Skip to comments.FT: Microsoft considers $10bn shareholder payout
Posted on 07/03/2003 4:35:44 PM PDT by mikegi
Microsoft is considering paying its shareholders a special dividend of more than $10bn to reduce its $46bn cash pile. Shareholders would receive the dividend in a one payment of "significantly more than $10bn" or spread over three or four quarters, according to a person close to the discussions. The dividend, which would be the largest corporate pay-out ever, is one of a number options Microsoft is looking at, the FT's sister paper, Les Echos, has learned.
The other options include a buyback, acquisitions and higher ordinary dividends. A decision is expected by the end of the year.
The software giant has come under pressure from shareholders to unlock its war chest as its shares have lagged and cash holdings have grown. A decision earlier this year to begin paying a dividend, which will amount to nearly $900m this year, will make little impact as it continues to generate $3bn of cash each quarter.
The $10bn a year of excess cash generated and President George W Bush's move to lower the tax on US corporate dividends have prompted Microsoft to consider a more generous payout policy. The company said when it originally announced its 8 cents per share dividend - the first paid in its 28-year history - that it would consider raising the payout. One option would involve distributing more than $1 per share at a cost of more than $10bn.
Microsoft has maintained it needs large cash reserves to cover potential legal risks from anti-trust actions and to buy back the billions of dollars worth of shares it issues to employees under stock options. plans. However, executives in recent months have said that with the company's legal problems receding and its cash mountain still growing, they would reconsider this policy.
"Two other options are being considered: a momentous acquisition or a share buy-back to perk up the stock price," said the person close to the discussions. A combination of the options has also not been ruled out.
BTW, msft, if you do buyout TIVO, be sure to increase the bitrate on the recordings. Right now there's too much digital noise even in the best recording modes.
Didn't Micro$oft already have a DVR. Leave TIVO alone!
Here comes the Alternative Minimum Tax monster....
And just how are the two mutually exclusive?
Yep, Ultimate TV or something. It was satellite only. Actually, what I'd really like is a Video Computer. It would be a box that handles AV switching and could accept plug-in peripherals. For example, the box would have hot-swappable slots where you could plug in various hardware: tuner cards, digital cable tuner cards, game cards, hard drives, etc. The idea is to reduce the TV set to just a monitor, reduce VCRs and DVDs, etc. to simple media storage devices, and reduce cable/digital cable/satellite tuners to simple media sources. The Video Computer box would do all the AV routing (in a far more sophisticated way than AV receivers do today). There would be one remote control and one user interface. No more worries about composite/SVideo/component cabling and switching. TV is a mess these days!
$1 a share comes out to more than $1bn total and 8 cents/share works out to $900mn then I guess there are 1.12bn shares subscribed; that's more than 2 shares for every man, woman, child and spooted owl on the planet.
How could they ever go bankrupt?
When did Gates ever find time to write code?
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