[Am-info] Dividends

[Sujal Shah]

On Mon, 2003-01-06 at 14:43, Dave Solomon wrote:
[SNIP]
> 
> Editorial comment:  Who is the loser here?  I think it is the
> United States of America -- all of us.
> 

I thought that Microsoft doesn't pay dividends?  Has that changed
recently?

Also, it's not the whole of the U.S. of America.  It's just the people
that don't directly benefit from dividend income... last time I checked,
most families earning below 70K combined don't usually have much in
dividend income, at least not directly.  Trickle down economics in
action....

Sujal


> -- Dave Solomon
> 
> Bush -- isn't that another version of the contraction BS?
> 
> At 11:43 AM -0500 1/6/03, John J. Urbaniak wrote:
> >It seems that a significant component of the Bush economic stimulus plan
> >will involve the removal of taxation from corporate dividends.
> >
> >I watch the financial and political programs on CNBC, CNN, Fox and
> >others.
> >
> >Talking heads on these problems are *expecting* Microsoft to declare and
> >pay a significant stockholder dividend - they mention the enormous hoard
> >of cash (~$40 billion) which Microsoft is now sitting on.
> >
> >Now I think the following numbers are accurate - if not, you can make
> >appropriate corrections.
> >
> >There are about 7 billion shares of MSFT outstanding.
> >
> >MSFT currently sells for about $54 per share.
> >
> >A $1.00 per share dividend would yield slightly less than 2% of the $54
> >share price.  But such a dividend would cost Microsoft about 7 billion
> >dollars.  If they do this for a few years, their $40 billion begins to
> >dwindle.  Remember, dividends do nothing for the paying company - they
> >only generate goodwill for the investors.
> >
> >The higher MSFT stock price rises, the higher dividend would be
> >*expected* by investors and pundits, because dividends are evaluated in
> >terms of the price of the stock.
> >
> >What will Gates & company do?
> >
> >Will they declare a reasonable 2 - 4 % dividend to reward their
> >investors?  7 billion lost to Microsoft treasury for every $1.00 of
> >dividend paid per year?
> >
> >Will they forego a dividend and risk the wrath of the analysts,
> >investors, pundits and politicians who are expecting it?
> >
> >Will they declare a pitifully small dividend and again risk the wrath of
> >those who keep looking at that $40 billion?
> >
> >This is a no-win situation for MS, I think.
> >
> >But I think it makes for an interesting discussion.
> >
> >John
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---- Sujal Shah --- sujal@sujal.net ---

        http://www.sujal.net

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