MS gives dividends for the first time ($870M), stock split, Xbox surprise performer

[KrazyHorse]

Originally posted by Drake Tungsten
Question for JohnT : How much of an effect will having more money in the warchest have on Microsoft's stock price? I know it will have some effect, but it seems like it is getting to the point where it won't do much to add more cash. The money is just sitting around, doing nothing.

It's pretty scalable, drake. I there are a million MS shares and they have a billion in the bank, then each share I buy nets me 1000$ of the bank account. I can't withdraw it, but share price is based on that.

[Drake Tungsten]

Interviewed by AOL-TimeWarner, of all people.

Oh god. Now we don't trust CNN?

Oh, that changes everything, SEVERAL investors.

It's better than the zero evidence you have backing up your claims...

[TCO]

What happened to using the X-box for strategic defense? The damn thing is making money!

[Drake Tungsten]

The damn thing is making money!

The Xbox can't make money, as Asher has assured me. It's all about stopping Sony, not taking over the gaming industry...

[Drake Tungsten]

I there are a million MS shares and they have a billion in the bank, then each share I buy nets me 1000$ of the bank account. I can't withdraw it, but share price is based on that.

Wouldn't a decent dividend attract investors and therefore increase share price?

[Asher]

Originally posted by GP
What happened to using the X-box for strategic defense? The damn thing is making money!

Is it?
I thought it was just losing a lot less money than everybody thought it was.

The Xbox can't make money, as Asher has assured me. It's all about stopping Sony, not taking over the gaming industry...

Knock it off with the damn strawman.
I've said this, repeatedly to you, but you keep forgetting it to try to make a point.

The #1 intention of the Xbox is to fend off the threat of Sony and their "Entertainment Computer" system.
The #2 intention of Xbox is to profit from it.

It's highly unlikely MS will profit from it. Even if it does start turning quarterly profits from it, the profits would need to exceed over $3B as of today to make up for the money it took MS to R&D, market, and produce the consoles.

I seriously doubt that would happen.

By the way, Drake, "stopping Sony" = "taking over the gaming industry..."

[Asher]

Originally posted by Drake Tungsten
Oh god. Now we don't trust CNN?

You trust CNN?

It's better than the zero evidence you have backing up your claims...

Why do I need EVIDENCE for my "claims"?

Do you need evidence of the concept of voting for board members?

Do you need evidence of the concept of free money = good?

[Drake Tungsten]

Do you need evidence of the concept of voting for board members?

You could start by showing that MS has a strong board that can stand up to the executives. Not all boards are made the same. If MS has a weak one, the stockholders voice may not be heard.

[KrazyHorse]

Originally posted by Drake Tungsten

I there are a million MS shares and they have a billion in the bank, then each share I buy nets me 1000$ of the bank account. I can't withdraw it, but share price is based on that.

Wouldn't a decent dividend attract investors and therefore increase share price?

Only if the average person doesn't trust MS to grow the money as fast as they themselves could. Like I said, if an investor wants a 5% dividend they can sell 5% of their MS stock...

[JohnT]

Here's a quote that might explain the small yield:

"Microsoft's proposed dividend will leave its stock on a yield of 0.29 per cent. The level was set, says John Connors, chief financial officer, by looking at the dividend yields of other technology stocks."

Also, this is new:

"The company also said it is introducing a direct stock purchase program and a dividend reinvestment program, offering both new investors and current stockholders the option of receiving Microsoft's annual dividend in cash or having it automatically reinvested."

Lastly, there is no need to talk about the $43 billion viz the new tax laws as retained earnings paid out as dividends will still be taxed. Yahoo! is also thinking about paying a dividend... if the tax plan passes.

Source: http://www.cfo.com/article/1,5309,86...tml?f=features

[Asher]

Originally posted by Drake Tungsten
You could start by showing that MS has a strong board that can stand up to the executives.

Ummmmmmmmmm...

No comment. It's for your own good...and my sanity...

Out of curiousity, Drake, how familiar are you with the business world?

[Drake Tungsten]

"Microsoft's proposed dividend will leave its stock on a yield of 0.29 per cent. The level was set, says John Connors, chief financial officer, by looking at the dividend yields of other technology stocks."

I don't buy this. The CNN article I linked to gave the dividend yields of other major tech players and MS was lower than them all.

Hewlett-Packard = 1.6%
IBM = 0.7%
Intel = 0.5%
Motorola = 1.7%
Texas Instruments = 0.5%

[Drake Tungsten]

Only if the average person doesn't trust MS to grow the money as fast as they themselves could.

But how does MS "grow" money that's sitting in a war chest? They can invest it into new endeavors up to a certain point, but MS has so much money now that they can't possibly use it all. Wouldn't giving that excess money back to stockholders as dividends be the wise course of action?

[JohnT]

Originally posted by Frogger
? Are those directed at me? Because I didn't bother reading many of the responses; just drake's outbursts...

Naw, they're aimed at me and my foolishness for forgetting that the $43b is already factored into the price of MS stock.

[Asher]

Originally posted by Drake Tungsten
But how does MS "grow" money that's sitting in a war chest? They can invest it into new endeavors up to a certain point, but MS has so much money now that they can't possibly use it all. Wouldn't giving that excess money back to stockholders as dividends be the wise course of action?

While people always say it's $43B in "cash", it's actually not.

It's mostly in investments and the like.

As of Q3 2002, the breakdown is as follows:
Cash: $5,338,000,000
Short term investments: $35,137,000,000

That's the main reason MS sits on all this money. They're pretty damn good at investing it. MS could make hundreds of millions of dollars a year without producing a single damn product as of today...