Investments and Acquisitions
John Connors, Microsofts chief financial officer, addressed the philosophies and priorities that were the foundation for the latest actions. He said the company will continue to invest heavilydriving innovation, improving customer satisfaction and working to provide good returns to shareholders. "We are going to continue to aggressively fund research and development and all the breakthroughs across all of our businesses. We will also look for strategic investments and acquisitions to complement our own innovation and to provide new growth opportunities," he said.Connors said Microsofts second priority is to repurchase its stock, with board-approved plans to repurchase as much as $30 billion of its stock over next four years. "We do believe we have great opportunities in front of us, and this buyback program affirms that belief. We believe it is a prudent level of buyback that will allow us to buy back a very significant amount over that four-year time span," he said. Wall Street analysts had called on Microsoft to use its substantial cash reserves to issue a dividend or to
buy back stock.
Connors said Microsoft also believes that there is additional cash that can be returned to shareholders in the near term. As such, the company will offer a one-time, special dividend of $3 a share, subject to shareholder approval.
"These steps represent a combined total value to shareholders of up to $75 billion over the next four years if the regular, quarterly dividend remains at the current level," Connors said.
Last up was Microsoft chairman and chief software architect Bill Gates, who said Microsoft has always been about long-term investment and having great people building great software products. As such, the cash-management plan is a "pretty exciting milestone" for the company, its staff, shareholders and customers, he said.
"You might ask whats next for us. The answer is record investment in innovation, and over the next year, Microsoft will file for more than 3,000 patentsup very dramaticallyand make it one of the top companies in the world in terms of innovative activities," Gates said.
Click here to read more about Microsofts push to build up a strong patent portfolio.
The company will disclose more details on its product roadmap at its financial analyst get-together late next week, but in the near term is the release of Windows XP Service Pack 2 (SP2), the release next year of the new version of SQL Server, code-named Yukon, and the release of a new Visual Studio product, as well as the dramatic improvement of search properties, he said.
Looking further out, Gates said there will be breakthroughs in products such as Longhorn, the next version of Windows, and the storage paradigm it will deliver. He said such investments in software generate profits, and through a "high-volume, low-price model, have a broad and dramatic positive impact."
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As such, the first priority for its cash-management plan is to continue to grow its regular dividend. Microsoft, which just started its dividend program about 15 months ago, is now on course to be one of the largest dividend payers in any industry, amounting to about $3.5 billion a year at the new rate of a quarterly dividend of 8 cents per share.