Microsoft says it plans to return about £40.5bn to its
shareholders over the next four years, including a one-off dividend
of £1.60 per share.
The company's board of directors has also approved a regular
quarterly dividend of 4p per share and a plan to buy back up to
£8.6bn of Microsoft stock between now and 2008, company officials
said.
The announcement ends growing speculation over how and when
Microsoft would begin to distribute its vast fortune, amounting to
about £30bn in cash and short-term investments at the end of its
last quarter.
It said the move was motivated, in part, by confidence in its
ability to increase revenue and profit through innovation and new
products. But the timing may also have been driven by its success
in settling numerous lawsuits, reducing the likelihood of
substantial litigation costs in the future.
Microsoft chairman Bill Gates called the move "a pretty exciting
milestone". He said in a separate statement that he would donate
his proceeds from the one-time dividend, worth about £1.6bn, to the
Bill & Melinda Gates Foundation.
Microsoft has faced pressure from shareholders to repay some of
the profits it has made, especially since its share price has
remained relatively constant over the past few years. Ahead of the
news, its shares on the Nasdaq (MSFT) closed at £15.35 on Tuesday,
up 1.3% on the day. The stock leapt more than 5% in after-hours
trading.
The company cited several developments that led it to believe
the worst of its legal woes are behind it. In April it agreed to
pay Sun Microsystems more than £1bn in a deal that ended Sun's
antitrust lawsuit against the company. And last year it paid £406m
to settle antitrust claims by America Online's Netscape
division.
More recently, a US appeals court approved Microsoft's
settlement with the US government in its long-running antitrust
case. And the European Commission's case against Microsoft has
reached the appeals stage, which means the penalties in that case
are unlikely to escalate beyond what has already been recommended,
said Brad Smith, Microsoft's general counsel.
The payback plan will not reduce Microsoft's spending on
research and development, Gates said. He enthused about several
upcoming products, including new versions of the company's SQL
Server database and Visual Studio development tools, both of which
are due for release next year after delays. Its online properties,
including the MSN search engine, will be improved "in a pretty
dramatic way," he said.
The one-off dividend, to be paid on 2 December, depends on
shareholders approving an amendment to Microsoft's employee stock
plan. When a company issues such a large, one-off payment, its
shares typically decline in value by about the same amount. The
proposed amendment is designed to ensure that Microsoft's workers
are not "inadvertently disadvantaged by this process", the company
said.
James Niccolai writes for IDG News Service