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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."
This is the main way of funnelling profits from your company account to your personal account in Railroad Tycoon.
Bite the hand.
If only I'd bought that Microsoft stock when I was born.
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.
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?
--
http://nemilar.net - Not your grandmother's soup kitchen
1) Buy SCO and read their evil plans before making them all walk the plank.
2) Put it all in a massive pool and swim in it.
3) Buy out every cell phone company in your state and turn them off *just to stop the stupid ringtones*.
4) Spend the rest on pr0n.
Beep beep.
Guess that's the short end of the stick, huh.
They are about to buy off the whole damn country.
This will make Bush's meager tax money payoff seem
like peanuts to the microsoft stock owning public.
Well, I have to give them credit. If they can afford
to part with 10 billion, this is a great way to
purchase good will.
For every annoying gentoo user, are three even more annoying anti-gentoo crybabies. Take Yosh from #Gimp for example.
I wish there were more situations where I had so much money I had to give it away just to keep it managable.
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.
-- You see, there would be these conclusions that you could jump to
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.
If so, wouldn't bill get those billions without having to hand a few hundred million over to Uncle Sam?
The owner of a company has much more power than the manager, even if it isn't excersized as often.
You can't judge a book by the way it wears its hair.
Yikes! there is a better way to reduce that cash pile. Give away 10 billion to people on the planet.6billion/10billion=1.6$ so, microsoft should starts giving out 1.6$ to everyone. That way, they may even start to love Bill Gates. wait no, considering their crappy software costs ten fold more...eh
secure the damn OS.
Thanks.
...it's a dollar a share. It's a lot of money for Gates because he owns billions of Microsoft shares. But for your average Microsoft stockholder it's only a fraction of a fraction as much. Nobody's "buying off" anyone. Dividends happen not infrequently, and as it happens Microsoft had a lot of excess cash to divide.
"All it takes to fly is to hurl yourself at the ground... and miss." - Douglas Adams
> Or an "accountaint" - I hear they're more professional than "accountains."
How lame. If you're going to correct someone for a single typo at least get it right.
Accountant. A taint is the space between your nut sack and asshole.
Let's see, which would Microsoft most likely buy?
Nothing for 6-digit uids?
What profits
20....15...10...5...submit
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
There was an interview with Scott McNealy in one of the Linux magazines a few months back. In it, he said (paraphrasing) "if Sun ever pays out a sizeable dividend, it means we've run out of R&D ideas and the company's in trouble". I don't remember the exact wording, but that's the gist of it.
Essentially, Sun's policy is to reinvest all profits back into the company. Putting it another way, they're banking on being able to keep growing the company indefinitely and thus keeping shareholders happy solely through upward movement in the share price.
It seems that this may have been Microsoft's policy as well until now. Conspiracy theories aside, it'd be interesting to know what changed to make them issue a big dividend after all these years.
Had MS not paid out a dividend they would have retained (allowing for various tax differences in what they do with the money) this much more as free cash (i.e., capital), hence the firm would increase in value via an increase in the share price.
To realise this gain in cash, investors would just sell shares. Or even, to maintain parity, MS would issue shares to existing shareholders pro rata who could then sell them if they wished.
The fact there is a dividend or not matters little unless we go into the intricies of corporate finance theory.
--
FreeNET user? Comfortable with the adverse selection?
Gives out a much larger portion of the profits, and not just to pad his own wallet.
:)
That's true, but giving out 100% of $0.00 isn't exactly the same thing
No, dividends are taxed at the (now reduced) capital gains rate, instead of the ordinary income rate.
A taint is the space between your nut sack and asshole.
No, the area between frontal private parts and the anus is the "choad".
An "accoun-taint" is one who "taints" (alters deceptively) the books. See "taint" and the poster child.
Will I retire or break 10K?
How much of a reduction? How much will major stockholders stand to gain because of this being done now instead of 2-3 months ago?
I am almost shocked to see this. They have $47b lying around in a bank (indeed, making interest) and, well, how many bugs and security problems?
:) they could rework the whole security of Windows ground-up.
I know that generally more developers hinders development (after a certain thresthold), but surely it would be possible to employ more bug-fixer-type developers to resolve these issues, provide diffs to the main developers and then everyone is happy? In fact, with, say, $5b (wow, that's more than required, I'm sure
Now I have to go find my Railroad Tycoon CD. Now thanks to you, my three-day weekend has just became drastically shorter.
There's exactly two legitimate bases for stock valuations: one is dividends, the other is a cycle of systematic buy-backs and new issues.
Absent either of those two options, what have you got? You've got someone saying to the market "Hey, loan us some money. We never intend to repay, but perhaps you can sell our note to someone else for a profit."
Bill's waited antil after the anti-trust case, but since he's ignoring it anyway, he's not likely to give a shit.
Good move, Bill - you are now, officially, a Robber Baron
oh brave new world, that has such people in it!
Money Fight!
To make laws that man cannot, and will not obey, serves to bring all law into contempt.
--E.C. Stanton
And consider this: a lot of companies, institutions, foundations, trusts, etc. regularly buy securities for endowments and other investment purposes. Now, if Microsoft stock is a good performer, it would give Microsoft an "in" with those companies and institutions for software sales.
No matter what you think of Microsoft (and for the record, I do not have a single Microsoft product under my roof) this is a smart business move. And I might add that Linux cannot compete on these grounds, either. Smart move... seriously.
IAAL
> If so, wouldn't bill get those billions without
> having to hand a few hundred million over to
> Uncle Sam
And won't he, most likely, dump a hell of a lot of that money into his family's philanthropic NPO?
I wonder how many small-town libraries will get a boost from this dividend.
(I hate him as an overrated hacker and citizen-politician, but, so far, respect him as a rich celebrity.)
Milk the cow now she'll be dry in a year.
You can review every story submitted to Slashdot, and in 99.9999% of any comment in the story summary dealing with MS, it is always of a bashing nature.
You're just making that shit up. I just checked a few and there are plenty of pro-MS or just plain neutral posts. The loud zealots on either side are really visible, but it's really not a significant portion of the posts.
Where'd that "$1 per share" stuff come from? All the reports I've seen today speculate about an increase from 8 to 26 cents per share, max.
But then, Slashdot could only troll about Gates taking 2 billion, not 10 billion. I'm sure it was just an editorial typo. Heh.
-- Slashdot: When Public Access TV Says "No"
..why you think anything must have changed.
MS has reached pretty close to a market plateau here. One of the problems with having a monopoly is it means once you've saturated your market, there's really no competition to grow from.
MS is reaching saturation, plus facing additional challenges via Linux etc.
Or, to put it another way, since the stock doesn't have a ton of room to grow anymore, they better do something else to keep its value up. If MS stock value drops then the stock options, which they use to keep the employees happy at what would otherwise be mediocre wages, become much less valuable, and MS starts to lose employees to competitors. (Which in turn precipitates a faster stock-fall, etc.)
Think about it, the economy is just starting to turn around, so by doing this large dividend now, they work to stop their employees getting twitchy as the market recovers.
I'd be willing to bet you'd be able to expect substantial dividends from MS so long as the economy doesn't look to be slowing down. Once that happens, the dividends will drop because the employees will have fewer options.
That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze
I'd say the factors behind this are:
1) M$ had an inordinate amount of money stashed away, pushing the limits of accounting rules for contingencies, earmarks for future projects, etc., but with being threatened with breakup it's hard to argue with what all contingencies they may have needed to consider.
2) With settlement of the suit, that excuse went away. They have to pay out a dividend because the IRS says so.
3) They held out (wink, wink IRS) until the Republicans reduced the dividend tax.
4) Billg is probably just as glad about it anyway so he doesn't have to sell more stock for whatever reason he was selling it, presumably partially at least to fund his charities.
rd
Gates has unsheathed his light sabre and is about to show the true power of the Force...Profit. That's how you get mind share with the PHB crowd. You won't see a multi-billion dollar dividend any time soon out of GNU/Marx/Mao/Linux.
P.S. At least I sold CPM (for $50, as I recall) and kept DOS.
This issue is a bit more complicated than you think.
if he makes $95 mil from $0.08 / share, then why would he make $1.13 bil from $1 / share???
Don't become a regular here, you will become retarded. -- Yoda the Retard
When I read "/.-centric", I thought "slashdot community", which is much more along the lines of the readers than the editors.
The editors are biased and rarely read the submissions in depth, but that's why I tune out the commentary (both editor and submitter) in the summaries and go straight to the article. Provided it's not slashdotted; in which case it's off to the comments for a mirror.
Well I'm no economist so instead of trying to formulate an opinion I'll just ask: could this be beneficial to the economy?
Erik
Erik http://yakko.cs.wmich.edu/~rattles
What Microsoft should really do is host a T-Shirt design contest, where the winner gets three copies of the shirt they designed and a $10 billion credit at ThinkGeek.
Second Century... once you get to 1960s or so theres a dividend tax so you have to get dodgy accountants to inflate your income statement and then find a banker to lead follow-on public offerings of the stock!
The divided taxation rate was reduced to 15% and is set to be eliminated. The sunset provisions kick in in 2008 where it can be optionally extended.
Microsoft is made up of a load of long-timers who have made enough money through stock options that they don't really have to work and the newcomers whose stock options have been underwater for several years.
Without stock options (and the money generated with a rising stock price) neither the money or the work environment is much to write home about. Neither the old-timers or newcomers are particularly motivated and most of the "innovation" goes on by buying smaller companies.
Issuing a dividend is one way to pump the stock price up and thus motivate some employees.
Yea yea, I'll probably be modded flamebait or troll but... come on! ANYTHING MS does is immediately evil? Look, for the first time ever last quarter they paid out 8 cents a share dividend, because it made financial sense. This time they have looked and, again, it made good solid financial sense to pay a dividend. It's good for the stockholders, it's good for the economy and, yea, it's good for Gates and other execs (because they believe enough in their company that they own shares in it too). How is it even remotely possible in any way, shape or form that MS giving it's shareholders money is anything but good for everyone? Indirectly, even non-stockholders benefit (think about it).
"I hadn't slept yet"
Is that one of those Douglas Adams future perfect tenses?
With Windows you can get Money.
With Linux you can get Enlightenment.
Really.
Summaries? I must've missed that bit for the abuse directed at the other poster.
It really did look like your first post (I assume it's yours, anyway) was talking about the average user posting comments. As another poster wrote, the editors are, strangely enough, not that big a part of the slashdot community. The commentary tacked on to many articles is so pithy that I just skip over anything after the italics.
They don't seem to even read the articles or check them over given the frequency of dupes & broken links. It's like they're scripts that post based on keyword hits and attach a randomly generated quip.
In short, I tend not to care what they have to say. I'm here for the gems scattered throughout the comments. Hell, even the lumps of coal are good if they're funny.
Or are you just posing rhetorical questions? Of course, everything that MS does is evil and has to be scrutinized. After all, they are THE enemy.
Really, this is the future. If waiters and preachers can live off donations, so can information producers.
-Libertarian secular transhumanist
Based on http://biz.yahoo.com/p/m/msft.html 10.7B shares outstanding.
This issue is a bit more complicated than you think.
This may make the stock rise - too much cash on hand is often seen as a negative by analysts.
Back when MS was the underdog.. Should have bought some shares..
Hell could even have got a job with 'em too, but give up my nice, well paying,cushy job with EDS?
DOH!
---- Booth was a patriot ----
So I'm going to get $1 for the one share of MSFT I own! Wow, now I only lost $24.34 to MSFT!!!
hmm... for fun I enjoy launching DDoS attacks against 127.87.42.5
Did you miss the fact that MS was found guilty of illegally leveraging their monopoly by a Federal Judge?
/.?
Those profits were gained via illegal activities.
Why am I having to explain this to anyone reading
There are those of us who were so focussed on the technical and intellectual side of the rise of personal computing we completely missed the business opportunity.
It woudn't have been hard. Get my friendly neighbourhood broker to invest a few hundred or a couple of thousand in Microsoft, Netscape, etc at certain times and I wouldn't be sitting here unable to afford to buy a house for my wife and kids.
If you don't want to repeat the past, stop living in it.
How long do you have to ordinarily hold a stock before receiving a dividend? Could I buy M$ stock now and get the dividend?
How often are announcements like this followed up? How many dividend payouts are there in a year?
What I'm wondering is if I could make better profits from buying and selling at dividend time than the crappy 3% I get from the bank.
Kickstart
After Ralph Nader wrote MS a letter in January 2002 urging them to pay a substantial dividend you'd think other reflexive MS critics would applaud the move. Not the case here, where anything they do, no matter what, is the urging of Satan. This site can be a cesspool of shallow thought sometimes.
Gates isn't satisfied with winning. Everyone else has to lose. And I don't think it's a money thing, really.
Don't get me wrong, I still think he's a piece of shit.
With $10,000,000,000.00 Microsoft could pay the salary of 10,000 programmers ($100,000/year) for 10 years and make Windows the best OS ever!
Hell-loooooooooo!
Anyone out there in America with a fucking CLUE!?
What did you expect?
BTW, this adds up to fully 1% of the $350 billion alloted to the recent tax cut.
1% of the tax cut for the whole nation will go into this one dividend payment.
Those of you who understand finance will realize that if every corporation takes Microsoft's lead, the eventual tax cut will be *much* bigger than $350 billion.
We were robbed, and half of you voted for it, even though you were told you were being screwed.
There will be an interval of at least four years before your Enlightenment can progress to the next level, and some even claim that the a higher level of Enlightenment than already attained will never come to fruition.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Dividends exist to entice share buyers when growth is no longer evident.
Microsoft would be insane to do a cash acquisition when their stock is more than worthy enough to act as payment. Look at the history of MSFT - what you rather take - shares or cash???
Is microsoft guilty of some antitrust stuff? Absolutely.
Is that the only reason they are successful? Nope.
The predatory practices they have are LEGAL if you aren't a monopoly. Microsft has done some bad things.. but they aren't on top solely because of some shitty business.
Vaporware, vapor dividend. /. orthodoxy?
The pragmatic truth is that is was likely a call from Warren Buffet saying "you gotta prime the stock market, or we're all beat" that drives this news.
Dig Open Source though I do, one cannot claim it creates wealth like proprietary stuff, apologies to RMS.
Will this post incur the wrath of the
Get thee glass eyes, and, like a scurvy politician, seem to see things thou dost not.--King Lear
Isn't that true for all stock owners though? Bill Gates was obviously received the largest benefit but isn't the only one to get rich off this.
Hmmm... Pie...
You know, I'm sitting here thinking...
Frankly, I've not been all that impressed with Windows since, well Workgroups 3.11 and/or maybe NT. I said _impressed_. 98se I could swallow and 2K is barely doable, but the rest are just so obvious garbage money grab releases.
All along I've been running Linux in the basement. Heck, it's sitting side by side with my Netware & BSD running the corporate network(s).
OS.X has also become my personal GUI of choice, but Linux & BSD remain close at hand as well. Windows only as needed -- and usually through VirtualPC.
They got me again.
And the bitch of the matter? Never bought their stock. Fucked me coming, and doing it to me going as well. How ironic. I surely may not prefer Windows, but it unquestionably doesn't suck to be Bill -- does it? My [red] hat goes off to him.
Now, please, get the hell out of the way or release Microsoft Linux or Microsoft BSD or something "Un*x" based (go ahead and sue me too SCO, you fucktards).
When will this nightmare freakin' end already? Jesus (!)
I thought the real point behind having ownership in a company was getting a slice of the company's profits. Then the buying and selling of shares is based on the expectations of distributions. But double taxation of such distributions discourage companies from distributing profits, instead using those profits to fuel growth. At that point, the share price can no longer ride on the future expectation of distributions. It can only ride on the expectation that someone else will buy the stock from you for more than you paid for it. And then it seems that everyone only values how much the company grows, not how much the company is profitable. We know from recent history that this is a bad thing.
Uh, the IRS doesn't require a corporation to pay out dividends...
sorry but 640K$ should be enough for everyone...
--- Metamoderating abusive downgraders since my 300th post.
I'd like to point out that, in general, corporations are horrible at investing their money (especially when it's not internally invested on new projects). One need only look at the carcasses of the old-line conglomerates to see this.
I say tax their asses until they crap blood.
<a href="http://www.joblessjimmy.com">Work is dumb and so is Jobless Jimmy.</a>
You're assuming they all would have paid those dividends anyway; they wouldn't have, so actually the tax, though reduced, on this is gravy.
We might be collecting more dividend taxes then before if this keeps up.
IIRC it was something like 3.2 cents per share, so far only once that I can recall (the dividend doesn't show up on the investor.cnet.com chart), and come to think of it, I still haven't seen the *first* check.
I think you're right about how they've become an "old" company, tho, that no longer needs to attract investors.
~REZ~ #43301. Who'd fake being me anyway?
> No, he did not play by the rules. He broke the law -- the courts have so ruled.
Umm. So the legal system have the final say in what is right and wrong?
Yet every week there are people here shouting how wrong and unfair DMCA/outragous legal settlements/patent cases are.
So;
We agree with legal rulings = The legal system is clearly the last word in what is right.
We don't like legal rulings = The legal system is corrupt and change is needed now!
The surprise isn't how often we make bad choices; the surprise is how seldom they defeat us.
Microsoft is clearly considering this massive dividend because the recent tax cuts that just went into effect mean that a dividend now will be taxed less than if Microsoft had distributed the money in previous years. Yes, Gates gets to pocket a 10-figure number of dollars out of such a transaction and he really doesn't need the money... but the average american actually owns a few shares of MSFT stock without even realizing it, buried within the mutual fund in a 401k or such.
This could have the same economic effect of a $10 Billion tax cut, dropping money back into play in the American economy where hopefully it'll inspire John Q. Public to spend a little more at the local shopping mall. Alone, $5-6 dollars isn't really going to do this, but if this inspires other companies that have been hording cash for a rainy day to declare a larger-than-usual dividend, that trend could turn your retirement fund's investments around to start facing the right direction again.
Unfortunately, this smells a bit little too much like trickle-down economics, so the odds of this working out perfectly and the way G.W. Bush had on his chalkboard are a bit slim. But at least the first few dominoes are falling as they're supposed to...
This is what they needed to do.
Bill Gates stands to make $1.18 billion himself off the $1 a share dividend
When you have as much money as Bill Gates has, what's a billion or so more? I mean, is it really such a big deal to him? I only wish he would be a bit more of a philanthropist and donate some of his massive wealth to help children in war-torn countries or find solutions to AIDS ravaged Africa. Instead, he uses his money to buy computers for public internet access across North America - certainly not bad - but it's self-serving since all the computers are running Windows operating systems.
SEO Copywriter. Just Say ON
Bush might just get to see the Laffer curve in action.
Of course, to put things into perspective, the debt increases by $1.59 billion every day, on average.
I originally bought MSFT stock as a form of voodoo investing. Given my horrible karma, any stock I buy goes down. I figure I've knocked a few billion off Gates' fortune... But four slurpees definitely redeems Microsoft in my eyes.
Hence the reason it was called BASIC - Bill's Attempt to Seize Industry Control. That other acronym was just a marketing ploy.
.unsigged
[Plus there is the NetLSD Project.] That's BSD not Linux. There is a difference. It's BSD and Linux. YFI
It has everything to do with linux. After all he demands that it be called GNU/Linux. Perhaps you've forgotten. Only if the userland is GNU. It's not GNU/Linux if it uses the BSD userland (like NetLSD). YFI
Whoops, looks like Comrade Allah got zinged there! Go back to your fucking red raghead butt buddies queernuts. Hey, I'm a Christian and a libertarian, not a Muslim and a communist. YFI
Windows gets hacked more often than linux because more people use Windows. That's exactly right.
Cite, queernuts. Your zealotry is clouding your vision. Look up "opinion" and "fact" in any dictionary.
[If you had actually used Linux, you wouldn't have said that.] If you actually used linux, you would have said that. I am a Windows, er, MS-DOS 6.20 luser posting from Galeon on Red Hat 8.0 Linux, and I think it r0x0r. I am open-minded - a true anti-zealot. YFI. (Returning to the topic at hand) Besides, why should I put any cash in Billy Boy's pocket? He's got more than enough to survive on. I'm on a fixed income. I'd rather pay $29.95 for a "Linux for Complete Assholes" than $249.95 for a copy of dreXP. Besides, my TV tuner card refuses to work on Win98SE (which it was designed for) while it works flawlessly on Linux. I get much more bang for my buck running Linux than I ever could with Windows.
Besides, I only used Windows, really, to multitask DOS apps, or to run apps which were also out on DOS anyway. I can do that just fine with DOSEMU, and I can even play Losedoze Solitaire under Windows 3.00a's Real Mode if I don't want to run Wine.
Hey, also, you know, XMAME runs faster than MAME for Windows - on the same hardware.
Billy Boy has lost one customer. Too bad he's not gonna feel any strain on his pocketbook.
-uso.
Dreams, dreams, don't doubt dreams, dreaming children's dreaming dreams. Sailor Moon SS
I think we can rule out Microsoft being "debt-laden", but it still sheds an interesting light on how finanicial people with a tech background will be looking at this move: The growth days are over, and from here on, it is stagnation.
(Disclaimer: Everything I ever needed to know I learned from Slashdot)
If Microsoft give a US$ 1.00 dividend to its stockholders that is just a 4% return on the per share price. If they do this 5 times then all of that money in the bank is gone. I have bad invenstments that return better than 4%. You can currently get a muni (at least in California) that returnes more than 4% per year for 25 years, tax free! Even with this dividend you would need to believe that the price per share is going to go up as if Microsoft were a growth company
After all, it's $10 billion that Microsoft can't use to harass the cause of Free Software.
Furthermore, isn't this what the entire stock market is about? Getting dividents? The entire idea of "owning a company" with stocks is kind of ridiculous. How does the average person benefit from owning a corporation, especially since they have next to nill say? The only way the money made on Wall-Street can be rationalized is by the premise that ultimately, it's all about someone eventually getting stocks with dividents. The upward quest of stocks is a quest that is only possible because, eventually, someone wants a stock that pays dividents.
social sciences can never use experience to verify their statemen
Well, some of us were retards and voted for the wrong person.
Nice job putting it into perspective though.
1q2w3e4r5t6y7u8i9o0pqawsedrftgthyjukilo;p'azsxdcf
The whole point of corporations is to do what's best for their stock-holders. A corporation's one and only legal obligation is to do what's best for the shareholders, while staying within the law.
This is good for MS share-holders. MS is no longer growing. They can't grow -- the markets are saturated for the most part, and they monopolize most of them. They are also facing stiff competition from Free Software, which will make it difficult if not impossible for them to penetrate into the 5-billion person markets of China and India. MS is also most certainly not a value stock. They are selling at many times their earnings.
Their stock-performance has been abysmal lately. If you invested 10k in MS 5 years ago, it would be worth...10k today. MS obviously is failing as a corporation: they aren't doing good by their shareholders. (forget all this BS about monopolies, market-share, etc...the only thing that determines if a corporation is a success or not is if they are benefitting their share-holders). MS clearly isn't. Nor is there any considerable potential for them to do so in the near future, neither as a growth nor value stock.
Thus, the only way MS can fulfill its only legal obligation is to start paying out dividents. If MS doesn't pay out dividents, there is no reason why anyone would conceivably want to own MS stock, unless it's price sunk so low that it would be a value buy in P/E terms. MS has an outrageous P/E right now, with shares selling at roughly 30 times the earnings per share. It's PEG is 2, so it is clearly not growing into it's price. Furthermore, it's Price/Sales is about 33% higher than the industry P/S.
Now, if you want a good stock in terms of growth and value, you might want to check out Pre Paid Legal (PPD). They are selling at avery low P/E and have huge room to grow. Pre-Paid Legal sells legal insurance: an industry that is essentially like health-care insurance before it became a multi-billion dollar industry.
In short, by most indications, MSFT is a crappy stock. I certainly wouldn't invest in it. No way. The only thing MS stock can offer investors is dividents. If you go to Quicken.com, it fails all evaluation strategies. Neither Motley's Fool's Foolish 8, Geraldine Weiss' Blue-Chip Value, Robert Hagstrom's The Warren Buffet Way, nor the NAIC's Established Growth evaluation strategies show any interest in MSFT. Worse than that, for such a large supposedly rock-solid company, MS' stock is disturbingly volatile. MS stock is almost as volatile as the Nasdaq index -- terrible. It barely outperformed the Nasdaq over the past 5 years.
social sciences can never use experience to verify their statemen
Now I can finally make money off of all that MS stock that I own! Hahaha!
Did I say that? Oh, damn. Uhm...
(GNU/)LINUX!!!!!!!
Every cloud has a silver lining (except for the mushroom shaped ones, which have a lining of Iridium & Strontium 90)
Let me point this out: Bill's money comes from the way he plays the game. He's either going to play this game, or he's going to play a different game.
Whatever game he plays, he's probably going to win, because that's how he plays. [There are games that are probably more worthwhile to win, but they involve God and Heaven. For earthbound games, he's chosen pretty well.]
Now, it may be that he's going to have to pay mega taxes, and maybe in the process he'll bail our government out sortof. [Please don't, Bill. It's like helping an alchoholic escape his consequences. Sometimes a government needs to fall.]
Or maybe he's going to find a way to duck the taxes, the way most wealthy people can.
Maybe he feels that SCO isn't working out, and Linux is eventually going to win its game. In that case, he may be dropping out of the game before it becomes a game he can't win.
Maybe he wants to get out no matter what the cost, but feels that he owes the *other* stockholders something. So his exit will be "here's the dividends, it's been fun, see ya all later."
Honestly, we don't know what is going to happen. But I would argue that if there is a major dividend coming, then the only way it will affect you is if you have Microsoft stock. Then the effect will be that you get a chunk of money, but then the value of the stock decreases. Whether you win out or lose out is anyone's guess, but my guess would be that you'll do fairly well.
Correct Horse Battery Staple: 72 bits of entropy. Enter "Correct H" into google. When it generates the phrase, that's
One real mistake old-school businesses make is that they think they can just buy into a new industry, and it doesn't work like that.
Someone has to be boss, and either that boss knows widgets, or he knows the Zamf-service-industry.
His decisions then end up being good for end he knows, but bad for the other end, and the other end usually starts costing the industry money.
That kind of mistake usually takes a business down a notch from being two industry leaders and/or contenders, to being one company that is 5th or 6th in its field, and going nowhere.
If you're going to put it into such kinds of developement, it's far better just to hand the money out, and let people invest it where they will, keeping the knowledgeable management where it belongs.
Ford was incredibly smart not to get into the Parking industry. If they got into the Parking business, they'd first find that people were parking their Volkswagons and Mitsubishis there, anyways. Then, if they started towing and suing, they'd find that they were using Ford-level lawsuits for small-claims-court-level actions.
They'd also find that the publicity wasn't going the way they expected. Then there'd be the issue of when to upgrade the parking lots ("Are we sure we want our name on THAT ugly thing?" "Well, you're the boss, but it's cheaper than repaving every year") and so on.
Pure speculation? Well, yes and no. These mergers do happen all the time: Compaq and HP, for example. It is an excellent way for two A companies, as their business is failing, to become a single B level company with an amount of business that is close to bottoming out.
Correct Horse Battery Staple: 72 bits of entropy. Enter "Correct H" into google. When it generates the phrase, that's
Uh, the IRS doesn't require a corporation to pay out dividends...
h apter11.htm
I couldn't find any of the news article from the past that I have read that stated that the IRS was looking at M$'s excessive reserves, and it took me awhile to find something in Google that explains this clearly, but this excerpt does it nicely. I read it cached, it was from http://www.corporateservicecenter.com/Library/BKC
quote
Accumulating Excessive Earnings. Corporations that accumulate over $250,000 in earnings may be penalized by additional taxes on top of those that apply to corporate profits. The reason for this is that the Internal Revenue Service assumes that you are holding the money to avoid distributing taxable dividends. However, if your corporation plans to make significant equipment purchases, or is planning on expanding or diversifying, then reasonable grounds exist for retaining excess earnings. But your minutes must record the reasons for the accumulation, including the cost estimates for putting the plans into place. Your reasons do not have to be immediate. They can be long-range, since your minutes reflect your long-term corporate needs.
Other possible reasons for accumulating excessive earnings are:
For building inventory.
To protect against loss of profits when the corporation depends on a small number of customers.
To reserve funds for profit-sharing and pension plan obligations.
To invest or lend money to suppliers or customers that are necessary to maintain their business.
To build reserves against actual or potential lawsuits.
end quote
Not only does the IRS require paying dividends, in effect they consider it running a tax shelter if you don't and accumulate excessive earnings as M$ has. The basis for the reserved earnings all these years have been detailed in their financial statements.
I'm just a programmer, but I read the news.
rd
A thought here on MSFT's motivation. . .
m ll .com on shareholders asking for MSFT dividends, http://www.fool.com/dripport/2002/dripport021107.h tm
With the huge cash reserves they have, they should be taking a beating on the Accumulated Earnings Tax [FN-1]. I haven't done a lot of research on this (my Google research is below) but the short of it seems to be "if a corporation allows earnings to accumulate beyond the reasonable needs of the business, it may be subject to an accumulated earnings tax of 38.6%." This 38.6% would certainly exceed any ordinary income tax (now capital gains tax under the newest law, I think) that the shareholder would pay on the dividend.
Also, if memory severs, wasn't MSFT getting hit with a shareholder suit to force it to pay dividends?
[FN-1] IRS Publication 542, Accumulated Earnings Tax, http://www.irs.gov/pub/irs-pdf/p542.pdf
See also:
Open Letter to Bill Gates, http://www.cptech.org/ms/rn2bg20020104dividend.ht
An update from our friends at CCH, http://www.toolkit.cch.com/text/P12_4785.asp
Foo
This is terrible! These greedy MS investors not only expecting, but actually GETTING a return on their investment! If those scoundrels at MS had any conscience at all they would give away their products, then repay investors by begging for money or selling T-Shirts. Mr. Gates shame on you, I invested in your company hoping not to make a dime, but there you go again, raising the value of your stock and paying out a dividend. Next time I will do the smart thing and invest in Mandrakesoft.
Could it be that Billg thinks Microsoft won't last much longer (or be profitable much longer) and wants to cash out while he can? Let's see if M$ launches any huge lawsuits sometime soon.
The economy is being blown out. The value of everything is dropping vis a vis what the current manipulated artificial currencies say they are worth. Sitting on daily de-valuing cash is pointless, they are taking the cash and running with it NOW before it's worth much less, that cash can be converted to more wealth-preserving assets. In a month or three, perhaps that same valuation in forms of digits would be worth much less when it's compared to tangibles. This is what the real high rollers around the planet are doing, so it's not surprising that microsoft management would be doing it. that their smaller shareholders get a piece of it they can't avoid, that's out of their hands, but the larger holders want OUT, they want to get into safer things now. This is a serious economic clue, of much more worth than most nightly business reports puffery.
Aren't they? I mean why not?
By the way while $1/share dividend is high for a stock trading at $26/share it's not unknown. Even bank stocks typically grind out $0.28/share in the same trading range year after year without sitting on a 46 billion dollar pile of cash.
That's 1.18 Billion *TAX FREE* thanks to Bush's latest tax break. Thank god! I was so worried about Bill Gate's financial well-being. I'm so glad the President was there to ensure that the rich and wealthy stay rich and wealthy with as little effort as possible.
Do you have any idea what percentage of corporations in the US are covered by the $250,000 threshold? It's at least 60%. That should give you an idea of how easy it is to get around this rule.
From this cursory reading, as long as your board can make a good-faith claim that it's keeping the earnings for future expansion or whatnot, this rule does not apply.
For all practical intents and purposes (that is to say, outside of cases where you incorporate a corporation to rent you your house, or the corporation is a mob front, etc.), this rule does not exist.
A stock is worth the present value of its future dividends. That's a hard-line value investor position, but it's reality. Everything else is greater-fool theory; stocks are worth more because someone else will overpay for them. When that kind of thinking becomes pervasive, there is a bubble, soon followed by a crash.
No company can grow forever. Eventually, if a company doesn't fail, it reaches maturity. At that point, it had better start paying dividends, or there's no reason to buy the stock. If it doesn't pay dividends, somebody will buy up the company and pull cash out.
The debt/equity/dividend tradeoff is warped by US tax law, which favors debt. Interest in debt can be deducted as a business expense, but dividends cannot. As a stockholder, dividends are income in the year they're paid out, but stock appreciation isn't taxed until you sell the stock. This is the real reason many companies don't pay dividends.
The Bush administration is pushing for a tax cut on dividends, to redress this imbalance. A high tax on stock appreciation for stocks held less than three years or so would be better public policy. Warren Buffett used to suggest a 100% tax on short-term capital gains, before he was seduced by the 1990s boom.
This was really more of an issue back in the junk-bond boom of the 1980s; it's less of an issue today.
Do you have any idea what percentage of corporations in the US are covered by the $250,000 threshold? It's at least 60%. That should give you an idea of how easy it is to get around this rule.
From this cursory reading, as long as your board can make a good-faith claim that it's keeping the earnings for future expansion or whatnot, this rule does not apply.
For all practical intents and purposes (that is to say, outside of cases where you incorporate a corporation to rent you your house, or the corporation is a mob front, etc.), this rule does not exist.
The IRS makes that determination, which is what I said and defended, and for somestrange reason even the IRS couldn't see $45 bn in planned and contingency requirements.
It does exist, and was in the news. Sorry you didn't see it or understand.
rd
For some reason, my posts don't show up in the filtered view (>0) when I reply through an email notification of a response. I'm reposting as a test and I guess I'll quit responding through email if it shows up.
Do you have any idea what percentage of corporations in the US are covered by the $250,000 threshold? It's at least 60%. That should give you an idea of how easy it is to get around this rule.
From this cursory reading, as long as your board can make a good-faith claim that it's keeping the earnings for future expansion or whatnot, this rule does not apply.
For all practical intents and purposes (that is to say, outside of cases where you incorporate a corporation to rent you your house, or the corporation is a mob front, etc.), this rule does not exist.
The IRS makes that determination, which is what I said and defended, and for somestrange reason even the IRS couldn't see $45 bn in planned and contingency requirements.
It does exist, and was in the news. Sorry you didn't see it or understand.
rd
and I'd say microsoft's exeuitives think it's come time to start selling the stock in their company and filling their personal pocketbooks a bit further. They are certainly looking they're afraid of something, weither it be linux, US courts, another economic downfall, who knows. But it isn't a good sign when you're company heads start selling off theri stocks; it shows they've lost a good deal of faith in their company's ability to do damage.
Candy-Coated Knowledge
wasn't because I posted through email notification, just bad karma I guess...
rd
And even if we hadn't been thusly extorted, there's still a little matter of recompense for decades of grief and loss caused by insecure, unstable software.
Call the $10 billion a downpayment on Microsoft's Reparations. ;-)
You are correct that Bill Gates is not the CEO. That means he is not officially responsible for running the company.
.doc format preserved their monopoly for many years. Now it will hurt their ability to keep the market.
However, Bill Gates is the Chairmain of the Board. The Board of Directors are elected by the stockholders to represent the stockholders interests. All decisions that relate to issuing shares and paying dividends are handled by the Board. As Chairman, Bill Gates is very influential in any decision about paying dividends. The Board could declare a dividend while the company is losing money, which the a responsible CEO would normally recommend against doing.
Microsoft is about to die. Bill Gates knows this. Most of his "wealth" is due to the value of his Microsoft stock. MS has $40 billion in cash. Bill Gates needs to transfer as much of that money from Microsoft into his own pocket. Paying dividends is one of the more obvious methods to accomplish this.
Paying dividends will also keep the price of MS stock higher than it would be if MS did not pay dividends. The stock has been dropping steadily since Jan 2000. It is unlikely that MS stock will ever start climbing again. But the idea that large dividends will be paid regularly will cause many people to buy and hold the stock even as MS dies.
---
Reasons I believe MS will die:
1. MS has diversified. Most of the divisions lose money. The server software breaks even. Almost all profit comes from 2 products: MsWindows and MsOffice. Without these products, the company will need to live off its savings. IIRC, MS burns $10 billion per year. So MS could last 4 years if they did not pay dividends. They can also trim costs to last longer. I believe moving jobs to India is being done for this reason.
2. MsOffice is under atttack from OpenOffice and the supported proprietary versions. Many businesses have already converted, and many others are evaluating their options. The migration is building momentum. As more companies migrate away from MsOffice, more companies will need to transfer files in formats that the previously migrated companies can read. The proprietary MS
3. MS has never owned the server OS market. They have dominated the desktop market. 12% use Macs. 1% use "other". That means MsWindows has maintained 87%. Much of the reason to use MsWindows is to be able to use MsOffice. That is handled above; other reasons to believe MsWindows will die are below.
- Linux is gaining marketshare. It has several advantages. Its biggest advantage is mindshare among computer gurus. The GUI has become usable by the public. Computer gurus now install Linux on desktops for their friends and family, because they have less worries about viruses and crashes. Now the big problem is the availability of applications. The two biggest categories are commercial software, such as Photoshop and Lotus Notes, and games for the home consumer.
- Adobe is porting Photoshop to Mac OSX. Porting from OSX to Linux should be trivial. But most graphics professionals use Macs, so whether PS is available for Linux does not affect the corporate market much.
- IBM claims to be supporting Linux, but their most widely used product has not been ported. I am referring to the Notes client. (The Domino server was ported several years ago.) Notes is the only email/groupware/collaboration product to match corporate marketshare with MsExchange and MsOutlook. For many of the Fortune 500 to migrate from MsWindows to Linux desktops, they need the Lotus Notes client to be available on Linux. If IBM were truly commited to Linux, they would already have ported their software products. Ask them when the Lotus Notes client for Linux will be available.
- The
I spend my life entertaining my brain.
This is PRECISELY the behavior that should be encouraged, and why Bush's tax policies (eliminate double taxation on dividends) are spot-on. Dividends are GOOD. One of the main reasons for the stock market bubble and accounting fiascos like Enron was the tax incentives of companies and shareholders to move from dividend payments to "total return." Instead of seeking to maximize dividend payments, shareholders and corporate officers sought to maximize corporate earnings, inflating stock prices and thus their capital gains. The tax structure encouraged this because of the imbalance in taxation on dividends and capital gains. So you have the ungodly situation of value being measured in debt assumption. You get Enron.
/ www.cato.org/research/articles/niskanen-021 109.htmlb g1640es.cf mp ?36 3&bus
This move by Microsoft is precisely the way we want to go. It's a Good Thing.
http://budor.com/investment/opinion.htm
http:/
http://www.heritage.org/Research/Taxes/
http://www.upenn.edu/researchatpenn/article.ph
Derek
The Rumors of Microsofts death is GREATLY exagerrated.
.net and it's VERY cool. Generic hardware and a generic OS leads to managed code run-times like .net and Java. The .net effort is really a safety gap in case the world DOES fall in and the Windows hegemony is busted by open source.
No other company is in better control of it's own potential destiny than Microsoft. The declining stock price is due to the down performance of the market as a whole.
True, Linux is a serious thorn in Microsofts side. It means that they CANNOT charge whatever they like anymore. It means the outrageous price of Microsoft software will stay constant or start to decline. Microsoft's core products are serious cash cows and there are no signs that their core users, business and personal desktops, will be wrenched from their hands anytime soon.
On the applications side, Microsoft still has SERIOUS leads in the scope and usability of their software. In the enterprise area, (documents & email) Microsoft software is a user's dream compared to the nightmarish offerings from IBM. True, Microsoft doesn't scale as well, but they continuously make significant inroads.
Linux & IBM still has a lot of work to make their enterprise applications supplant all the functionalities available from Microsoft.
Even in a commoditized market, don't count Microsoft out. They clawed their way to dominance through cut-throat business practices and frankly CRAPPY software. Their recent work has mostly been excellent. Their developer tools are the Roles-Royce's of the computer world. No other company bends so far backwards to enable their developer community.
As far as Mac is concerned, they hold strong in the niche market of Graphics, Publishing & Film. They hold a 3% market-share of new PCs. There machines are now VERY excellent with a unix-based OS but they are still somewhat pricey. I can see them making significant inroads into scientific computing. However, don't expect the world to beat down Apple's doors because they have a Unix-OS and a VERY pretty user shell. I expect Apple to pick up market share now, but I never expect that they will make a significant dent into either Windows or Linux.
On the off-chance that the OS becomes COMPLETELY commoditized, MS DOES have a plan. It's called
-------- -------- Support Wesley Clark for president!!!
Goes to work, gets some coffee... reads his EMail.. hops over to his bank website to check his account.. "Hey, it say I have 17.4 billion dollars.. I thought I only had 16 billion... oh, I bet that stock dividend came in. Hey, maybe I'll take the wife out to dinner tonight to celebrate."
I am NOT a man!
I am a free number!
All that money and _nothing_ to buy :-)
:-)
MS can't touch anything computer related because tada! instant anti-trust case. They can't just buy into another industry without tada! instant anti-trust case (using monopoly profits to buy into an industry isn't allowed.)
Leave it in the bank? No way. Should the share price drop too far having a huge wad of money in the bank allows a hostile, leveraged buyout to be attempted. In addition share holders will start complaining that the money isn't being used to best advantage.
Looks like a dividend is the only option.
Unfortunately MS is going to face the same problem next year. They are too big for the market
buy food for the week, treat it as an extra income stream... Get enough of those dividend payments, stop working the shitty job I hate, and take up a nice job that I've always wanted to do, but never been able to because of lack of money. Shares that pay dividends are the same as rental properties, you would like some capital growth, but your main focus is on an extra income that you don't have to work for.
It's in that place where I put that thing that time
We weren't being robbed when the previous administration had some wonderful tax increases for us, but we are being robbed because the tax cut we're getting might not be all it's cracked up to be.
Hmm.
At least someone can claim a rebate on their Microsoft Tax.
Did it operate as a .com in the beginning, selling off stock to cover expenses?
You can't judge a book by the way it wears its hair.
Offhand, I'd guess Linux combined with a general lack of good ideas adding up to the idea that MS isn't worth reinvesting in.
"if Sun ever pays out a sizeable dividend, it means we've run out of R&D ideas and the company's in trouble".
In 'leading edge' high-tech, that's the conventional wisdom, and it's what I started wondering about right after I saw the announcement.
Tech Public Policy stuff
Having too much cash on hand makes MSFT look like a dollar-denominated money market fund rather than an aggressive technology hedge fund. Dropping some of the cash, or at least moving it to Euros will help the total company value.
However, the promise of a mass market software company is that engineering effort is spread over a nearly unlimited number of shipped units, creating an insanely large return on investment. Now that Microsoft is getting more involved in hardware like XBox and holding on to large piles of cash, it starts to look more like a traditional company.
We were making money during the previous administration, and we had balanced the budget. The new administration saw a treasury full of loot, and raided it for its own gain. It threw you a couple hundred dollars so you could say they helped you, too, but it threw Bill Gates half a billion on this transaction alone.
Taxes in this country, despite the progressive income tax, are overall regressive, because of shelters and the effects of consumption taxes and fees. These same guys are seriously looking at trying the Flat Tax, next. At which point they may end up being paid a subsidy by the government to be richer than God.
We were robbed.
Can't you guys see it? Microsoft is saving the Earth by paying off Dr. Evil!
How is the Riemann zeta function like Trump rallies? Both have an endless number of trivial zeros.
> No, dividends are taxed at the (now reduced) capital
> gains rate, instead of the ordinary income rate.
One point which greatly concerns me about this is that the federal income tax is slowly changing into a "wage tax," by which I mean that a greater portion of tax is being collected from wages and salaries, while other types of income, like dividends, have their tax rate decreased. Now, in principle a wage and salary tax applies to everyone but in reality it primarily affects the middle and lower class while creating another tax loophole for the rich.
Think about it - reducing the rate at which dividend incomes are taxed basically reduces the amount of taxes that the Bill Gates, Steve Jobs, and Larry Ellison types need to pay. All of these big players can afford to have their corporate CEO salary set at $1 while taking all of their real compensation in stock options. Since dividends from stocks are taxed at a lower rate, it's much better for the CEO's to earn $100 million via dividends than $100 million as a salary.
Moreover, this trick allows most people to think that CEOs are acting benevolently. "Oh, look - I just read that Mr. Top CEO only has a salary of $1 a year. That just shows his devotation to the company and his lack of extreme greed." No. But it does show that Mr. Top CEO understands the baroque U.S. tax system a lot better than Jane and Joe Sixpack (who, even if they did understand it, couldn't take advantage of the biggest benefits).
This probably sounds like a rant, but I fear there is truth in what I'm saying. The U.S. tax code is now something like 3-5 times *longer* than the King James Bible. That complexity can function as a great way to hide benefits to the rich. That, plus the extent to which corporate interests control American politics now, really make me suspect that the U.S. government has become a government of the people, by the people, for the few.
I would not want to invest in M$. Microsoft has about $46 billion in cash apparently, but they also have more than 10 billion shares out there trading at a wee bit over $26 bux. This means if they liquidated their whole nest egg that they could not even offer a 2% rate of return.
Furthermore they have precious little growth opportunities left. Anyone of us can do a straw pole... who is planning on upgrading their OS or M$ office suite any time soon?
The computer world has been filled with random fads that generally crash and burn at a bewildering rate. Why should Microsoft be different.
It might take years before Opensource software makes a real dent in the mass market - but it is inevitable that this paradigm shit will take place. When it happens M$ will probably not have a revenue model left and that will be the end of them.
Personally I beleive there will still be opportunities for commercial software but I feel any opportunities will not likely include operating systems and system software. I don't think these opportunities will include office suites either.
So pass the popcorn because the show will be interesting! I think the future is clear, yet I will admit that the time line is rather fuzzy.
Ok everyone is saying the dividend tax is lower. But come'on $10 billion, Uncle Sam has got to be happy about that even at a reduced percentage. I cant even picture 10 billion.
Or have I been under a rock and the double taxation is no longer a IRS advantage?
1. make $1.18 billion
2. ???
3. PROFIT!!!!
--
Yeah. And this was achieved not by moderating government spending, but by hiking up the taxes. Robbery spotted.
Believe me, I am in no way totally satisfied with the current administration in economic terms, but the previous administration's "balance the budget by pillaging the people" sat worse with me.
A pure flat tax would eliminate deductions and, by extension, shelters, that you so complain about in the lines before the above quote. Now, a "flat tax" that allows a few select exemptions (like on investments) could be a different story. But condeming the Flat Tax totally is ill-advised. A true implementation would eliminate many of the very things you singled out. A half-assed implementation, however, could well be damaging as you describe. The best we can probably hope for is a not-too-badly-compromised flat tax, which hopefully would retain most of the core benefits. You're way off in thinking the flat tax is a boon for corporations, though. It's the opposite. And that's why it's not happening with any rapid speed.
What I find funny is that the Republicans have been criticized for backing off of tax reform and backing away from the flat tax idea - criticized from the left. And the criticism is totally fair. I'd like to see the administration do more than just pay lip service to the idea. The tax cut is nice, but basically is just a step in undoing the taxation of the last administration. It's not a solution, it's a step. I want to see motion towards a solution.
But he forgot to put quotes around "charities". That should redeam him in the astroturfer's eyes.
Both showed up at Score 1. Maybe just random Slashdot slowness?
Seriously, if he didn't want goods publicity from the Foundation then he should have maybe toned down the name a bit !
There are places where the networks are not touching,and there are places where they are-Boeing's Lori Gunter
When you think about it, it is about time they pay a dividend. They should have been all through the years they where accumulating the 40bn they have.
I guess some of the slashdotters would prefer it if they bought SCO or IBM instead.
-- Many men would appreciate a woman's mind more if they could fondle it
If so, than we can patent following business model:
hany
Where does anything specifically say that the IRS is making Microsoft comply with this rule?
Regardless, the IRS can make the determination all it wants... it can be appealed to the US Tax Court, which would then decide whether the IRS was justified in making that determination, at which point the IRS essentially has to prove that the retained earnings and question are not needed. Yes, the IRS essentially has to prove a negative, and even if they get close to it, the following situation would still wreck their case:
The defendant goes out and actually uses a suitably large portion of their cash for expansion, for example by acquiring a suitably large corporation.
I'm not questioning its existence. I'm merely pointing out that, given the number of corporations these rules would apply to and the number that are in violation of it as much as Microsoft is, it's either a case of the exemptions are so easy to get that the law may as well not exist, or that the IRS never bothers with enforcing it, in which case, the law may as well not exist.
what exactly is so *cool* about .net? and how exactly does ms bend over backwards for developers? one of our customers was using vb with our activex control, and wanted to use .net. sadly, half the compilation options changed and furthermore, .net does not support the type of project he was using before. this isn't what i call "bending over backwards for developers" or being "very cool." also, .net isn't terribly generic either. unlike java, they do not encourage generic solutions, but rather promote invokation of native code.
BSD is for people who love UNIX. Linux is for those who hate Microsoft.
and jealous as can be!!!
Cause Bubba ain't got none of that stock. If a business is not about paying money to it's owners, what exactly is a business about???
HenryJamesFeltus.com
I'm not questioning its existence. I'm merely pointing out that, given the number of corporations these rules would apply to and the number that are in violation of it as much as Microsoft is, it's either a case of the exemptions are so easy to get that the law may as well not exist, or that the IRS never bothers with enforcing it, in which case, the law may as well not exist.
The IRS does enforce it, and in fact the reason I know about the excessive reserve earnings is because their scrutiny was in the news along with monopoly trial coverage. The justification for reserved earnings must be spelled out in financial statements, and M$ can no longer spell out $45 bn worth of justifications now that the monopoly suit has been settled.
They are paying dividends only because the IRS excessive earnings regulation will cause them to lose nearly 40% of it now that they no longer can justify retaining $45 bn in reserved earnings. The alternative is to pay out a substantial portion as dividends, conveniently after waiting until the Republicans made it much less costly to break up their tax shelter.
rd
I'm in purgatory you insensitive clod!
What's good for Gates is good for some of the most truly needy people of the world.
Your boss will be happy to hear that. Maybe next time he'll give you a 1% raise. And how about a 1% rebate on that new truck you've been eyeing...
1% is pittance, especially for someone as uberwealthy as Bill is.
SEO Copywriter. Just Say ON
If you think the greatest issue here is the money given back to the shareholders or Bill Gates netting a large share, you are very narrow minded. If you bother to read between the lines, or specifically read the buyout line, you might come to realise that the biggest risk is not in where the money goes to or comes from, but how Microsoft is benefitting (and it's not some consumer muddle about freeing up $46 billion). If Microsoft exercises a buyout, they will reduce much of the requirement for oversight!
In case you missed it, that means that they will be able to pursue all sorts of "fun" strategies that would have undesirable long term affects. Personally, I wouldn't be surprised if legal threatening developed greater strength and market strategy became more aggressive.
Of course, this could be a leak to inflate stock-value, but lord only knows why they would want to do that...unless an insider wanted to prevent the above.
The silliest thoughts I have....
"Yeah...it was the numbers that were irrational, not the murderous cult of vegetarians...." -- Hippasus of Metapontum
Let me list defenses for all of those
1. It will never become illegal, SCO is stupid
2. which is bad how?
3. it's only different than windows... have you ever seen someone who's not used to windows try and use it.
4. And windows is more stable???
5. The software is better than windows software, as it usually doesn't crash, and is more standards compliant.
6. The UI for some programs (gimp) sucks, but overall it's pretty consistent.
7. most things can be done from a UI now... what is this, 1986?
8. it has wine, and if you really want to stretch it, you can use VMware.
9. You can buy a computer with linux... hello, Lindows walmart pc, among others who are catching on.
10. If a linux distro maker dies, their stuff is open source, and somebody can continue on with their work, if microsoft goes belly up, well, that's it for windows.
11. what???
12. On the desktop?? excuse me but i run it on the desktop and have never paid a cent... don't tell me you hire you're own sysadmin for operating your desktop
13. Many distros is a good thing... but if you look at it, there are really only 4 or 5 big players....
14. This is a very good thing....
15. Not yet from microsoft... give them 10 years....
16. Yes, windows has a much better record.
17. Not to the kernel, or other important areas. those are monitored very closely.... I can make a buggy program for windows too.
18. if BeOS is better than linux, and linux is better than windows, then BeOS is better tahn windows. simple logiic
19. WHAT??
20. WHAT??
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
People invest in dividends for residual income. Not only that, it is real money that gets deposited in your account(s). A stock on a fun ride up is just theoretical gain until you sell it.
Most dividends are pegged to earnings, not stock price. Which means if the stock price declines, the yield of the dividend goes up relative to the stock price. Which creates buying pressure, and helps stabilize a decline in stock prices.
Because dividends are real money, they can't be 'faked' like balance sheet statements using uncollected sales numbers. And because of the dividend tax cuts, companies can't use the (bogus even before) argument double taxation as a reason for not paying out a dividend.
A company paying a healthy and regular dividend is, more than likely, a healthy company.
I agree with everything you said, particularly about the FICA pyramid scheme - except that dividends have already been taxed. An absurdly large portion (ok, I'm too lazy to go look it up) of corporate earnings are loopholed completely out of taxation. When you've got the degree of legalized corporate tax evasion that we do today in the USA, then it really isn't "fair" to allow dividends to go so lightly taxed in comparison to earned income.
When information is power, privacy is freedom.
its a signal to future potential shareholders of a higher payout. buying will take place and the shares will rise.
I thought it was the shareholders' money. At least in theory.
http://www.angelfire.com/ca3/marlowe Better a smartass than a dumbass.
I'm not fond of Microsoft, and some of their marketing practices were found illegal, but for the most part, Microsoft combined a decent product for a decent price with good marketing. Anyways, Microsoft is not Bill Gates.
So Bill Gates will be a billion dollars richer? Who cares. At least he's been donating some of his money to charity [such as the campaign to eradicate polio within the next decade], and he has stated that he will give away the majority of his fortune before he dies.
There are worse people in the world to give a billion dollars to.
that this is caused by President Bush's tax cut for the common man on Dividend Taxes? You think this would have happened without that gift from the President? This has nothing to do with stock price, it has to do with tax rate. It is now cheapest for Bill Gates (and let's not forget all the other Microsoft Billionaires) to receive their pay in dividends. So remember when your kids no longer have band practice in school, and you have no healthcare that it was simply that we needed to provide tax relief for the common man, like Ballmer and Gates.
The way I see it was that is that Microsoft had these billions of dollars that they couldn't invest in the next latest and greatest paradigm - LINUX!, without creating a suvere conflict of interest to their stock holders. But when they pay out dividends, then that frees up the cash on the open market to persue whatever technology is better without the conflict of interest. IMHO, this is really a good day for Linux.
Radon, a lot of what you're saying resonates with me. Certainly, I would be all for a greatly simplified tax system with fewer loopholes. And I really don't have a problem with the concept of graduated tax rates so this isn't veiled support for a flat tax system.
However, I do think that it's important that we provide tax incentives for investment. Investment, both personal and corporate, is what provides the economony the liquidity and funds it needs to grow. And growth in the economy is vital to support growth in population and growth in the demands of developing countries. In addition, investment necessarily involves risk---anyone who didn't believe that 10 years ago does now!
Attractive taxation helps to encourage people to accept that risk, because of the promise that the higher returns will still be high after taxes are taken out.
So yes, attractive capital investment taxation policy will often result in rich people getting richer---but if the alternative is that people horde their money and don't invest it, I'm not sure that's a worthwhile trade.
So investment taxation shouldn't be determined solely on some debatable notion of "fairness" alone, though that should be an important part of it. But it must also take into account the need to encourage investment.
I didn't say "the government was making money" I said "we were making money." As for "pillaging the people", most of the tax increase was on corporations, and despite what people collecting dividends will tell you, corporations do not have the rights guaranteed by the Constitution, people do.
And don't for one second bet that Steve Forbes and his ilk are going for a pure flat tax. They'll keep their loopholes and eliminate yours.
A flat tax is likewise regressive in valuation of service rendered. The rich, having had the opportunity to get rich, and the protections and assistance of the government in getting rich (the patent system alone is worth trillions to people who are no longer poor because they stumbled on a way to combine a hammer and a ketchup bottle), owe the government far more than someone who sweeps the offices of the rich.
The net taxation on the poor is about 50%, and on the rich is about 20%, and the effective value flow when the value of government is included is about -20% on the poor and 20% on the rich. The Bush tax cuts gave the rich even more, in cash, because they weren't making it on the stock market any more.
They saw gold in the treasury, and they looted it. Pure and simple.
Of course if the economy, the stock market, and their stock value starts to increase again, then they can still keep the pyramid scam going.
Don't believe me? Here's how it works: Microsoft prints up some new employee stock options. Those employees eventually buy their stock options and give the money to microsoft. Microsoft pockets that money and reports it as *earnings* instead of an expense. That money then goes into their statement as profits and cash.
This is no different from a company which continuously offers new stock for sale every year. But in that case you would never consider that sale of stock to be profit. It is a way of raising money, just like a company going IPO to raise money. But it doesn't reflect on the health of the company and eventually the company can burn through it all. In fact, these kinds of liquidity events should drive the stock price down since you're issuing more stock and diluting the other holdings.
In the case of Microsoft, though, these rules do not apply. In fact since microsoft reports all this cash as earnings then it looks like Microsoft is unreasonably profitable. They then can support really, really silly market capitalizations which pushes their stock price up -- this causes people to invest in them, and causes them to be a major holding of index mutual funds. Then the whole cycle continues...
True, Bill Gates will make $1 a share in dividends ... however, the dividend will also drop the stock price by $1 as soon as it is paid. Why? Because if a stock pays me a $1 dividend tomorrow, I'll pay $X for it today -- but if it paid the dividend yesterday, I'll only pay $X-1, because I don't get the extra $1. Therefore, Bill's gain on the dividend is offset by his loss on the stock. If he were really doing this for the cash, he could get the same result by selling some of his stock. (Of course, this doesn't take into account the difference between taxes on dividends and taxes on capital gains, but IANATL [I am not a tax lawyer].)
... I can't "make" a million dollars by writing myself a million dollar check. What goes in one way must come out the other.
This should make common sense
Cheers,
IT
Power corrupts. PowerPoint corrupts absolutely.
I'll flat out ignore your nice round number percentages that are obviously products of your imagination.
Funny thing though. You claim that "most of the tax increase was on corporations". And then that most of the tax cut is for the corporations. Which pretty much corroborates my statement about one undoing the other. The portion of the tax hikes that made it our way, though, was still painfully substantial.
I think that Bill Gates has something totally alterior planned. He'll try to pick up a few more billion dollars and then leave. He knows that .NET and Longhorn are the impending doom of Microsoft, and that if he doesn't get out soon he'll end up with lawsuits, government investigation, and potential financial failure.
If he can bank all of his assets now, he has that much more in the bank. Ballmer's already started, Bill's already taken himsrelf out of the CEO position, what's next?
They all know that things aren't looking good.
Company is able to pay $10 Billion, but is unable to create stable operating system.
And Linux just works, without half of Billion.
Not this time. If that 8 cent dividend were to become a 10 cent dividend, then the expectation is that more 10 cent dividends were to come and the stock would rise. But that's not what this is about... this would be a one-time dividend based on cash that Microsoft has been stockpiling for no particular reason, there's no expectation that this would happen a second time.
Some in the business would say this means that tech companies (or maybe just MS) can't find anything in R&D to spend the money on so it proves the driving force behind our economy (technology) IS sputtering and innovation is faltering. But then again I have always been called a doomsayer..
"Imagination is more important than knowledge" -- Albert Einstein
Ugh.
You really don't think very hard, or comprehend too well.
The taxes were on corporate profits. The tax cut was on dividends to rich individuals from corporate assets.
Cutting dividend taxes to 0% is precisely the opposite of investment stimulus. You're being lied to, and you're defending it.
Whether you like him or not, he did what he did in a country that made it possible. He had an idea, the idea sold, and he profited. That is the American way. His goal wasn't to make billions when he started, so now that he is, why do so many want to crucify him for it? Don't you realize that anyone in Bill's position would be receiving the same treatment, if not from you then from someone else who wouldn't exactly like how things have turned out? Accept reality and work with it, and maybe you'll be as comfortable as Bill one day.
Well... I can't be completely certain, but it is someone I know personally, so I'm fairly sure.