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

Standard Procedure

[Shadarr]

This is the main way of funnelling profits from your company account to your personal account in Railroad Tycoon.

/.-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.

[istartedi]

Dear Mr. Gates, please choose one of the following:

[ ] damned if you do
[ ] damned if you don't
[ ] just plain damned
[ ] all of the above

Re:/.-centric summary.

[stephanruby]

The problem you guys have is "why didn't I think of that back then". And the truth of the matter is he played by the rules and won.

Bill Gates is not evil, but Bill Gates is certainly not the poster child for meritocracy either. Bill's dad was a top-notch lawyer in New York. This gave him a top-notch education to begin with and an easy access to capital. Please, don't make it sound like everyone could have done what he did.

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.

[flacco]

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

Great, I just finished a delicious Mexican dinner, and you made me projectile-vomit with that statement.

Re:/.-centric summary.

[faspeed]

You're forgetting

[ ] damned cowboyneal

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?

Instead you bought Microsoft Windows.

[Anonymous Coward]

Guess that's the short end of the stick, huh.

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

Re:Didn't the govt just make dividend income TaxFr

[mcg1969]

No, dividends are taxed at the (now reduced) capital gains rate, instead of the ordinary income rate.

Interesting development

[Pettifogger]

Hmmm... anyone wonder why Microsoft is really doing this? No, it's not Gates' greed; he has enough and he knows it. This is a plan to ensure the long-term stability of the company. Linux is starting to get more press and is being increasing seen as a viable alternative. I think this is a strategy to increase investor confidence and tie the company's financial rewards more to the public. Everyone knows what the profit margin is on their products and that the corporation itself keeps almost all of that. I think this is a subtle way of saying that they're going to start sharing their big income.

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.

Need to Pump Up Stock Price

[virtigex]

The biggest problem that Microsoft has to deal with is their langusihing stock price. When the stock stalled in in 2000 many people left, because there was no more money to be made from the stock options.

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.

Balance of life

[Anonymous Coward]

With Windows you can get Money.

With Linux you can get Enlightenment.

Really.

Re:Bill Should Do More Good

[Moooo Cow]

Check out the numbers

Over 600 million each donated to child health, and HIV/AIDS/TB. As staggering as the absolute magnitude of those numbers are, even in percentage terms they are quite remarkable. Given his total career earnings of, say, $50 billion or so (to date), this represents more than 1% to each of those causes.

To put it in perspective, do you know any other moderately well off computer geek, who may make $3 million in their career, pledging 1% ($30,000) to each of those causes? He's also indicated that global HIV/AIDS/health is a top priority, so expect him to give a lot more in that area before he's done.