The End is Near - Microsoft declares dividend & stock sp



Is this their first stock split? Also, isn’t $.16 per share just a little low for a company with MS’s cash and market cap? And (just to string three questions in one post) how much of this do y’all think is related to Bush’s dividend tax waver proposal?

Hardly the first split. They’ve done quite a few during the boom years, but nothing recently. As to the dividend, there has been a demand from investors for a dividend; Microsoft has like 40 billion in cash. I agree that it does seem a little low, but it’s better than what it was before: zero.

And since the largest shareholder is Bill, you multiply his tens of millions of shares of Microsoft by 16 cents a share. Guess they didn’t want to make it look like they were unloading too much on their chairman.

It’s a start. They’re probably hoping this will get some of the whiners out there (aka: Nader, who doesn’t even own Microsoft stock) to shut the hell up.

According to the NY Times, Gates alone stands to make almost a cool $90 million off the dividends! And W. wants to cut his dividend taxes to zero!

how much of this do y’all think is related to Bush’s dividend tax waver proposal?

No way to know for sure (unless they tell us), but I suspect it’s more a matter of a change in attitudes to dividends. In the heyday of the 90s, the idea was to return value to investors by keeping that cash in-house for expansion, R&D or whatever and hope to deliver income to shareholders via capital gains (by increasing the “inherent” value of the company) rather than dividends. For awhile now, people have been debating whether the evidence shows that that actually works. Microsoft may simply be casting its vote in that debate. But I would agree that, all other things being equal, in a tax-free dividend world, a stock that pays a dividend is better than one that doesn’t.

Given that Gates has already given away billions to charity, I’d much rather see him keep his whole dividend so that [at least some of] the money goes to charity rather than the government.

Here’s CNN’s take on the whole thing. He nets $99.5 million from the dividend.

The total payout for all outstanding shares is ~$865 million. On profits of $2.55 billion, they have a little room to expand the dividend, but the Microsoft board really hate giving money to investors.

On the bright side, they’re calling is a “starter dividend” and want to make it an annual thing. It will probably increase in size next year if the Bush tax break is approved.