Microsoft Execs: Boosting Dividends Is Plans Top Priority

By Peter Galli  |  Posted 2004-07-20 Print this article Print

Officials say the company's new cash-management plan to return almost $75 billion in capital to its shareholders over the next four years won't hurt employees, and that Microsoft will continue investing heavily in R&D.

Microsoft Corp. executives on Tuesday lauded the announcement of a cash-management plan that could return almost $75 billion in capital to its shareholders over the next four years, saying the move would benefit all of its stockholders, employees and customers. The Redmond, Wash., software company announced the plan Tuesday following its approval by the Microsoft board earlier in the day. In a media teleconference Tuesday afternoon, Microsoft CEO Steve Ballmer said the company was delighted to have the opportunity to announce the plan to return capital to its shareholders.
"We are very happy to be able to return almost $75 billion in capital to our shareholders over the next four years. That comes after the last five-year period, in which we more than doubled our operating profit and returned over $30 billion to our shareholders through a combination of dividends and buybacks," he said.
Microsoft executives also said they are confident that the company has put many of its legal issues behind it, affording it the opportunity to move forward with its cash-management plan. But Ballmer also noted that Tuesdays action was the direct result of the innovation, hard work and passion of Microsofts employees. He said the company wants to ensure that their interests are also taken into account as part of the capital management plan. "Our employee stock options did not envision a large, one-time special dividend, so we are proposing some adjustments to our stock plans to ensure that our employees will not be unfairly disadvantaged by the payments of the one-time special dividend," he said. Microsoft remains excited about the opportunity to continue to "make a difference through software," Ballmer said. And while it remains realistic to the fact that there is great competition in the market, "We can grow and succeed as a company, and this plan for cash management is consistent with growing our business as we move forward." Addressing the same media conference, Brad Smith, Microsofts general counsel, said the past two years have been focused on solving legal issues, developing stronger relationships with the industry and focusing on the future. "For example, we resolved the major antitrust case here in the U.S., and the recent Court of Appeals ruling sent a clear and emphatic message that our settlement is a fair and appropriate resolution of those issues. "We have also resolved three quarters of the state class-action cases in the U.S., either through settlement or by winning in court, and have also resolved the largest private lawsuits pending against the company, such as AOL-Time Warner, Sun Microsystems Inc. and InterTrust Technologies Corp.," he said. But while Microsoft still faces several legal issues and takes those seriously, Ballmer said, the company has significantly reduced the legal risks facing it and now has a "much clearer understanding of the potential risks involved in the cases that remain. We have always said that reducing the legal and associated business risks was a prerequisite to addressing cash-management plans," he said. "With so many of our cases resolved and the legal uncertainties so much better defined and narrowed, we are now in a position where we can return significant resources to our shareholders," Smith said. Next Page: Microsofts CFO says "strategic investments and acquistions" are key.

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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