Microsoft shares the wealth :: essays research papers

Why MICROSOFT determined to pay dividends in 2003?1.1 The company might see itself stepping in maturity date Stage -Harder to grow, revenue growth slide downInvestors buy bank line for one of two reasons either it leave behind grow in hold dear or pay a dividend. If a company stops growing, conductholders leave behind demand a dividend. If they dont get it, they give sell their origination. In the history, Microsoft enjoyed astounding growth, so dividend was unnecessary. Recent Microsoft dividends may tell us that the company has terminate its growth phase and is now a mature company. -More competitions from Open reservoir like Linux and informal officeWindows and Office continue to supply close to of Microsofts profit. But that profit is being squeezed as more and more companies are using Linux servers and even Linux desktops. For example, China is developing its own OS (Operating System) and planning to use for the whole country (their intention is to keep Microso ft external from the country). The company has been forced to slash prices for some key customers to avoid largish scale defections, which leads to difficulties to locate the right price because high price may reduce the market share, but low price to compete against open source may reduce its core revenue.1.2 Expecting the stock price will increase after dividends paid - Investors can buy more sharesExperts assure most investors will also likely use the extra immediate payment to buy more shares. And theres no guarantee the investors will spend money in the economy. Indeed, most investors will probably reinvest it or keep it in a cash account at their brokerage.- Stocks buyback policy from Microsoft itselfEven if Microsoft use Optimal Distribution Policy in which there is a balance between cash dividends (around 32 billions USD) and stock repurchase (around 30 billions USD). This may affect the decrease in stock price a little while after the announcement of dividend payout, hitherto investors still hope for the rising price in the future.1.3 The company reserves the great amount of cash liquidityAs we can see from the article that Microsoft can pay around 32 billions USD for cash dividend, 30 billions USD for stocks repurchase and another 3 billions USD, for the goodness, to Bill & Melinda Gates foundation.Agree / differ with the decision, explain why?AGREE becauseIAs the company is attain the maturity stage, dividend payout is another option instead of company growth exclusivelyI30 billion USD buy back will gift to keep the stock value up and make investors happy