Microsoft will return cash to stockholders

Microsoft is paying a special dividend and buying back stock.
SEATTLE (AP) -- Bowing to pressure after years of enormous profits but a stagnating stock price, Microsoft Corp. is dipping into its substantial cash reserves with plans to return as much as $75 billion to shareholders through a combination of dividends and stock buybacks.
The software giant has amassed billions in recent years, most notably from sales of its two cash cows: the dominant Windows operating system and popular Office software. It generated $10.4 billion in cash during its 2003 fiscal year.
But its stock price has been little changed for almost three years. That has increased pressure on the company to do something with a cash pile that now totals at least $56 billion -- and is expected to continue to grow steadily.
Now that many of its legal troubles appear to have been resolved, the company said it finally felt free to spend part of its stockpile.
The Redmond-based company plans to pay a one-time dividend of $3 per share -- at a cost of $32 billion -- and will double its annual dividend to 32 cents per share. Microsoft began offering a dividend in March 2003. The company also said it plans to buy back as much as $30 billion of the company's stock over the next four years.
The payout suggests Microsoft has, at least for now, put off plans to use the money to make a major acquisition to punch up growth. Microsoft disclosed last month that it had initiated merger talks with German software maker SAP but called off the potentially costly deal after deciding it would be too complex.
Chairman Bill Gates said his share of the one-time payout, which amounts to about $3 billion, will be pledged to the Bill & amp; Melinda Gates Foundation, the billionaire's philanthropic organization.
What this means
The monumental payout will give shareholders a quick gain, and the buyback may help lift Microsoft's languishing share price. Microsoft stock, one of the nation's most widely held issues, has hovered between $23 and $30 since April 2002, despite steady profits.
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