Microsoft shares the wealth :: essays research papers

Why MICROSOFT decided to pay dividends in 2003?1.1 The company might see itself stepping in Maturity Stage -Harder to grow, r dismantleue growth slide downInvestors buy stock for one of two reasons either it leave alone grow in esteem or pay a dividend. If a company stops growing, stockholders testament demand a dividend. If they dont get it, they will sell their stock. In the history, Microsoft enjoyed incredible growth, so dividend was unnecessary. Recent Microsoft dividends may tell us that the company has ended its growth phase and is now a mature company. -More competitions from Open source like Linux and distribute officeWindows and Office continue to supply most of Microsofts profit. But that profit is being squeezed as to a greater extent 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 Microsoft away from the country). T he company has been forced to slash worths for near key customers to avoid large 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 say most investors will also likely use the extra cash 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 form _or_ system of government from Microsoft itselfEven if Microsoft use Optimal Distribution Policy in which there is a balance between cash dividends (well-nigh 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, however investors still ho pe for the ascent 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 / Disagree with the decision, explain why?AGREE becauseIAs the company is reaching the maturity stage, dividend payout is another option instead of company growth onlyI30 billion USD buy back will contribute to keep the stock value up and make investors happy