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Microsoft Has No Plan to Pay Dividends | |
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| Time: 15:10 EST/20:10 GMT | News Source: Reuters | Posted By: Byron Hinson | ||
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Microsoft Corp.'s executives said on Tuesday the company had no plans to pay dividends from its $40.5 billion in cash holdings as long as the software giant faced the threat of further litigation. At its annual shareholder's meeting in Bellevue, Washington, stakeholders in the world's largest company had a pointed question for executives: Will Microsoft, which has never paid dividends since going public in 1986, start paying out? | ||
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| #1 By 135 (209.180.28.6) at 11/5/2002 4:23:52 PM |
|
On the other hand, if a stock is no longer performing in the market... yet the company is pulling in fantastic amounts of cash, I do believe the company owes a debt to it's shareholders that should be paid in the form of dividends.
Either that, or they use the cash to buy back outstanding shares in order to pull the stock price upwards. As an investor I would not be happy in my money sitting there earning nothing for me. |
| #2 By 1845 (12.254.162.111) at 11/5/2002 8:48:39 PM |
| Are you insinuating that is what is happening with Microsoft's stock? |
| #3 By 1845 (12.254.162.111) at 11/5/2002 9:28:40 PM |
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That is to say, blue, are you saying that Microsoft should either issue dividends or do buybacks, because their stock is underperforming?
In my eyes, the investors knew what they were in for when they bought the stock. An informed purchaser of Microsoft stock would have been well aware that the company issued stock options which if excersized would dilute the share price and the the company did not issue dividends. Further, the company can't gaurantee a given growth rate. That is the risk that the investor accepts. If the investor isn't prepared to accept that risk, then the investor shouldn't buy Microsoft stock. |
| #4 By 135 (208.50.201.48) at 11/5/2002 10:31:36 PM |
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BobSmith - If there is no money to be made on MSFT then the investors are going to sell it, further driving the price down.
Microsoft is now a bluechip, it's time they started to act like one. I give them another year of flat stock growth and they'll rethink their position. |
| #5 By 135 (208.50.201.48) at 11/5/2002 11:48:59 PM |
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JWM - "I heard that 90% of Office users only use 10% of its features."
Ohh, you were doing so well too. Now you have to meet my challenge. List the 10% of features. |
| #6 By 3653 (65.190.70.73) at 11/6/2002 12:02:52 AM |
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I don't want Microsoft to issue dividends now. Personally speaking, I don't need the extra tax burden. Wait 30 years, and start paying dividends when I'm retired. Thats the best case scenario for a young investor. This post was edited by mooresa56 on Wednesday, November 06, 2002 at 00:25. |
| #7 By 1845 (12.254.162.111) at 11/6/2002 2:45:38 AM |
| I use smart tags every single time i use any app in Office XP. Smart tags alone make the upgrade worthwhile. |
| #8 By 135 (208.50.201.48) at 11/6/2002 2:53:50 AM |
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JWM - I never use the yellow high-lighter feature, so it must be a useless feature. It doesn't matter to me whether or not you use it, I shouldn't have to pay for it! Right?
Seriously... I've heard that argument off and on for about the past 15 years. It's never had much credibility. But you are right that Microsoft is their own biggest competitor. Personally I very much prefer Office XP over Office 97, but I can't think of much else one would need to add to it. To me it looks like the end of the line for that product. |
| #9 By 1845 (12.254.162.111) at 11/6/2002 4:07:41 AM |
| I understand what that means, and I'd love it if the price structure worked that way. |
| #10 By 1845 (12.254.162.111) at 11/6/2002 4:43:29 AM |
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I guess he doesn't realize that if stocks go up (and you've held them for a certain time, i think 2 years) you are responsible for the capital gains tax. This post was edited by BobSmith on Wednesday, November 06, 2002 at 04:43. |
| #11 By 1845 (12.254.162.111) at 11/6/2002 5:16:50 AM |
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If your stock gains in value, you pay a tax. If it drops, you take a capital loss, which is a deduction. The only way you'd end up paying when your stock tanked is if it tanked after the end of the year you are paying for. So if it is 2003 and you are paying for gains in 2002, it is possible that by the time you pay 2002 taxes, the stock dropped. In 2004, though, when you pay for 2003, you'll get a deduction. Roughly speaking it evens out.
The problem as I see it, is that you have to pay taxes out of pocket when your stock goes up even if you don't sell it if you've held it for long enough. If the stock does't yield dividends, then you have to pull the money from somewhere else. That can be a problem. |
| #12 By 135 (209.180.28.6) at 11/6/2002 10:44:37 AM |
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bonoriffic - True. The only time you have to pay taxes on ownership of a stock is when you excercise stock options.
As far as dividends go... I don't understand why you wouldn't want money. My stock holdings are all in retirement funds, so the taxes would be deferred. |
| #13 By 1845 (12.254.162.111) at 11/6/2002 1:20:22 PM |
| bonor, i wasn't chatting with my accountant (since i don't have one), i read that directly from the IRS's website before I bought stock back in June. In about a 100 hours I could probably find it again if you want to read it for yourself. |
| #14 By 3339 (65.198.47.10) at 11/6/2002 8:41:45 PM |
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Bob, the confusion is that CGT can be as high as normal income tax if you hold it for less than a year (depends on time period, tax bracket, and some other factors). As long as you hold it, you are good.
What will you pay in capital gains tax? It depends on how long you hold your investments. If you hold your stock and other investments for more than a year, your maximum tax rate on any resulting gain will be 10% if you're in the 15% federal tax bracket or 20% if you're in any bracket higher than 15%. Even better: if you've owned a security for more than five years and you're in the 15% tax bracket, your gain is taxed at only 8%! It sure makes sense to hold onto your investments for at least one year; otherwise your gains will be taxed at your ordinary income tax rate, which can be as much as 39.1%. |
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