Microsoft to share the wealth :: Namibia Internet Gateway cc ::

Articles: Microsoft to share the wealth

Posted by admin on Wednesday, July 21, 2004 - 12:40 AM

Microsoft Corp., the world's largest software maker, said yesterday it would return $75 billion (U.S.) in cash to shareholders over the next four years by buying its own stock, doubling its annual dividend and issuing a special one-time dividend.
Shares rose in after-hours trading following the announcement of the largest corporate payout ever. Microsoft, which generates about $1 billion in cash per month, said it would still have sufficient funding to make capital investments and acquisitions. Microsoft has been under mounting pressure from shareholders to return cash to investors as its sales growth has slowed, its share price has stalled and it has successfully settled major legal disputes with governments and competitors. "I think they are being good stewards of capital returning the money if they do not have a better way to invest the money themselves," said Nancy Barber, a fund manager at US Bancorp Asset Management. "I think people are pleased, but it is largely anticipated." The Redmond, Wash.-based company's existing cash position is expected to top $60 billion in the just-ended quarter. Analysts say they believe Microsoft has more than $70 billion in immediately available funds, including investments in other companies and other assets. In addition, as Microsoft increasingly draws on a steady stream of revenue from software sales booked far in advance, the company has been generating free cash flow of about $12 billion per year. Microsoft's board of directors approved a quarterly dividend of 8 cents per share, effectively doubling the current 16 cents per share annual dividend. Microsoft will also buy up to $30 billion of its own stock over the next four years. The board also approved a one-time special dividend of $3 per share, subject to shareholder approval at the Nov. 9 annual meeting. That will cost $32 billion. The quarterly dividend will be payable Sept. 14 to investors as of Aug. 25. The special dividend will be paid Dec. 2 to holders as of Nov. 17. "The magnitude of this (cash) distribution is unique because we're still going to have substantial funds available for investment and growth," said Curt Anderson, head of Microsoft's investor relations. Shares in Microsoft, which have underperformed other technology stocks the past year, rose to $29.14 in after-hours trading from the Nasdaq Stock Market closing price of $28.32.

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