Microsoft Considers $10 Billion Dividend

Dreadnougat writes "Microsoft is considering paying out a $10 billion dividend, the largest corporate payout ever. Cynics (ok, anyone reading /.) might note that Bill Gates stands to make $1.18 billion himself off the $1 a share dividend, in comparison to the $95 million he makes in a normal year off the regular 8 cents a share dividend."

Comments

/.-centric summary.

[Anonymous Coward]

MS is paying money to it's loyal investors because Bill Gates is greedy.

Had MS not payed out, the summary would have been:

MS is not paying out money to it's loyal investors because Bill Gates is greedy.

Re:/.-centric summary.

[Jeremi]

And the truth of the matter is he played by the rules and won.

If he played by the rules and won, why was his company found guilty of operating as an illegal, predatory monopoly? Or do you mean "the rules" in the Machiavellian sense of "the rules are whatever you can get away with"?

Re:/.-centric summary.

[TopShelf]

Companies aren't allowed to sell IBM/PC compatible computers without an OS. The only way to buy one like this is to build it from parts.

Say what? Go to any one of zillions of online computer merchants and you can order an OS-less PC. How does a comment like that get modded informative???

Re:/.-centric summary.

[NanoGator]

"it starts with wanting to own the entire computer industry and crushing every competitor to dust through unfair competition and sleazy tricks. "

And, as a fallback plan, they make products people want.

Re:/.-centric summary.

[73939133]

And, as a fallback plan, they make products people want.

So did Standard Oil and Ma Bell, and we still broke them up because they were ultimately harmful to the economy and not in the interest of consumers.

And so do cigarette makers and drug dealers, for that matter.

I doubt it's for his pocket

[jonman_d]

Come on, people - I _highly doubt_ Bill really cares whether he makes a hundred million or a billion dollars. If anything, it'd probably be more of a hastle for him, with all the extra taxes. Besides, is he even the guy that makes this decision anymore? He's not CEO. Perhaps an accountain could help me out on this one?

Damned if They Do ....

[tealover]

Why shouldn't Gates earn dividends on his shares? His dividend payment would be proportionate to the amount of shares he owns.

I guess certain people have to find any excuse to attack the man.

Hopefully it'll be trend.

[eidechse]

It'd be nice to see dividends once again be the main way most people expect to make money with stocks. Especially tech stocks. Focusing on the worth and stability of a company is a good thing. IMO, building money over time through dividends is more practical (read: safer) for small time investors than speculation.

Re:Hopefully it'll be trend.

[GigsVT]

Well ultimately any stock has no real value other than dividends and future dividends.

Think about it.

Huh? Regular dividend?

[ComputerSlicer23]

Hmmm, the poster says, "the regular 8 cents a share dividend". Uhh, didn't Microsoft just pay it's first dividend in the last 12 months. I don't believe they've paid out more then 4 of them, I'm reasonably sure they have only made one dividend payment in their entire corporate history. I'm too lazy to go track down the Slashdot story or the SEC filing on the matter.

Now that there is no dividend tax and Microsoft is no longer a growth company, there isn't any good reason not to pay the stockholders. When there was a dividend tax, Microsoft could argue that by keeping the money, they could put it to more efficient use to build stockholder value in terms of share value, rather then giving some of it to the stockholder, and some of it for the gov't. The other point is, that Microsoft is done growing by leaps and bounds. They don't need any more capital to grow, or smooth out cashflow issues, or any other standard business reason why a company normally keeps money cash on hand.

I believe the shareholders are starting to demand it, as that's the one way the shareholders can get their money out, without having the price go up or down. It's a sign that Microsoft is turning into an old school established company, like so many others, rather then being a hot commodity stock that creates value, because the company keeps growing, and building up more value.

Kirby

Long Overdue

[Ars-Fartsica]

Microsoft has been sitting on a cash mountain they are essentially unwilling to spend. They can simply swap stock for acquisitions, so without a pressing capital expenditure this cash should be returned to the owners of the corporation.

This may make the stock rise - too much cash on hand is often seen as a negative by analysts.

Paying Dividens is a Bad Sign

[Nice2Cats]

A while ago, we had a review on Slashdot of a book by one Andy Kessler from Wall Street who wrote an article in December 2002 called "I hate dividends" (see, somebody does follow those links). He has a couple of interesting quotes there:

[A]s an investor, I avoid companies that pay dividends like the plague, and you should too. Why? Because when they pay a dividend they are admitting they have nothing better to do with their money. If they won't invest in themselves, why should I?

and

Dividends entice investors into debt-laden, slow- or no-growth companies, more likely to cut their dividend, burning investors worse than conflicted research analysts. Run away. They are wearing a scarlet dollar sign. You want yield? Buy a bond.

and

Failing companies just bribe investors with dividends. Encourage companies with a future to invest in their operations, seeking high returns. If all that mattered were dividends, we (...) would still be investing in railroad stocks.

I think we can rule out Microsoft being "debt-laden", but it still sheds an interesting light on how finanicial people with a tech background will be looking at this move: The growth days are over, and from here on, it is stagnation.

(Disclaimer: Everything I ever needed to know I learned from Slashdot)

Re:Bill Should Do More Good

[haggar]

NOt exactly the same thing: the lower the income, the more that 1% matters. To bring this into perspective, think of a farmer in Asia, that gets about 1000 $US a year. For him, parting with 10 $US is a very big deal. On the other hand, Bill Gates could part with half of his money, and still have left 25 billion that he wouuld have no idea what the fuck to do with.