Microsoft's Dividend Policy

            
 
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Case Details:

Case Code : FINA011
Case Length : 16 Pages
Period : 1975 - 2004
Pub. Date : 2004
Teaching Note :Not Available
Organization : Microsoft Corporation
Industry : Information Technology (IT)
Countries : Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts

Background Note

Bill Gates (Gates) founded Microsoft (originally Micro-soft) in 1975 after dropping out of Harvard at the age of 19. Gates teamed up with high school friend Paul Allen (Allen) to sell a version of the programming language BASIC. While Gates was at Harvard, the pair wrote the language for Altair, the first commercial microcomputer...

Dividend Policy

Till 2002, Microsoft had not paid a dividend. Until its dividend announcement in 2003, Microsoft was the only corporation among the Dow 30 that had not paid a dividend. (See Exhibit: II)

Finance | Case Study in Management, Operations, Strategies, Finance, Case Studies

Although the payment announced in 2003, constituted a relatively small percentage of Microsoft's overall profits, the decision came as welcome news to some analysts...

The Road Ahead

Reactions to Microsoft's announcement were varied: One portfolio manager commented, “In my opinion that (one-time dividend) doesn't do anything for anybody. I would rather have seen them buy back more shares more quickly than do the special dividend”...

Exhibits

Exhibit I: Microsoft Key Numbers
Exhibit II: Microsoft – Dividend History
Exhibit III: Microsoft – Dividend FAQ
Exhibit IV: Microsoft's Biggest Shareholders (Report date as of 6/30/04)

Exhibit V: Dividend Yields of Few Technology Companies
Exhibit VI: Microsoft – Timeline of Acquisitions
Exhibit VII: Microsoft - Selected Financials
Exhibit VIII: Microsoft – Income Statement
Exhibit IX: Microsoft – Balance Sheet
Exhibit X: Dividends Paid By Few Technology Companies (As on August 2004)


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