Microsoft Exec Hopes for Closure on Lawsuits

By Peter Galli  |  Posted 2004-04-22 Print this article Print

Microsoft has a a fund with billions stashed away yet says it's uncomfortable paying dividends and reducing its cash position. The reason is the company's outstanding legal issues, CFO John Connors reiterates.

Microsoft has squirreled away a cash and investment stockpile of tens of billions of dollars. But shareholders hoping for word about dividends as well as those customers wondering what acquisition plans the company may have for that kitty must wait a little longer, the company advised Thursday. Microsoft previously has said it is uncomfortable paying dividends and reducing its cash stockpile while there are still outstanding legal issues. In addition, at Microsofts annual analysts day event at the Redmond campus last July, its chief financial officer, John Connors, made clear that the firm had no intention of distributing any of its $62.7 billion cash-and-investment stockpile to shareholders until the legal risks posed to the company have been removed.
"We still have a number of outstanding legal issues, including from Sun Microsystems, the EU and shareholder class actions, and for us, the biggest factor in any such decision is what is the business-model risk to unresolved legal matters of significant consequence," he said at the time.
But on Thursday, in a conference call with reporters and analysts to present the companys third-quarter financial results, Connors held out some hope, telling investors that Microsoft had "worked hard to clear up a substantial amount of our legal exposure: [America Online Inc.], Sun and all but a handful of the state class-action suits." "We will continue to focus on getting closure on our legal matters, but tremendous progress has been made. We are still on track to be able to share more details by the financial analysts meeting this July," he said. Connors, who normally ends his presentation with a list of the largest risks and drivers to Microsofts business going forward, this time broke with tradition and outlined the opportunities Microsoft executives see for the company in terms of products and technologies as well as its opportunities to increase shareholder value. Microsoft has done a better job of growing absolute revenue, profits and cash flow over the past three years than any of its technology peers, he said. "Over the next several years, we will deliver some fantastic products, including SQL Server 2005, Longhorn client and server, Visual Studio 2005, Office 12, our next-generation business solutions platform, the next-generation Xbox console and a host of additional products, Connors said. "We believe we clearly have the broadest portfolio and the best pipeline of technology of any company in the industry, bar none," he said. According to Connors, the current financial year has been a "great one" for Microsoft, and the next financial year "can be as well. As we look out over the next several years, we see a very bright future for the company and its shareholders. We have the opportunity to deliver incredible innovation to both business and consumer customers and show very meaningful revenue growth. "We will also continue to be very focused on relentlessly driving cost efficacy and executing on a multiyear plan to reach profitability in all of our emerging businesses. If we do all of these things, which we are confident we can do, well likely see revenue and operating income growth improve in fiscal year 2006 and beyond," Connors said. Check out eWEEK.coms Windows Center at for Microsoft and Windows news, views and analysis. Be sure to add our Windows news feed to your RSS newsreader or My Yahoo page:  
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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