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Microsoft sets dividend, splits stock
January 16, 2003
Securities analysts have long questioned Microsoft's fiscally conservative management regarding its huge $56 billion cash stockpile and the billions of dollars it generates from ongoing operations. Microsoft has said that the money will be used to settle outstanding litigation against the company and pay related fines but has not offered any specific details.
Analysts speculated that Microsoft will discuss its plan to handle its massive cash position at its fourth-quarter earnings announcement on July 22 or a meeting of financial analysts on July 29 in Redmond, Washington.
On Thursday, Bernstein Research analyst Charles Di Bona sent a report urging Microsoft to consider a stock purchase plan or a special dividend to shareholders. Di Bona also said that Microsoft could boost its annual dividend, which Microsoft started giving out last year for the first time
"We strongly favor a combination of substantial share repurchases to reduce existing cash balances coupled with a meaningful increase in the annual dividend," Di Bona said in a report.
He called on the company to increase its dividend over time and periodically buy back shares using the money from the company's ongoing positive cash flow. The cash buybacks will increase the company's share price and the boosted dividend will make Microsoft's stock attractive to investors who seek regular income, he said.
Long-time Microsoft analyst Rich Sherlund, who works for Goldman Sachs, on Monday said that a multibillion-share repurchasing program would benefit the company's share price. Sherlund calculated that a $10 billion stock repurchase program would boost earnings 10 cents a share on an annual basis.
"We believe management is motivated to improve their share price, so we have shifted our thinking over the past year in terms of how aggressive they might be in addressing the cash position," Sherlund said in the report. He noted that the company has not yet indicated its intentions.
Microsoft's stock price, which was $27 on Thursday, has trailed the Nasdaq composite index since the beginning of this year.
Microsoft could also spend its cash on acquiring other companies. Last week, the company disclosed that it held preliminary discussions with SAP over a merger of the two companies. Microsoft typically makes smaller acquisitions related to the purchase of specific technology.
Microsoft settled its legal disputes with Sun Microsystems, signing a wide-reaching agreement in which Microsoft paid $1.95 billion to Sun to settle all legal disputes. Microsoft is facing a $611 million fee from the European Commission's antitrust regulators. Microsoft earlier this month appealed the antitrust ruling, which included a request to reduce or annul the $611 million fine.
a case at the Bulgarian Competition Protection Commission in Sofia against
Microsoft Bulgaria and Microsoft Corp, USA
The members of the Bulgarian Parliament Ivan Ivanov and MP m.d. Stoicho
Katsarov signed June 16th, 2004 a letter to the Competition
Protection Commission in Sofia with 4 points questioning Microsoft
practices and business behaviour. Letter is also signed by Veni Markovski,
chairman of the Internet Society in Bulgaria.
Point one concerns the development of the Bulgarian government e-gateway
(http://egateway.government.bg), which
requires the users to have Windows and Internet Explorer if they want to
use the electronic services, provided by the government. This is against
rulings of art. 34 (2) ot the Bulgarian Law for protection of competition.
Other articles concerned are art. 2 (1), points 2 and 3, and art. 18, point 2.
The second point regards vulnerabilities in the Microsoft Windows OS. The
dangers which are going for the users are not known to the users, but to
the producers of the closed code software, which is against the provisions
in art. 32 (1) of the Law.
Third point concerns the fact that Windows always goes with preinstalled
Internet Explorer.
Forth point is with respect to the Distribution of the Windows MediaPlayer
as part of the MS Windows. Both last points are in connection with art. 34
(5) of the Bulgarian Law.
The two members of the Bulgarian Parliament from Democrats for Strong
Bulgaria (DSB) are also co-authors of the draft law for using free and open
source software in the administration, which is to be reviewd by the
Parliamentary committee on Transport and Telecommunications on June 17th.
Full text of the letter (in Bulgarian) is published at http://portal.bg/news.php?cat=main&read=20041606005
see also in German: http://www.heise.de/newsticker/meldung/48329
and http://www.heise.de/newsticker/meldung/48176