- Folks:
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- If our own local governments did the same, and stopped
their double accounting shell game, the effect on the economy would be
dramatic and as Bill did with 32 Billion in surpluses to benefit his shareholders,
the figure per surpluses from within "ALL" local governments
as a start would be at least 2 Trillion dollars. Now that's what I call
a real economic boost and shot in the arm for the shareholders of this
country, the American People.
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- I note that Bill is receiving a 3.3 Billion dollar payout
for returning 32 Billion. I wonder if we should offer our government officials
a payout for returning the real surpluses to us? No, only kidding. Bill
Gates owns Microsoft. It is his right to receive what he gets. Our government
officials are supposed to work for us. We are the owners. It is our right
to receive the Lion's share and not theirs as it has been for the last
several decades.
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- I also note that the primary stock holder of Microsoft
Corporation are the thousands of local and federal government investment
fund accounts. Their share of that 32 Billion based on stock ownership
will be about 22 to 24 Billion dollars.
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- EXAMPLE: One local government investment fund is: The
NY State Retirement Fund which owned about 63 million shares of Microsoft
in 2000, or their up front benefit would be about 189 Million Dollars.
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- Well, the government thanks you Mr. Gates, and also so
does the American public based on your example of not hoarding surpluses
shown.
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- Who knows, maybe we should make our local governments
following Mr. Gates example go one step further and consolidate their surplus
revenues, then administratively modify government to make it self sufficient
without any taxation by following the pension fund principle through the
use of a TRF (Tax Retirement Fund) of meeting the annual budgets, and then
maybe We The People may just get a dividend yield on top of no taxation.
The Future starts with what we make happen today!
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- Yours Truly,
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- Walter Burien www.CAFR1.com
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- Microsoft to Pay Stockholders Special
One-Time Dividend of 32 Billion Dollars
Company Founder Bill Gates to Get $3.3 Billion Payout
By GARY RIVLIN
The New York Times
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- AP - Microsoft Chairman Bill Gates (July 21) - Microsoft,
with more than $50 billion on hand, announced yesterday that it would bestow
on its shareholders a special one-time dividend of $3 a share, a payout
worth $32 billion.
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- Although other companies have paid special dividends
in the past, the size of Microsoft's payout is far and away the largest
cash grant in corporate history.
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- Bill Gates, the company's chairman and largest shareholder,
will receive $3.3 billion of that one-time dividend. Mr. Gates, already
one of the world's richest men, will also see an extra $180 million a year
from an increase in the quarterly dividends, also announced yesterday.
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- Mr. Gates pledged to give all of the one-time dividend
to the Bill and Melinda Gates Foundation, which focuses on global health
and education issues. The contribution will increase the size of the foundation's
assets by 11 percent, to $30 billion, making it roughly three times the
size of the next largest foundation in the United States.
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- In addition to the special dividend, Microsoft said it
would double its quarterly dividend to 8 cents a share, a move that translates
into an additional $3.5 billion a year paid to shareholders.
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- The company also announced that it would buy back as
much as $30 billion of its own stock over the next four years.
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- "The magnitude of the action being taken here is
breathtaking," said Rick G. Sherlund, an analyst with Goldman, Sachs.
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- A large cash distribution to shareholders had been expected,
according to Wall Street analysts, given investor pressures. Microsoft
shares soared in the 1990's, but have been treading water in recent years
as the revenue growth has slowed.
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- At the same time, there has been mounting pressure on
the company to do something about its mounting hoard of cash, which has
ballooned to $56 billion. The $32 billion payout, which will be paid in
December, will leave the company with more than $20 billion on hand.
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- "This has been a low- to medium-grade issue for
at least a year now, and a high-grade issue in the last couple of months,"
said Charles J. di Bona, an analyst with Sanford C. Bernstein & Company.
"Most investors would ask what took so long."
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- Microsoft generates roughly $1 billion in extra cash
each month. "I don't know any company out there that generates that
kind of excess cash," Mr. di Bona said.
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- Fifteen months ago, Microsoft announced that it would
pay a quarterly dividend, a rare decision by a technology company. That
decision was cast as tacit acknowledgement that Microsoft was making the
transition from hot stock to a more steady, investor-friendly blue-chip
stock.
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- The announcement that the company would raise its quarterly
dividend "puts us on course to be one of the largest dividend payers
in any industry," said John Connors, Microsoft's chief financial officer.
According to Standard & Poor's, the move will make Microsoft the 10th-largest
dividend payer in the S.& P. 500. "When you're generating cash
at that pace, you have to keep distributing it out," Mr. di Bona said.
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- The company currently invests its excess cash in a variety
of investment vehicles, from bonds to mortgage-backed securities and holdings
in individual stocks, Mr. Connors said. The company has earned roughly
7 percent a year over the last several years on its surplus cash.
-
- Analysts had expected Microsoft to announce an aggressive
stock buyback plan and to increase its quarterly dividend payment. The
surprise in yesterday's announcement was that the company was spending
over half its cash on hand in a one-time giveback, which could even give
a modest boost to the economy.
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- "The story here isn't that they're doing something
about all that money they have," Mr. Sherlund said. "It's that
they're being big and bold in how they're choosing to spend it."
-
- Microsoft announced its plans after the close of the
markets. Shares of Microsoft rose 37 cents, to $28.32, at the close of
the market. In after-hours trading, shares spiked more than 5 percent,
to $29.91.
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- The one-time cash dividend, Mr. Sherlund said, provides
"immediate gratification" for shareholders who have been restless
over a stock price that has barely budged in the last couple of years,
despite a modest rebound in technology stocks. At the same time, he noted,
the company leaves itself "with a sizable war chest moving forward."
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- "Most companies hold debt," Mr. Sherlund said.
"This is a company with all this excess cash. This in no way inhibits
its future growth opportunity."
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- But because of its recent antitrust troubles, the company
is limited in its ability to spend on acquisitions because of heightened
scrutiny from the government.
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- Still, Steven A. Ballmer, Microsoft's chief executive,
was bullish about growth in a conference call with analysts and reporters.
"As I look out over the next several years," Mr. Ballmer said,
"I'm confident we have some of the greatest dollar growth prospects
of any company in the world. No doubt about it. Period." Mr. Ballmer
stands to receive $1.2 billion in the one-time dividend.
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- Microsoft officials said the motivation for the announcement
was the resolution of lawsuits and legal challenges against the company,
many involving antitrust claims in both the United States and abroad, rather
than pressures from investors.
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- "Over the past two years or so, we've been focused
on resolving our legal issues from the past and creating stronger relationships
within the industry," said Bradford L. Smith, the company's general
counsel. On June 30, a federal appeals court handed Microsoft a convincing
victory in ending its domestic antitrust problems, upholding the settlement
the company reached with the government two years ago.
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- The company has also resolved three-quarters of the state
class-action suits filed, Mr. Smith said. The company's appeal of a $603
million fine the European Commission imposed in March is still pending,
"but at least we have a better sense of the known risk," Mr.
Connors said.
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- In recent months, the company has also resolved several
high-profile legal disputes with competitors, including Sun Microsystems,
a settlement that cost Microsoft nearly $2 billion.
-
- "We had committed to investors that once we had
resolved these issues, we'd announce our plans," Mr. Connors said.
-
- The company decided to make its announcement yesterday
rather than waiting until tomorrow, when the company will issue its quarterly
earnings results.
-
- "There's already enough news and important analysis
that analysts and investors are required to do" without this much-anticipated
announcement, Mr. Connors said.
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- The plan, which the Microsoft board approved Tuesday
morning, is subject to shareholder approval at the annual meeting in November.
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- "We had a lot of different scenarios we looked at,"
Mr. Connors said. "We decided this scenario is one that met the interests
and inputs of all the different constituencies.
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- "I don't think you're going to see much opposition
when you're talking about a $3-a-share one-time dividend," Mr. Sherlund
said. "That works out to a 10 percent premium given where the stock
price has been."
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- Mr. Connors said: "The special dividend satisfied
the input we received from shareholders who wanted the cash. The buyback
met the input of those who thought a large-scale buyback was the appropriate
action for building value." As for that quarterly dividend increase,
Mr. Connors said that was what "investors told us they wanted."
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- And under the tax law enacted last year, investors will
be able to keep even more of their dividends in their pockets. The law
cut the maximum tax rate on dividends to 15 percent, down from the maximum
35 percent that stockholders would pay on ordinary income.
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- The stock buyback will mean fewer shares outstanding,
which will increase the earnings per share - a number that is all important
on Wall Street.
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- "This is all things to all people," said Mr.
di Bona, who added that he was by and large impressed with the company's
three-part plan.
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- "Bearish people will say the increase in the dividend
is an admission that the company has matured and sees limited growth in
the future," Mr. di Bona said. "I vehemently disagree. I think
all this reflects is recognition that Microsoft has created a business
model that create more cash than anything we've ever seen before."
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- ###
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- NOTE FROM WJB: I will correct Mr. di Bona statement above.
US Local Governments as a combined intertwined corporation "has created
a business model that create more cash than anything we've ever seen before."
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