Microsoft Issues Dividend, Splits Stock

By Peter Galli  |  Posted 2003-01-16 Print this article Print

Software giant to pay an annual dividend to shareholders for the first time.

Microsoft Corp. on Thursday said it would, for the first time, pay an annual dividend to shareholders. It also announced a two-for-one common stock split. The annual dividend of $0.16 a share before the stock split ($0.08 after the split) will be payable on March 7 to those shareholders on record at the close of business on February 21. Shareholders will receive one additional common share for every share held on the record date of January 27, Microsoft said in a statement. "Declaring a dividend demonstrates the boards confidence in the companys long-term growth opportunities and financial strength. We are especially pleased to be able to return profits to our shareholders, while maintaining our significant research and development efforts and satisfying our long-term capital requirements," John Connors, Microsofts chief financial officer, said.
But Connors cautioned that while Microsoft is very optimistic about the future of the technology sector, it does not expect to see a significant upturn in global IT spending in the short term.
Connors said Microsoft does not see robust corporate demand from any large countries. "Our forecast assumes soft business demand for the second half of the year," he said. Microsoft is also introducing a Direct Stock Purchase Program and a Dividend Reinvestment Program, which offers new investors and current stockholders the option of receiving Microsofts annual dividend in cash or having it automatically reinvested. This program will be administered by Mellon Investor Services and not Microsoft, Connors pointed out. Microsoft on Thursday also reported a 10 percent rise in revenue to $8.54 billion for the second quarter to end-December compared with the same quarter a year earlier, partly on the back of its controversial Licensing 6.0 strategy, which came into effect last year. Connors said the Redmond, Wash., software firm delivered solid results in every business despite a challenging global economic environment. Operating income for the second quarter was $3.26 billion, which included a $210 million charge reflecting the companys estimate for costs related to resolving pending state antitrust and unfair competition class action lawsuits. This compares to operating income of $2.84 billion reported in the second quarter of last year, which included a $660 million charge related to the companys estimate of the class action lawsuit costs. Net income for the second quarter was $2.55 billion, including a $282 million after-tax charge for investment impairments and a $126 million one-time tax benefit relating to a favorable tax court ruling, compared to net income of $2.28 billion in the prior year. Diluted earnings per share for the second quarter were $0.47, including a $0.03 charge related to the companys estimate of the class action lawsuit costs, a $0.05 charge for investment impairments, and a one-time tax benefit of $0.02. This compares to earnings per share of $0.41 in the prior year, which included an $0.08 charge related to the companys estimate of the class action lawsuit costs.

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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