RealTime IT News

Microsoft Doubles 2004 Dividend

Microsoft's Board of Directors declared the company's second annual dividend Friday, approving an increase that doubled the previous dividend.

Microsoft said the board increased the annual dividend to 16 cents per share in fiscal 2004, up from the 8 cents per share for fiscal 2003 that it approved in January. The dividend will be payable on Nov. 7, 2003, to shareholders of record at the close of business on Oct. 17, 2003.

The first dividend, which equated to a payout of about $850 million, or a yield of less than 0.5 percent, was characterized as a "starter dividend" by Chief Financial Officer John Connors when it was unveiled in January.

"In looking at the dividend, we looked at Dow 30 companies, we looked at other tech companies, and we feel that what will be over $850 million for our first dividend is a significant amount of money and a meaningful dividend," Connors said at the time. "As we go forward, we'll look at what our legal environment and risk profile will look like. What does R&D look like. What do significant other uses of cash look like. And then we'll review the dividend ballpark. It's a good place to start."

The company disappointed expectations in July, when it announced prior to its annual financial analyst meeting that it had no intentions of announcing a dividend program change.

""We really need to get through a couple of very significant legal issues both in terms of what the financial impact would be and the business model impact; most notably the E.U. as well as the Sun antitrust case," Connors said then. "We don't feel it would be prudent to commit to a long term program until we see our way through those."

At the time, analysts and investors had been hoping for a plan from Microsoft that would address its nearly $50 billion cash reserve. Speculation had been running rampant that the company was mulling a one-time, $10 billion cash dividend.