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

[TCO]

Originally posted by Asher

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

Cash equivalents like that are commonly called cash when talking about the stock. In terms of the stock price, and the liquidity and suhc it makes little difference.

[Asher]

Originally posted by GP
Cash equivalents like that are commonly called cash when talking about the stock. In terms of the stock price, and the liquidity and suhc it makes little difference.

Yeah, GP, I know that. I was wondering if Drake knew that.

He made it sound like the money sits idle in a bank account. MS invests most of it, and gets good returns on them...

[JohnT]

Originally posted by Drake Tungsten

Interviewed by AOL-TimeWarner, of all people.

Oh god. Now we don't trust CNN?

Perhaps he is referring to the fact that AOL and MS aren't exactly buddy-buddy.

Frogger answered my question for me quite nicely. Thanks, Frogger!

[KrazyHorse]

Originally posted by 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?

I doubt it's not growing at all. It's probably sitting in relatively safe investments at low yield. And like Asher mentioned, MS sometimes feels the need to lay a whole heap of cash on the line to do something like buy Rare (again, why I went with an Xbox)...or pay off a federal judge or maybe even the President .

Anyhoo, the real point is that if shareholders ever got pissed enough they could either sell or vote in a new leadership. Dividends are just a way of attracting the pensioners...

[JohnT]

Originally posted by 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%

You forgot a few...

Sun = 0%
Oracle = 0%
Yahoo! = 0%
Dell = 0%

Those go into the average too.

[TCO]

Originally posted by Asher

Yeah, GP, I know that. I was wondering if Drake knew that.

He made it sound like the money sits idle in a bank account. MS invests most of it, and gets good returns on them...

Well...there is certainly an argument against having too much cash like that inside a tech company. That it is better to return the money to the shareholders and let them invest it as they see fit. And run the company off of earnings. It makes them more hungry that way if they don't have that cash cushion.

[Asher]

Originally posted by Frogger
MS sometimes feels the need to lay a whole heap of cash on the line to do something like buy Rare (again, why I went with an Xbox)

Rumour has it Midway and Vivendi Interactive (Blizzard, Sierra, etc) are next.

[KrazyHorse]

But MS isn't a sartup any more. They can't live hand-to-mouth, can they?

They're more into buying things now, then incorporating them in their evil plan for world domination...

[Drake Tungsten]

Yeah, GP, I know that. I was wondering if Drake knew that.

Oh god. Lay off the condecension...

[TCO]

Originally posted by GP


Well...there is certainly an argument against having too much cash like that inside a tech company. That it is better to return the money to the shareholders and let them invest it as they see fit. And run the company off of earnings. It makes them more hungry that way if they don't have that cash cushion.

Do one big huge wopping dividend.

[TCO]

Originally posted by Frogger
But MS isn't a sartup any more. They can't live hand-to-mouth, can they?

They're more into buying things now, then incorporating them in their evil plan for world domination...

They have way too much cash. Just like Novartis has too much.

[Asher]

Originally posted by Drake Tungsten
Oh god. Lay off the condecension...

Sorry (really).

I have a tendancy to do that but I really don't mean to.

But still, the "cash" is mostly in investments of some sort, not sitting idle...

[KrazyHorse]

I trust your thoughts on this one. Have never been part of business world. Have difficulty understanding how people whose goal is to make money think...

[Drake Tungsten]

At least GP agrees with me...

[Asher]

Originally posted by GP
They have way too much cash. Just like Novartis has too much.

Why do you think they have too much cash?

Do you think it makes them too powerful?

BTW, Drake, if you still insist they have no possible need for that much cash, remember that they would have bought Nintendo for $25B had Nintendo agreed to it.

They also nearly spent billions of dollars (undisclosed sum) buying Sega, which would have used the money to buy Square, but Square called it off at the last minute.

They'll find use for that cash. Give them time.