3 ms·
If they have excess cash that they have no clue how to spend, they should return it to investors via a dividend. See http://blogmaverick.com/2008/09/08/talking
by briansmith 18y ago
If they have excess cash that they have no clue how to spend, they should return it to investors via a dividend.
See http://blogmaverick.com/2008/09/08/talking-stocks-and-money/ http://blogmaverick.com/2008/09/08/talking-stocks-and-money/
Note the section "Microsoft, Dividends and Stock Buybacks," originally written four years ago.
- icey 18y agoAlmost like the article that was linked. The full title of the article is: "Microsoft Authorizes A Big $40 Billion Buyback; Ups Dividend"
- briansmith 18y agoThey only increased the quarterly divident by $0.02 per share. The 2004 special one-time dividend was $3.00 per share. Without the buyback, Micosoft could repeat the $3.00 per share dividend with money to spare. Granted, this is an over-simplification of what is going on. Microsoft authorized a $40 billion buyback but they probably won't buy back all $40 billion. This has the effect of inflating the price of shares beyond their true value. The main people who win are here are the ones that would have used the dividend to buy more Microsoft shares (since a buyback effectively is a way of the company forcing you to buy more shares with your dividend, but with lower taxation and brokerage fees), and the ones that are were going to sell their Microsoft shares anyway.
- byrneseyeview 18y agoThat depends on whether or not they think their stock is underpriced. Microsoft could give their shareholders cash, or they could purchase an asset (MSFT) with an earnings yield of over 7%.
- netcan 18y agoAs far as I understand, a stock buyback is very similar to a dividend. Another way of giving cash to investors.