[Am-info] Microsoft mulls record special dividend

[Erick Andrews]

http://www.guardian.co.uk/microsoft/Story/0,2763,991594,00.html

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Mark Tran [The Guardian] Friday July 4, 2003

Microsoft, the computer software giant, is considering paying
out a special dividend to shareholders in response to
increasing investor pressure.

The special dividend would be more than $10bn (œ6bn), the
biggest corporate pay-out ever, the Financial Times reported.

Unlike traditional companies, technology companies such as
Microsoft often do not pay dividends to shareholders on the
grounds that they benefit from high stock prices.

But that argument has lost credibility with the bursting of
the hi-tech bubble and investors have been putting pressure on
Microsoft, whose share prices have come down from
stratospheric levels during the 1990s boom, to release some of
its enormous cash reserves.

Microsoft, which generates about $3bn (œ2.1bn) in cash every
quarter, has accumulated a cash pile of $46bn (œ26bn).  The
company began paying a dividend earlier this year.

Microsoft had in the past justified its no-dividends policy on
the grounds that it needed large cash reserves to cover
potential legal risks from lawsuits.  The company last year
settled a landmark anti-trust action from the US government.

But in a report published yesterday, their first review of the
settlement, the federal government and states accused
Microsoft of failing to comply with a key element of the
agreement.  Failure to adhere to the settlement could trigger
a court order against the company, the group said.

Microsoft competitors such as Sun Microsystems have complained
that the software giant's licensing terms remain onerous
despite promises to make them simpler and cheaper.

Under the terms of the settlement, Microsoft agreed to offer
its competitors "reasonable and non-discriminatory" terms of
access to its proprietary protocols to enable them to build
software more compatible with the Windows operating system.
Microsoft controls 90% of the market in operating systems.
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-- 
Erick Andrews