Microsoft Exec Hopes for Closure on Lawsuits

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.

/zimages/3/28571.gifCheck 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: /zimages/3/19420.gif