[Am-info] Microsoft mulls record special dividend

[John J. Urbaniak]

Erick Andrews wrote:

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

$10 billion comes to less that $1 per share.

At a current price of about $25, that's roughly 4% of a stockholder's
investment.  Nowadays, a 4% return is pretty good.

But this is supposed to be a "special" dividend, meaning "one-time."
I'm sure Microsoft won't be holding this rate continuously.

They're still selling at a p/e of over 30, which is historically very
high and, in my opinion, precarious.

Oh, the quandries Mr. Gates finds himself in...

John



>
> 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.
> ================================================
>
> --
> Erick Andrews
>
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