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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."
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; "
Sure thing:
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1 - Windows Client, including the Microsoft® Windows® XP desktop operating system, Windows 2000, and Windows Embedded operating system.
2 - Information Worker, including Microsoft Office, Microsoft Publisher, Microsoft Visio®, Microsoft Project, and other stand-alone desktop applications.
3 - Microsoft Business Solutions, encompassing Great Plains and Navision business process applications, and bCentral(TM) business services.
4 - Server and Tools, including the Microsoft Windows Server System(TM) integrated server software, software developer tools, and MSDN®.
5 - Mobile and Embedded Devices, featuring mobile devices including the Windows Powered Pocket PC, the Mobile Explorer microbrowser, and the Windows Powered Smartphone software platform.
6 - MSN, including the MSN® network, MSN Internet Access, MSNTV, MSN Hotmail® and other Web-based services.
7 - Home and Entertainment, including Microsoft Xbox®, consumer hardware and software, online games, and our TV platform.
It's how the corporation is structured from a business perspective. http://www.microsoft.com/mscorp/articles/business
Huh? Most public companies take their profits and reinvest them in the company. This may or may not help the company grow and reward investors by making the company more valuable. Some companies pay out dividends (i.e. pay out profits to investors), usually because the company is not easily able to expand so growth is not an option. This is commonly seen in large companies in mature fields; think heavy industry, mining, railways, etc..
Redhat most definately does not give their profits to their investors; they are focused, like most tech companies, on growth, so they reinvest it in the company.
I guess you missed the Microsoft Antitrust Trial that was in all the papers the last few years?
Historically, MOST large companies (eg, those in the S&P 500) regardless of industry pay a dividend on the order of 4% per year. Earlier in the 20th century, dividends averaged as high as 6-7%. Recently the average has dropped to 2-3%, which is a historical low. The tech companies that have gotten so big so fast in the last 20 years and still pay a tiny dividend are an exception, not the rule. Those companies have now reached a scale where it is unrealistic to expect them to be high-growth businesses (on a percentage basis), and are struggling to adjust to the fact that they are now "mature" firms.
Microsoft seems to be making the adjustment somewhat more quickly than the other new tech giants. Realizing that rapid share price appreciation was probably gone for good, they quit issuing options to the employees and now give limited stock grants. Realizing that they have pissed off a lot of shareholders by accumulating $60B in cash that they can't seem to use, they are issuing the one-time special dividend and increasing their annual dividend (although it will still be on the order of only 1%). I suspect that the stock buy-back is aimed more at trying to increase the share price for those thousands of disgruntled employees holding worthless options than anything else -- buying shares is no better "investment" than using the money internally, something they don't seem to be able to do, but it does have financial effects.