Feeds

Microsoft: unusual cash flow problems

Big Bucks

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

Microsoft is reviewing what to do with its cash pile.

Microsoft is considering paying a special dividend of $10 billion, the largest corporate payout on record, to slim down its cash reserves of more than $46 billion. It has also been reviewing other options, including acquisitions - and while there is frequently speculation concerning takeovers, it could be a risky strategy for Microsoft to take.

Under pressure from shareholders anxious to extract greater value from the world's best performing major company, Microsoft is reported to be mulling over four options. It is looking at a share buyback, acquisitions, a higher annual dividend or a "special dividend" that could top the $10 billion mark. This could come in a single lump or may be spread over several quarters.

Microsoft shares rallied on world markets on Friday after reports on the possible payout emerged in the French financial daily Les Echos. The company made its first dividend payment earlier this year, encouraged by favorable tax treatment from US president George Bush.

Microsoft shares had already been riding high, following a Merrill Lynch analyst arguing that there could be some upside to the company's numbers.

Analyst Jason Maynard raised his fiscal 2004 earnings per share estimate to $1.09 from $1.04.

Mr Maynard said he was encouraged by modestly better PC unit numbers and positive feedback on the new server product releases. He also said his $33.3 billion revenue forecast for fiscal 2004 "is achievable and could show some upside in the second half."

Although it generates around $10 billion in cash every year, the Redmond-based company has always maintained a Scrooge-like grip on its reserves, insisting that it needs to buy back millions of shares issued to staff every year under stock options and to cover potential legal risks.

Acquisitions are an obvious way that Microsoft could shrink its cash pile and it is forever being linked with potential buys, most recently with struggling CRM vendor Siebel Systems and financial software provider Sage Group. However, given that regulators keep a sharp eye on Microsoft in view of its dominant position in desktop and server software, buying other companies is a risky route to take, especially given that it already has the ability to colonize new markets with software developed in-house.

Source: Computerwire/Datamonitor

Recommended research:

Datamonitor, "Microsoft mobile - putting it all together" (BFTC0859)
Datamonitor, "Microsoft: making strides with NSPs?" (BFTC0799);
Datamonitor, "Microsoft - global financial services strategy" (BFTC0562)

Secure remote control for conventional and virtual desktops

More from The Register

next story
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.