works.

Something is cooking at Microsoft... (1)

erroneus (253617) | more than 10 years ago | (#9753954)

...can anyone smell what's in their kitchen?

It might be enlightening if some insider anonymously posted their newer long-term shift in direction. This is a pretty major change and their motivation is what?

Nothing's cooking at Microsoft... (1)

truthsearch (249536) | more than 10 years ago | (#9754107)

This is not a major change. Doubling the yearly dividend still puts almost no dent in their cash reserves. Check how many billions they make each year and work it out.

The one-time $3 dividend serves a few purposes. It keeps investors complacent again. They became complacent when dividends were first announced. But now that the markets are up and their stock is stagnant investors are looking for better returns. This "proves" more value in their stock. To really distribute most of the cash reserves as they're supposed to (speak with Ralph Nader) they would need to pay out more than that every year, but notice they won't commit to that. They pay a one time "large" amount, then buy back a large amount of stock, so those periodic $.08 are now much smaller payouts (because there's less outstanding stock) and the stock that's left public is worth more. It's also a display that they are a value stock, no longer a growth stock. It's also a HUGE payout to the major shareholders: Bill Gates and friends. So don't be surprised if someone leaves right after the payout. This may be a friendly gesture to an insider.

The buyback is something they do very often, but not usually too big. They almost need to do it now because their stock and revenue growth are stagnant. The buyback plus one time dividend will pump up the stock price for at least a little while. When their P/E ratio falls into a position between value and growth stocks their share price will go up further for a long time.

Business as usual.

Confidence for future earnings is high (1)

Timesprout (579035) | more than 10 years ago | (#9753959)

So where does all the 'MS are a doomed, paniced entity, directionless and running in fear of Linux' we see here on /. fit into this view ?

Re:Confidence for future earnings is high (1)

kfg (145172) | more than 10 years ago | (#9754117)

So where does all the 'MS are a doomed, paniced entity, directionless and running in fear of Linux' we see here on /. fit into this view ?

The fact that Linux and their dropping share price have forced them to make this move to retain investor interest.

KFG

Re:Confidence for future earnings is high (1)

truthsearch (249536) | more than 10 years ago | (#9754159)

Simple: they're no longer a high growth company. If they planned on having huge market growth (enterprise and government, especially) then they wouldn't be playing the value game. Linux is partly undercutting their profits and slowing their market growth, and they see no change in the near future. I'd say that fits right into the /. view.

Its a good thing I held on to those 15000 shares.. (1)

sTalking_Goat (670565) | more than 10 years ago | (#9753964)

seriously how many /.actually have MS stock.

I'd file this in the sucks-to-be-me dept.

401ks and mutual funds (5, Insightful)

Thumpnugget (142707) | more than 10 years ago | (#9754103)

seriously how many /.actually have MS stock.

There is a very good chance that anyone with mutual fund investments in growth funds that deal in mid-to-large-cap stocks will own a bit of Microsoft. Since I'm guessing there are quite a few people who are gainfully employed reading Slashdot that are probably younger, probably have a 401k, and probably are choosing longer-term investment options to grow their money, I would bet a significant percentage of (the gainfully employed) Slashdotters own a chunk of Microsoft, whether they realize it or not.

I can't give you exact figures, but I know that I indirectly own a little chunk of Microsoft and I'm guessing a lot of other people here do too.

Any company with that much cash (1, Redundant)

davidwr (791652) | more than 10 years ago | (#9753965)

Any company with that much cash that they can't put to good use owes it to their employees to either invest it a la Warren Buffet, or disperse it to its shareholders so they can invest it or spend it as they see fit.

I don't think Microsoft sees itself as an investment company a la Buffet's Berkshire Hathaway. They see themselves (accurately or not) as a technology innovation company.

Won't affect current reserves. (4, Interesting)

BigGar' (411008) | more than 10 years ago | (#9753967)

I was thinking that I'd read that Microsoft was cleaning about 1 billion per month. If that's accurate and continues the stock buy back would not affect cuurent cash reserves only slow the rate it builds. That would result in a reserve growth of 18 billion over the next 4 years instead of 48 billion, while at the same time reducing the number of publicly held shares which will probably up the stock price.

Interesting (1)

jbellis (142590) | more than 10 years ago | (#9754055)

but what about the $3/share special dividend? How many outstanding shares are there?

Math Call! (1)

Marko DeBeeste (761376) | more than 10 years ago | (#9753968)

Isn't .08 .16? Fast-fingered Bill strikes again. Surprise, surprise, surprise. ----- G Pyle

Re:Math Call! (1)

Marko DeBeeste (761376) | more than 10 years ago | (#9753988)

Sorry, previous post dropped the less than sign

Re:Math Call! (1)

ScoLgo (458010) | more than 10 years ago | (#9754085)

Yes but quarterly is more frequent than annually so it works out to twice as much per year.

Re:Math Call! (1)

Osgyth (790644) | more than 10 years ago | (#9754016)

quarterly dividend payments of $0.08 a share (up from $0.16 annually) so... ((4*.08) = .32) > ((1*.16)= .16)

Re:Math Call! (0)

Anonymous Coward | more than 10 years ago | (#9754026)

0.8 * 4 > 0.16 . Read the article.

Well it makes me happy (2, Interesting)

tekunokurato (531385) | more than 10 years ago | (#9754003)

I just won $100! I bet my buddy that they couldn't come up with a better investment than a direct financial return to stockholders, and I was right (he thought they were going to buy somebody big). The bet's been going since late winter when they announced they'd have a plan for their cash by mid-summer.

It really is a reflection of their growth prospects. Until now their stock value was still banking on a good deal of growth, and this announcement makes it clear that they probably won't achieve that.

Actually, an interesting stat is that something like only 15% of stock buyback approvals in major companies actually materialize into actual buybacks.

Re:Well it makes me happy (1)

powerpuffgirls (758362) | more than 10 years ago | (#9754137)

Maybe your buddy has been sitting on 10,000 MSFT shares? So if MS bought somebody big, he wins and takes $100 and continues to sit on MSFT shares; if you won, you take away $100, but he's now getting $30,000 dividend. Win-Win situation.

Discounts court cases and Linux (1)

Quirk (36086) | more than 10 years ago | (#9754029)

"...the availability of competitive products or services such as the Linux operating system at prices below our prices or for no charge;..."

This basically says the future looks bright ahead. MS is paying out much of their warchest. Any threat Linux may pose has been discounted. MS believes they'll hang onto their 96% of the market and do so while growing new products.

Netcarft confirms (0, Offtopic)

Isbiten (597220) | more than 10 years ago | (#9754030)

Windows stockholders are dieing. In this recent event that will bring more money to the stockholders, many of them fell off their chairs with a hearattack after getting the RSS feed from overlords.net

YOU FAIL ITS.8.. (-1, Troll)

Anonymous Coward | more than 10 years ago | (#9754032)

impl3m3ntation to may well remain

Guess who benefits from the $3 dividend payout? (0)

Anonymous Coward | more than 10 years ago | (#9754088)

Bill Gates! $3/sh amounts to more than $5b for Bill's current holding of MSFT. This is on top of whatever the public pays him by bidding up MSFT tomorrow. It''s already up $1.50 in the after market.

Dividend tax law (1, Interesting)

Anonymous Coward | more than 10 years ago | (#9754127)

So basically since the dividend tax changed, microsoft is giving all its money away. Has to make you wonder especially since Bill and crew will get a lot of cash with minimal taxes now. Conspiracy hat engaged: Big business tells Bush Administration, our companies have lots of cash and we want it since we have lots of shares in said company that has lots of cash. Change tax law and then we can divest the companies of the cash and put it in our own pockets. Sure some small investors will get some money too but they don't own 23% of said company like I do, boo-yaa.

Re:Dividend tax law (1)

t_allardyce (48447) | more than 10 years ago | (#9754200)

I don't think theres any need for the conspiracy hat here, or even just a cheepo tin-foil hat, its well known that Bush loves his special laws that seem so nice to the average joe because they give him afew cents, but are loved by the rich because they give them a few billion cents. And he would have gotten away with it if it wasnt for those pesky share-holders.

Re:Dividend tax law (0)

Anonymous Coward | more than 10 years ago | (#9754232)

Yeah, what a conspiracy - especially when you look at the known facts:

1) Investors want to pay less taxes on their investment!

2) Republicans favor lower taxes!

Quick, call all the reporters you can and let them know that republicans and investors are both trying to get lower taxes!!!!!!!

Why not.... (4, Funny)

carlos_benj (140796) | more than 10 years ago | (#9754155)

Hey, why don't they pay out that promised money for forwarding all those emails to Bill could test that email tracking software? I mean, I musta sent that thing to several hundred people expecting to reap big cash rewards and I haven't even seen a dime!

Re:Why not.... (1)

carlos_benj (140796) | more than 10 years ago | (#9754177)

Doh! :g/to Bill/s//so Bill/

robbIE expands use of PostBlock censorship devise (0)

Anonymous Coward | more than 10 years ago | (#9754172)

kode, in favor of returning to publishing stuff that matters.

the daze of the phonIE payper liesense hypenosys stock markup FraUD softwar gangster execrable, is WANing into coolapps/the abyss.

tell 'em robbIE?

all is not lost?

consult with/trust in yOUR creators.... bringing newclear power/meaning to life, since/until forever. see you there?

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