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Microsoft's One Time Dividend

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"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?

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

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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 to think about, and ...

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