7/20 M$ pay $$$$ special divident
http://www.nytimes.com/2004/07/21/technology/21gates.html?hp
Can someone explain why this makes financial sense to M$?
Why don't they buy back some stocks with that money? Isn't this
like cash down the drain, not that they are short on cash.
\_ Why does any company pay a dividend? Why does any company go
public?
\_ Well, a company goes public to raise cash. When it had more
than enough, it should purchase the stock back. It's not
that they have never paid any divident. They are not a dot
com after all.
\_ in the end, the value of a stock is the dividend or promise of
future dividends. sometimes, profit making companies don't
pay dividends because the company feels that the cash is
better invested for growth (and the hope of a bigger dividend
payout in the future). microsoft has too much cash, more than
it knows how to use, so it just pay it out to shareholders.
makes sense to me.
it knows how to use, so it just pays it out to shareholders.
makes sense to me. a stock that will never pay any dividend
is like a bond that will never pay any interest; it's value
would be zero and nobody will want to buy it.
\_ I disagree. It could still be worth something on the basis that
eventually they will get bought our or will liquidate their
operations. Both are essentially a single large delayed
dividend. Now if you say the company will never pay a dividend
and is planning on going bankrupt...
\_ It could still be worth something, but the idea is that
the profits get returned to the investors. Somewhere
along the line people forgot this fundamental of
incorporating a business.
\_ Well all that really matters is that you can find someone
to pay more for your shares. In a growing company with no
dividend, that's not a problem.
\_ This is the key for "growth" stocks. M$ has kept this
attitude for a long time. Now that it has "stablized"
it either starts paying dividends or it starts losing
value as an investment (as noted above, a zero interest
bond).
\_ Not really. Say you incorporate your business and
it is doing very well. You're making lots of money,
but not paying it out to the stockholders. Would
you sell for merely $1 more than the value of the
stock (assets) if you're generating a massive cash
flow? The bottom price for a stock is the assets of
a company, but *profit* is what you really want. A
huge company and no money for the investor (you)
does you no good.
\_ well, like you said, they are like a "single large delayed
dividend". in other words, you don't disagree.
\_ The cash reserves are causing M$ problems. Internal protests when
M$ tried to cut benefits, investors upset by "no dividends" stance,
and antitrust supporters all point to the huge cash reserves as
evidence of M$ stinginess and power. For business, money in the
bank is not being used on investment or R&D. Buybacks and dividends
are programs to keep stock prices stable and reward investors.
M$ is implementing both. It's a different mindset than the paranoid
one that M$ has been selling where any moment now, they might
collapse and need that money to defend themselves. |
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