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Microsoft's One Time Dividend

"Finally, in July 2004 Microsoft announced a plan to return cash to stockholders, by paying a special one-time $32 billion dividend in December 2004 . . . . Microsoft also doubled its regular annual dividend to $3.50 per share. Further, it announced that it would spend another $30 billion over the next four years buying treasury stock. These actions will help to deplete some of its massive cash horde, but as you will see in this chapter, for a cash-generating machine like Microsoft, the company will be anything but cash-starved."

a) Do you agree with the steps Microsoft took to use a large portion of its cash?

b) What impact do you think it had on its stock price?

Solution Preview

Thank you for posting today. It is my goal to provide ideas, definitions, research help, and instructions on how you, the student, should approach the assignment.

I think it's safe to say that hindsight is always 20/20. I am going to approach this question by answering part B first, giving you some general things ...

Solution Summary

The solution responds directly to each of the questions posed by the student about the Microsoft dividend.