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Microsoft Announces Dividend and Stock Buyback Program
neile writes "Microsoft just announced some of their plans for their large cash reserves. This includes moving to quarterly dividend payments of $0.08 a share (up from $0.16 annually), and a special one-time dividend of $3.00 a share in December. The Board of Directors also approved a four-year, $30 billion, stock buyback plan."
That's a couple of things that SCO can't say right about now.
I knew I bought their stock for a reason. I know I will get modded down for this or flamed but you'll never see a company like Redhat do this. Regardless of your opinion of MS, this is a good move to reward stockholders.
My sig of choice is Marlboro
I get a refund to the full retail value of the malware that was preinstalled on my notebook?
Now I can finally collect on my M$ stock and buy some of them $CO shares!
Now's when it actually pays to have a piece of microsoft.
Crap, I was hoping for a Mars mission.
Blaze a trail to the New World
"... and all seven of our businesses are growing," said Steve Ballmer
Seven businesses? Can anyone enlighten me on this? OS, Software, Xbox, MSN, selling hotmail addresses to spammers?
Caesar si viveret, ad remum dareris.
graves or new foundations?
Pay attention to the Forward Looking Statement..
"the availability of competitive products or services such as the Linux operating system at prices below our prices or for no charge; "
Oh yeah- the catch is Bill Gates Sr. He's always taught his son that vast accumulation of wealth was bad for the economy overall. The one redeeming factor of the Gates family has always been small estates (for the socioeconomic class they're in anyway- MY parents can't afford to give me a $100,000 loan to drop out of college and start a business). Maybe Bill Gates Jr. finally convinced his board what his father always taught him.
SJW: a person who perceives an injustice, and while correcting it, commits a greater injustice.
It doesn't make sense (to me) for a company to sit on top of massive cash reserves which represent, essentially, profit made by from the investment of stock buyers.
But on the other hand, it wouldn't make sense for them to blow all of their reserves on dividends and buybacks. After all, not even Microsoft could be so arrogant as to blithely assume that they're going to keep making the kinds of profits they have been until the end of time.
Um. Never mind.
www.kitchengeek.com -- Nosh for
These are the actions of a company that realizes they are no longer a growth stock and is no longer looking to finance things via the market but rather reward consistent investors and enter into a "slow, continuous growth" mode instead of acting like a start-up. Investors will like quarterly dividends and the buyback will shore up the flagging stock price.
Now, if only Cisco would buyback their stock (way too many shares floating), start expensing their options like a proper company and start paying some dividends, maybe they could be considered a grown-up stock as well.
Man, I knew MS were worried about their lacklustre share price performance compared to Apple, but this is a desperation move if ever I've seen one.
Basically, this is a quick way to pump up your share price by almost three bucks, only to have it plummet by the same amount when it goes ex-dividend.
Either that, or they are trying to lose that cash-mountain to make it less of a target for something over the horizon that we haven't seen yet. Think patent infringement lawsuit or something like that.
gadgetophile.com
So does a buy back program mean that msft is buying shares in msft? This seems a bit odd as it creates a circular loop in the owenership. I own 0.0001% of msft, but that 0.0001% of msft owns 0.00000001% of msft.
I understand that this is mainly to drive up stock prices, but could a company theoretically own itself. This stuff's confused me for a while.
Microsoft is great at one thing; making money. Unfortunately, being good at making money doesn't necessarily mean they have to be good at making software (at least considering how they've gone about it).
...can anyone smell what's in their kitchen?
It might be enlightening if some insider anonymously posted their newer long-term shift in direction. This is a pretty major change and their motivation is what?
So where does all the 'MS are a doomed, paniced entity, directionless and running in fear of Linux' we see here on /. fit into this view ?
Do not try to read the dupe, thats impossible. Instead, only try to realize the truth
What truth?
There is no dupe
I'd file this in the sucks-to-be-me dept.
My days of not taking you seriously are certainly coming to a middle...
Any company with that much cash that they can't put to good use owes it to their employees to either invest it a la Warren Buffet, or disperse it to its shareholders so they can invest it or spend it as they see fit.
I don't think Microsoft sees itself as an investment company a la Buffet's Berkshire Hathaway. They see themselves (accurately or not) as a technology innovation company.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
I was thinking that I'd read that Microsoft was cleaning about 1 billion per month. If that's accurate and continues the stock buy back would not affect cuurent cash reserves only slow the rate it builds. That would result in a reserve growth of 18 billion over the next 4 years instead of 48 billion, while at the same time reducing the number of publicly held shares which will probably up the stock price.
Shop smart, Shop S-Mart.
Isn't .08 .16?
Fast-fingered Bill strikes again.
Surprise, surprise, surprise.
----- G Pyle
Faith: n. -- That human impulse that drives them to steal appliances when the power goes out
This could be because MOST public companies pay their profits every quarter to investors rather than store it in the bank. Microsoft begins to actually give their profits to their investors, which off the top of my head Redhat has always done (should they make a profit), and it's something "(I'll) never see Redhat do". I don't get the reasoning.
Burn Hollywood Burn
I just won $100! I bet my buddy that they couldn't come up with a better investment than a direct financial return to stockholders, and I was right (he thought they were going to buy somebody big). The bet's been going since late winter when they announced they'd have a plan for their cash by mid-summer.
It really is a reflection of their growth prospects. Until now their stock value was still banking on a good deal of growth, and this announcement makes it clear that they probably won't achieve that.
Actually, an interesting stat is that something like only 15% of stock buyback approvals in major companies actually materialize into actual buybacks.
Read jack phelps dot net
It has the same effect as if the stock was bought back then the shares canceled. If I own 25% of MSFT, and MSFT buys back half of its outstanding stock from other people, I now own 50% of MSFT. I say "in effect" it's canceled because depending on where MSFT is incorporated, it may "hold" this stock as "treasury stock" so it can resell it later without "issuing" new stock. If it does not hold treasury stock, the stock is "canceled" and will have to be re-issued if MSFT wants to "sell" it.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
This basically says the future looks bright ahead. MS is paying out much of their warchest. Any threat Linux may pose has been discounted. MS believes they'll hang onto their 96% of the market and do so while growing new products.
"Academicians are more likely to share each other's toothbrush than each other's nomenclature."
Cohen
Windows stockholders are dieing. In this recent event that will bring more money to the stockholders, many of them fell off their chairs with a hearattack after getting the RSS feed from overlords.net
I fought the corporate America, and the corporate America bought the law.
but what about the $3/share special dividend? How many outstanding shares are there?
Bill Gates! $3/sh amounts to more than $5b for Bill's current holding of MSFT. This is on top of whatever the public pays him by bidding up MSFT tomorrow. It''s already up $1.50 in the after market.
seriously how many /.actually have MS stock.
There is a very good chance that anyone with mutual fund investments in growth funds that deal in mid-to-large-cap stocks will own a bit of Microsoft. Since I'm guessing there are quite a few people who are gainfully employed reading Slashdot that are probably younger, probably have a 401k, and probably are choosing longer-term investment options to grow their money, I would bet a significant percentage of (the gainfully employed) Slashdotters own a chunk of Microsoft, whether they realize it or not.
I can't give you exact figures, but I know that I indirectly own a little chunk of Microsoft and I'm guessing a lot of other people here do too.
Free yourself. Everything else will follow.
This is not a major change. Doubling the yearly dividend still puts almost no dent in their cash reserves. Check how many billions they make each year and work it out.
The one-time $3 dividend serves a few purposes. It keeps investors complacent again. They became complacent when dividends were first announced. But now that the markets are up and their stock is stagnant investors are looking for better returns. This "proves" more value in their stock. To really distribute most of the cash reserves as they're supposed to (speak with Ralph Nader) they would need to pay out more than that every year, but notice they won't commit to that. They pay a one time "large" amount, then buy back a large amount of stock, so those periodic $.08 are now much smaller payouts (because there's less outstanding stock) and the stock that's left public is worth more. It's also a display that they are a value stock, no longer a growth stock. It's also a HUGE payout to the major shareholders: Bill Gates and friends. So don't be surprised if someone leaves right after the payout. This may be a friendly gesture to an insider.
The buyback is something they do very often, but not usually too big. They almost need to do it now because their stock and revenue growth are stagnant. The buyback plus one time dividend will pump up the stock price for at least a little while. When their P/E ratio falls into a position between value and growth stocks their share price will go up further for a long time.
Business as usual.
Developers: We can use your help.
So basically since the dividend tax changed, microsoft is giving all its money away. Has to make you wonder especially since Bill and crew will get a lot of cash with minimal taxes now. Conspiracy hat engaged: Big business tells Bush Administration, our companies have lots of cash and we want it since we have lots of shares in said company that has lots of cash. Change tax law and then we can divest the companies of the cash and put it in our own pockets. Sure some small investors will get some money too but they don't own 23% of said company like I do, boo-yaa.
Lots of companies which faced competition from disruptive technologies have failed to acknowledge that their markets were under pressure. Microsoft is even trying to respond, within the constraints (handicaps) imposed by their business model.
Sustainability and energy independence essay
Hey, why don't they pay out that promised money for forwarding all those emails to Bill could test that email tracking software? I mean, I musta sent that thing to several hundred people expecting to reap big cash rewards and I haven't even seen a dime!
--
As a matter of fact, I am a lawyer. But I play an actor on TV.
The value of the company is the same after this announcement as it was before, but ex-dividend it goes down by three bucks a share. The only reason to bid up the price is if you expect the stream of dividends to continue, which it may well fail to do.
Sustainability and energy independence essay
kode, in favor of returning to publishing stuff that matters.
the daze of the phonIE payper liesense hypenosys stock markup FraUD softwar gangster execrable, is WANing into coolapps/the abyss.
tell 'em robbIE?
all is not lost?
consult with/trust in yOUR creators.... bringing newclear power/meaning to life, since/until forever. see you there?
"The Board of Directors also approved a four-year, $30 billion, stock buyback plan."
Some never listen to AC's about Microsoft.
...why not reward the employees with serious profit-sharing?
I'm an investor in stocks, but I've always thought the employees deserved a bigger piece of the pie than the shareholder.
It might even reign in on some of the insanity of the markets...nah. "Fear and greed" will always rule.
You get 32 cents a year for owning stock that cost (as of end of day on 7/20/04) $28.32. A whopping 1.1% dividend! WOOHOO!!! Tell ma I'm buying her a house!
MS could never invest in Linux boom without going against it's share holders. But if they give the shareholders cash instead, and the share holoders invested it themselves, then it is OK.
If MSFT buys back shares, then some people who once had shares have cash instead and the remaining people own a bigger fraction of the company. It's like some of the owners of a partnership allowing another partner to cash out, paying her off from the assets of the business.
Sustainability and energy independence essay
Gates owns about 1,117,678,329 shares right now, so this gives him a nice payout of about $89.5 million per quarter, without having to sell a single share. And that $3 per share return of capital is even juicier.
One should always be suspicious when a company tells investors "you can invest this money better than we can" by issuing a dividend. Usually it is either a gimmick to boost the stock price, or a method for the management to extract lots of $$ from the company.
I guess you've never read the prospectuses that mutual funds are required (by law) to distribute to you and you are required to sign acknowledging having read prior to purchasing shares?
It seems that their stock hasn't been affect by this much. I wonder why it didn't just by $3.00 instantly?
It is equivalent to those stocks ceasing to exist.
...) shares. This is equal to Y/(1-x) (since x 1).
Let x be the factor of itself that a company owns, and Y be the factor of shares that you own. Since for every stock you actually own, you in effect also own the stocks the company owns, the number of shares you own actually translate to Y*(1 + x + x^2 + x^3 + x^4 +
Now, if those x shares ceased to exist, the total number of outstanding shares would be (1-x) and the percentage of the company you owned would be Y/(# of outstanding shares) = Y/(1-x).
Look at the afterhours stats.
It's up nearly 2 dollars.
I own indirect (401k, etc), and direct as in I will be getting some of that $ out of M$.
But I also do not belive that MS is the king of all evil on computers. I think we users are. We all buy the stuff and we all have contributed to what MS is today. Yesterday it was IBM, today they are 'the big evil company' tommorow it will be someone else...
This is great news for Microsoft. It means it's going to keep focused on its current businesses and not do any big crazy move like buying SAP, Disney, Sun or something stupid like that.
Most boards with that much money at their disposal would be tempted to get themselves on the headlines but the Microsoft leadership has always been sensible.
...because it means this year I'll get a bigger bonus from Microsoft than I will from my employer (Apple).
Why would you buy a set of shares that are yielding 0.57%, when you could put that money into cash and get 2.1% in an online savings account? (And that's without looking very hard -- I'm an Australian, unfamiliar with US financial products.) Short answer: you wouldn't. So you're buying those shares with the expectation of capital gains.
Now, why do shares appreciate in value? Short answer: the company increases its earnings, or the investing public expects to see an increase in its earnings over the next N years. Ultimately, you would expect to see those earnings paid out as dividends, maybe with some of them kept in the company.
What does this have to do with Microsoft? They're starting to make the transition from a growth company -- one that invests its earnings back into the company, to grow the value of the company so it can earn more money -- into a yield company -- one that pays out a significant chunk of its earnings to its shareholders.
Microsoft needs to pay out a hell of a lot more than it is at the moment to sustain its current share price. I don't see it happening any time soon; the market is close to saturated, and they can't shift as many overpriced boxes of software as they used to. Maybe -- just maybe -- this is where the value of Microsoft's shares start to drop to more realistic levels ...
This seems like just a way to make the stock price rise. Someone correct me if I'm wrong, but:
1. Give away a big one time dividend (stock is immeidately worth that much more/share).
2. Buy back your shares, increasing demand for them, thus increasing the value.
3. Buy back your shares, creating less total shares (since I'd assume the shares would no longer be outstading shares and not traded), thus increasing the value of each share.
It's interesting, but kinda weird. As another poster said, they couldn't figure out what else to do with the big pile of money they had sitting around.
AccountKiller
Residual theory suggests that dividend policy is irrelevant as investors are indifferent between dividends and capital gains.
It is the assets of the firm that generate the stream of income - how that stream is distributed (dividends or capital gains) is irrelevant.
Higher Dividend -> Lower Profit Retained -> Lower Capital Investment -> Lower Profit -> Lower Divident Growth
Low Dividend -> Higher Profit -> Higher Capital Investment -> Higher Profit -> HIgher Dividend Growth
If you wish to generate capital, sell shares.
"Teachers leave us kids alone
This is good news. period.
seriously how many /.actually have MS stock.
.NET, and Palladium everywhere, open source effectively killed by IP laws, etc), my career options become a lot worse, but at least I'll make a decent profit.
Me, for one. It's partially a hedge; if MS actually does achieve complete dominance (Longhorn,
How to solve most of our problems: 1.Lots of nuclear plants. 2.Cure aging.
This move was not entirely unexpected, you always give the investors' money back to them if you can't find anything better to do with it. Microsoft has always been an extremely disciplined purchaser of companies (you know what I mean if you've been f****d by them). What this is saying is that there are no really good opportunities at MSFT's current scale. It also means, if you're paying attention, that the center of gravity of tech investment (eventually becoming innovation) is moving elsewhere... FOSS is driving a secular change in our industry.
Fantastic.
Right on
$30 billion will buy back 1 billion shares - which is how many shares Bill Gates has. I wonder if Bill will take advantage of the stock buyback in order to sell his whole stake in the company?
that they spend any of that $50 billion actually advancing the state of the art in computer science.
Oh, no, we need a stock buyback plan. Definitely more important for Billy Boy.
Fucking assholes. It's absolutely amazing how scummy Bill Gates actually is.
I always wondered what Melinda - an MS employee - thought of him being directly quoted as saying that MS could hire women at half the salary of men and make them do the grunt work because "they're only women."
Of course, once you snag a billionaire, I guess any feminist thoughts you might ever have had go out the window.
Microsoft must be destroyed! By any means necessary!
Mod this troll! Mod this flamebait! Is that all you got, huh? Are you nuts? Come at me!
Richard Steven Hack - This sig is TOO GODDAMN SHORT TO DO ANYTHING USEFUL WITH! MORONS!
It's practically a tradition in Sweden...
"...but could a company theoretically own itself..."
Yes, the company could proceed with the buy-back until it takes itself private, i.e., no more pesky outside shareholders!
A lot of small but profitable companies are currently thinking of taking themselves private to avoid the expense of the red tape caused by the Sarbanes-Oxley Bill. Compliance can cost a large percentage of a small company's profits!
Of course, this won't be done by a series of small buybacks!
It means that Microsoft ***must*** maintain 96% market share and they ***must*** grow new products!
No more slacking off in the "campus"!!!
With the amount of microsoft news being posted, Slashdot is slowly morphing into microsoft-watch. M$ is discussed more here than any other discussion group in the planet !!
Not that there is anything wrong with that.
It is a shame you don't understand what it means to be a corporation. MS exists to make its shareholders money. This is exactly what they are doing / have been doing / will continue to do.
It is not up to the corporations (MS in this case) to advance computer science. It is not up to the corporations to find a cure for cancer. It is not up to the corporations to invent the longer lasting light bulb. I'll say it again to be clear: Corporations exist to make money and to make money for their investors.
That being said, most of the time (and I do mean most here) these two things are one in the same. The corporation needs to innovate / invent / advance society to make money...but it is not necessary.
When it is all said and done, MS is doing exactly what they should do. They have made a product that the world wants, uses, and perhaps (now) needs. In my opinion they innovated along the way and they continue to innovate. Not so much with their OS, but with some of their other programs. Excel is one of the best programs I've ever seen. MS Money is right up there too. Visual Studio has spoiled me as a developer...
Bitch if you want, but the stockholders are happy, MS is making money... they are doing exactly what needs to be done.
-Mark
Dovie'andi se tovya sagain.
Someone recently suggested that Microsoft's final solution was to use all of it's cash reserves to buy back outstanding stock shares to reduce the comapny's liabilities on the stock market.
Face it! With Microsoft's current stock prices and the number of outstanding shares, balanced against the real assets they have, the smartest thing that Microsoft could do is to buy back as many shares as their cash reserves will support (reducing the real money that they would have to pay to stockholders) and then close the company!
If you still own Microsoft stock, I'd be dumping it! This is the first move in a long line of moves to shaft their stockholders. Better get out now, while the getting is good!
Cuban has a very interesting blog, even more so for NBA fans. (For those who don't know, he's the owner of the Dallas Mavericks, an NBA team. He made his billions selling Broadcast.com to Yahoo! back in the dot com bubble.)
I could not justify my existence if I were a turkey farmer. Would I terminate myself? Undoubtably, yes.
no
Microsoft is clueless as to what to do with the piles of cash they have. They don't seem to have any bright ideas on deploying this cash to reap more returns.
RTFA TSIA HTH HAND
(other repliees did the math for you on the difference between "quarterly" versus "annually")
Microsoft just needs more money. That's why they share. They are looking for more stupid home investors, at whom recent articles and made-up pools are aimed. They fear of the possible trend change for the stock price.
Well, maybe not right, but he called the stock buyback over a week ago. Maybe Gates is going to take his ball and go home.
To a Lisp hacker, XML is S-expressions in drag.
I thought the same thing, if it happens do you think they will really open source windows as one last "fuck you!" to linux?
If Microsoft cured cancer and ended all war you people would find a problem with it. I can only imagine how unsuccessful you must be in life that you HATE anyone and everyone who accomplishes anything. Go ahead and mod this flamebait or off topic. Your opinions do not have any effect in the real world, stock dividends do however.
Support ethnic cleansing in Palestine and help censor the American press!
If you are at an American University we are recruiting active censorship drones to spy on fellow students, lecturers and guest speakers on behalf of the Israeli government.
We can stifle democratic thought and criticism of Israeli fascist oppression -But only with your help!
Free housing:In six short weeks we can show you how to build a rogue state by demolishing existing homes in Palestine and building new houses on top!
We are currently looking for experienced bulldozer drivers with a large western bank balance to emigrate to the expansionist state of Israel and call it home.
Simply choose a plot of land and start building! Its easy peesy!!
If your chosen plot is currently occupied by a Palestinian family, dont worry
-simply build over them!
Its as easy peesy as eeny meeny miney mo!
We can protect your residential developments on occupied land with experienced snipers in full body armour and appropriately armed Apache helicopters kindly donated by the American public.
If you are an American citizen with a view to emigrating to warmer climes and view of the Med, you may also be eligible for a fraction of the 3,000,000,000 (yes thats 3 Billion!) dollars donated yearly by American taxpayers to help support our broken-ass state.
Due to our endless appetite for weapons of mass destruction our economy is unsustainable and we require your support. WMDs don't come cheap you know. It costs $$$$$$s to terrorise a whole region.
Our military personnel can barely afford to maintain our arsenal of 200 nuclear weapons, spy satellites and attack submarines.
Give a man a gun and he can kill a Palestinian child. Give him a helicopter and he can kill them all.
Part-time vacancies available:We are currently in construction of the world record breaking apartheid wall surrounding the largest ethic ghetto since Krakow.
The Israeli military is hiring expatriates with a military background to monitor the prisoners and maintain watchtowers. If you are blinded by a covetousness of other peoples land, but have a keen eye with a sniper scope you would be the ideal candidate for our border watchtower division.We need your help. Sponsor an Israeli colonizer.If anybody criticises you,point a finger and call them anti-Semite,it worked for the Liberty.
great, now we get more garbage. :P
MSFT will jump $3 (12%) immediately when the news becomes public. MSFT is a significant component in the each of the three major market indexes.
You will never get modded up, since the Machomos here on slashdot hate dvorak
Knights were hardly the chivalrous gentlemen that modern literature portrays them to be. Reading non-simplified non-romanticized histories of the Middle Ages will make that clear pretty quickly.
Chivalry was more of a thing for stories and songs. No doubt there were some chivalrous knights, but most knights were noblemen out to enrich themselves and gain power. Some others were no more than thugs. The knights and lords along the Rhine extorted money from ships passing by. If a ship declined to pay, it would get sunk. These were known as the robber-knights.
The average knight tended to act mostly in his self-interest, but might do a few acts that could be constituted as chivalrous. The Middle Ages was a rather lawless era where brutality often got people ahead.
The supposedly noble and chivalrous knights of the Crusades sacked and looted everything in their path as they headed for Jerusalem. The Hungarians and Byzantines were particularly pissed off at the Crusaders. They gave permission for the Crusaders to pass through their lands, and all they got in return was a swath of destruction where the armies had passed. Upon entering Jerusalem, the Crusaders immediately proceeded to massacre the entire population regardless of religion and went out of control for a few days as they looted the city.
Chivalrous indeed. Back then as now people were selfish bastards intent on gaining wealth and power.
The amount of brutality and backstabbing by the knights and noblemen of the Middle Ages was incredible. Kingdom were very decentralized, and the only enforcement of law for knights was provided for by the ruler of the area, usually at their whim. Kings, dukes, and so forth usually had little control over their vassals, so enforcement was only provided if it was in the best interests of the enforcer.
There is only one reason Microsoft has decided to do this dividend: their shareholders will otherwise lose the money in the near future because of massive civil lawsuits. Why? because Microsoft's huge security holes only leave them two options as a company. 1) Patch them and kill thousands of applications (lawsuits). 2) Don't patch them and leave everyone vulnerable (lawsuits). The board came to the conclusion to disburse the money now (to the shareholders) before the courts take control of it.
Forget about ethics, just invest in tobacco and firearm companies. You can make a lot of money that way. Seriously.
Security is inversely proportional to the commitment of one desiring to circumvent it.
If this is the case, it will be an interesting thing to see from a socioeconomic and geopolitical standpoint....