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Bill Gates' big payday: $99.5 million
SEATTLE, Washington (AP) -- With its coffers now topping $43 billion, Microsoft Corp. is finally heeding calls from impatient investors who want the world's largest software company to share some of the wealth with them. After Microsoft splits its stock 2-1, the Redmond-based company will pay its first dividend -- 8 cents per share. The split takes effect January 27, the company said Thursday. Microsoft long had opposed calls from some shareholders to use some of its cash reserves to pay a dividend, arguing that its vast prosperity was better spent on research and product development. But Microsoft's board voted unanimously this week to issue a dividend since many of the company's antitrust and other legal issues have been largely resolved, chief financial officer John Connors said. They included a $1.1 billion settlement of a class-action lawsuit filed by California consumers. "We were the only Dow 30 company that has not declared and paid a dividend," Connors noted, calling the small payment "a starter dividend. If you stack us up against other big tech companies, we're right in the ballpark and it's a good place to start," he said. Big payout for chiefMicrosoft chairman Bill Gates would own about 1.2 billion shares after the stock split -- giving him a $99.5 million dividend payment. Connors said the Bush administration's proposal last week to eliminate the federal dividend tax was "just coincidental in timing." But that proposal was certain to increase shareholder pressure. The dividend is payable March 7 to shareholders of record February 21. Microsoft will review the dividend program regularly, but hopes to make it an annual payout, Connors said. After the stock split, Microsoft will have 10.8 billion shares outstanding, for a total dividend payout of about $864 million. "This is the news that Microsoft investors have been waiting for," said Michael Gartenberg, research director for Jupiter Research. "With $40 billion in cash, it was hard for Microsoft to justify keeping that all set aside for research and development and legal fees." Sales strongThe dividend itself "is a step in the right direction," said Marty Shagrin, a research analyst with Victory Capital Management. Still, he called it "pretty small." Also Thursday, the company also announced an earnings boost for its quarter ended December 31, although investors seemed unimpressed as they drove the stock price down nearly 5 percent. For the quarter ended December 31, Microsoft reported a profit of $2.55 billion, or 47 cents a share, up 12 percent from $2.28 billion or 41 cents a share in the year-ago period, slightly beating analysts' expectations. The company reported record revenue of $8.54 billion for the quarter, a 10 percent increase over the $7.74 billion last year. Those results include a $282 million after-tax charge for writing down poorly performing investments and a $126 million one-time tax gain. Among its expenses, the company took a $210 million charge -- its estimate for the cost of resolving pending antitrust class action lawsuits. The company took a $660 million charge in the second quarter of 2002 for the same reason. Analysts surveyed by Thomson First Call had a consensus estimate of 46 cents a share on revenue of $8.6 billion. The company said its quarterly performance was due to strong sales of computer server software, which increased 12 percent to $1.7 billion. Investors hoping for more?Sales of Xbox game consoles were on the lower end of the company range, comptroller Scott Boggs said, declining to disclose how many units Microsoft sold in the quarter. Since June 30, the company has sold about 4 million consoles. The company also said more than 250,000 people have signed up for its new Xbox Live online video-game service. Personal computer sales and overall technology spending remains soft, the company said. Although Microsoft's revenue were in line with analysts' range, investors may have been hoping for more, said Mark Murphy, an analyst with First Albany Corp. Microsoft said it expects profit of 47 cents to 48 cents a share on revenue of $7.7 billion to $7.8 billion for the third quarter that ends March 31. For the full year, the company lowered its revenue estimates to $31.9 billion to $32.1 billion with profits between $1.90 a share and $1.93 a share. For the six months ended December 31, the company reported a profit of $5.3 billion, or 97 cents a share, on revenue of $16.3 billion. For the same period a year ago, the company reported a profit of $3.6 billion, or 64 cents a share, on revenue of $13.9 billion. Copyright 2003 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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