MS gives dividends for the first time ($870M), stock split, Xbox surprise performer - Page 3

KrazyHorse · January 17, 2003, 02:01

Quote:

Originally posted by Drake Tungsten
Question for JohnT : How much of an effect will having more money in the warchest have on Microsoft's stock price? I know it will have some effect, but it seems like it is getting to the point where it won't do much to add more cash. The money is just sitting around, doing nothing.

It's pretty scalable, drake. I there are a million MS shares and they have a billion in the bank, then each share I buy nets me 1000$ of the bank account. I can't withdraw it, but share price is based on that.

Drake Tungsten · January 17, 2003, 02:02

Quote:

Interviewed by AOL-TimeWarner, of all people.

Oh god. Now we don't trust CNN?

Quote:

Oh, that changes everything, SEVERAL investors.

It's better than the zero evidence you have backing up your claims...

TCO · January 17, 2003, 02:03

What happened to using the X-box for strategic defense? The damn thing is making money!

Drake Tungsten · January 17, 2003, 02:04

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The damn thing is making money!

The Xbox can't make money, as Asher has assured me. It's all about stopping Sony, not taking over the gaming industry...

Drake Tungsten · January 17, 2003, 02:06

Quote:

I there are a million MS shares and they have a billion in the bank, then each share I buy nets me 1000$ of the bank account. I can't withdraw it, but share price is based on that.

Wouldn't a decent dividend attract investors and therefore increase share price?

Asher · January 17, 2003, 02:06

Quote:

Originally posted by GP
What happened to using the X-box for strategic defense? The damn thing is making money!

Is it?
I thought it was just losing a lot less money than everybody thought it was.

Quote:

The Xbox can't make money, as Asher has assured me. It's all about stopping Sony, not taking over the gaming industry...

Knock it off with the damn strawman.
I've said this, repeatedly to you, but you keep forgetting it to try to make a point.

The #1 intention of the Xbox is to fend off the threat of Sony and their "Entertainment Computer" system.
The #2 intention of Xbox is to profit from it.

It's highly unlikely MS will profit from it. Even if it does start turning quarterly profits from it, the profits would need to exceed over $3B as of today to make up for the money it took MS to R&D, market, and produce the consoles.

I seriously doubt that would happen.

By the way, Drake, "stopping Sony" = "taking over the gaming industry..."

Asher · January 17, 2003, 02:07

Quote:

Originally posted by Drake Tungsten
Oh god. Now we don't trust CNN?

You trust CNN?

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It's better than the zero evidence you have backing up your claims...

Why do I need EVIDENCE for my "claims"?

Do you need evidence of the concept of voting for board members?

Do you need evidence of the concept of free money = good?

Drake Tungsten · January 17, 2003, 02:10

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Do you need evidence of the concept of voting for board members?

You could start by showing that MS has a strong board that can stand up to the executives. Not all boards are made the same. If MS has a weak one, the stockholders voice may not be heard.

KrazyHorse · January 17, 2003, 02:10

Quote:

Originally posted by Drake Tungsten

Quote:

I there are a million MS shares and they have a billion in the bank, then each share I buy nets me 1000$ of the bank account. I can't withdraw it, but share price is based on that.

Wouldn't a decent dividend attract investors and therefore increase share price?

Only if the average person doesn't trust MS to grow the money as fast as they themselves could. Like I said, if an investor wants a 5% dividend they can sell 5% of their MS stock...

JohnT · January 17, 2003, 02:11

Here's a quote that might explain the small yield:

"Microsoft's proposed dividend will leave its stock on a yield of 0.29 per cent. The level was set, says John Connors, chief financial officer, by looking at the dividend yields of other technology stocks."

Also, this is new:

"The company also said it is introducing a direct stock purchase program and a dividend reinvestment program, offering both new investors and current stockholders the option of receiving Microsoft's annual dividend in cash or having it automatically reinvested."

Lastly, there is no need to talk about the $43 billion viz the new tax laws as retained earnings paid out as dividends will still be taxed. Yahoo! is also thinking about paying a dividend... if the tax plan passes.

Source: http://www.cfo.com/article/1,5309,86...tml?f=features

Asher · January 17, 2003, 02:11

Quote:

Originally posted by Drake Tungsten
You could start by showing that MS has a strong board that can stand up to the executives.

Ummmmmmmmmm...

No comment. It's for your own good...and my sanity...

Out of curiousity, Drake, how familiar are you with the business world?

Drake Tungsten · January 17, 2003, 02:15

Quote:

"Microsoft's proposed dividend will leave its stock on a yield of 0.29 per cent. The level was set, says John Connors, chief financial officer, by looking at the dividend yields of other technology stocks."

I don't buy this. The CNN article I linked to gave the dividend yields of other major tech players and MS was lower than them all.

Hewlett-Packard = 1.6%
IBM = 0.7%
Intel = 0.5%
Motorola = 1.7%
Texas Instruments = 0.5%

Drake Tungsten · January 17, 2003, 02:18

Quote:

Only if the average person doesn't trust MS to grow the money as fast as they themselves could.

But how does MS "grow" money that's sitting in a war chest? They can invest it into new endeavors up to a certain point, but MS has so much money now that they can't possibly use it all. Wouldn't giving that excess money back to stockholders as dividends be the wise course of action?

JohnT · January 17, 2003, 02:20

Quote:

Originally posted by Frogger
? Are those

directed at me? Because I didn't bother reading many of the responses; just drake's outbursts...

Naw, they're aimed at me and my foolishness for forgetting that the $43b is already factored into the price of MS stock.

Asher · January 17, 2003, 02:20

Quote:

Originally posted by Drake Tungsten
But how does MS "grow" money that's sitting in a war chest? They can invest it into new endeavors up to a certain point, but MS has so much money now that they can't possibly use it all. Wouldn't giving that excess money back to stockholders as dividends be the wise course of action?

While people always say it's $43B in "cash", it's actually not.

It's mostly in investments and the like.

As of Q3 2002, the breakdown is as follows:
Cash: $5,338,000,000
Short term investments: $35,137,000,000

That's the main reason MS sits on all this money. They're pretty damn good at investing it. MS could make hundreds of millions of dollars a year without producing a single damn product as of today...

TCO · January 17, 2003, 02:22

Quote:

Originally posted by Asher

While people always say it's $43B in "cash", it's actually not.

It's mostly in investments and the like.

As of Q3 2002, the breakdown is as follows:
Cash: $5,338,000,000
Short term investments: $35,137,000,000

Cash equivalents like that are commonly called cash when talking about the stock. In terms of the stock price, and the liquidity and suhc it makes little difference.

Asher · January 17, 2003, 02:23

Quote:

Originally posted by GP
Cash equivalents like that are commonly called cash when talking about the stock. In terms of the stock price, and the liquidity and suhc it makes little difference.

Yeah, GP, I know that. I was wondering if Drake knew that.

He made it sound like the money sits idle in a bank account. MS invests most of it, and gets good returns on them...

JohnT · January 17, 2003, 02:24

Quote:

Originally posted by Drake Tungsten

Quote:

Interviewed by AOL-TimeWarner, of all people.

Oh god. Now we don't trust CNN?

Perhaps he is referring to the fact that AOL and MS aren't exactly buddy-buddy.

Frogger answered my question for me quite nicely. Thanks, Frogger!

KrazyHorse · January 17, 2003, 02:24

Quote:

Originally posted by Drake Tungsten

Quote:

Only if the average person doesn't trust MS to grow the money as fast as they themselves could.

But how does MS "grow" money that's sitting in a war chest? They can invest it into new endeavors up to a certain point, but MS has so much money now that they can't possibly use it all. Wouldn't giving that excess money back to stockholders as dividends be the wise course of action?

I doubt it's not growing at all. It's probably sitting in relatively safe investments at low yield. And like Asher mentioned, MS sometimes feels the need to lay a whole heap of cash on the line to do something like buy Rare (again, why I went with an Xbox)...or pay off a federal judge or maybe even the President

.

Anyhoo, the real point is that if shareholders ever got pissed enough they could either sell or vote in a new leadership. Dividends are just a way of attracting the pensioners...

JohnT · January 17, 2003, 02:27

Quote:

Originally posted by Drake Tungsten

Quote:

"Microsoft's proposed dividend will leave its stock on a yield of 0.29 per cent. The level was set, says John Connors, chief financial officer, by looking at the dividend yields of other technology stocks."

I don't buy this. The CNN article I linked to gave the dividend yields of other major tech players and MS was lower than them all.

Hewlett-Packard = 1.6%
IBM = 0.7%
Intel = 0.5%
Motorola = 1.7%
Texas Instruments = 0.5%

You forgot a few...

Sun = 0%
Oracle = 0%
Yahoo! = 0%
Dell = 0%

Those go into the average too.

TCO · January 17, 2003, 02:27

Quote:

Originally posted by Asher

Yeah, GP, I know that. I was wondering if Drake knew that.

He made it sound like the money sits idle in a bank account. MS invests most of it, and gets good returns on them...

Well...there is certainly an argument against having too much cash like that inside a tech company. That it is better to return the money to the shareholders and let them invest it as they see fit. And run the company off of earnings. It makes them more hungry that way if they don't have that cash cushion.

Asher · January 17, 2003, 02:28

Quote:

Originally posted by Frogger
MS sometimes feels the need to lay a whole heap of cash on the line to do something like buy Rare (again, why I went with an Xbox)

Rumour has it Midway and Vivendi Interactive (Blizzard, Sierra, etc) are next.

KrazyHorse · January 17, 2003, 02:29

But MS isn't a sartup any more. They can't live hand-to-mouth, can they?

They're more into buying things now, then incorporating them in their evil plan for world domination...

Drake Tungsten · January 17, 2003, 02:29

Quote:

Yeah, GP, I know that. I was wondering if Drake knew that.

Oh god. Lay off the condecension...

TCO · January 17, 2003, 02:29

Quote:

Originally posted by GP

Well...there is certainly an argument against having too much cash like that inside a tech company. That it is better to return the money to the shareholders and let them invest it as they see fit. And run the company off of earnings. It makes them more hungry that way if they don't have that cash cushion.

Do one big huge wopping dividend.

TCO · January 17, 2003, 02:30

Quote:

Originally posted by Frogger
But MS isn't a sartup any more. They can't live hand-to-mouth, can they?

They're more into buying things now, then incorporating them in their evil plan for world domination...

They have way too much cash. Just like Novartis has too much.

Asher · January 17, 2003, 02:31

Quote:

Originally posted by Drake Tungsten
Oh god. Lay off the condecension...

Sorry (really).

I have a tendancy to do that but I really don't mean to.

But still, the "cash" is mostly in investments of some sort, not sitting idle...

KrazyHorse · January 17, 2003, 02:31

I trust your thoughts on this one. Have never been part of business world. Have difficulty understanding how people whose goal is to make money think...

Drake Tungsten · January 17, 2003, 02:33

At least GP agrees with me...

Asher · January 17, 2003, 02:34

Quote:

Originally posted by GP
They have way too much cash. Just like Novartis has too much.

Why do you think they have too much cash?

Do you think it makes them too powerful?

BTW, Drake, if you still insist they have no possible need for that much cash, remember that they would have bought Nintendo for $25B had Nintendo agreed to it.

They also nearly spent billions of dollars (undisclosed sum) buying Sega, which would have used the money to buy Square, but Square called it off at the last minute.

They'll find use for that cash. Give them time.