On Apr 26, 10:50 pm, Roy Schestowitz <newsgro...@xxxxxxxxxxxxxxx>
wrote:
> __/ [ Linuxiac ] on Friday 27 April 2007 01:15 \__
>
> > Wow, this bypassed all the pallets of returned Vista computers on the
> > docks of the customer service sections at Best Buy, CompUSA, Sam's,
> > Costco, etc.
>
> > But, that was the first and second week of release. Now, it has slowed
> > to nothing, because nobody's buying.
>
> It looks very encouraging on the surface, but the money is coming from
> /somewhere/. The company has lost over half of its cash reserves in just 2
> years.
>
> Software Notebook: Microsoft's cash pile isn't what it used to be
>
> ,----[ Quote ]
> | But Microsoft has taken a series of steps to reduce its cash
> | balance. Specifically, by Microsoft's count, the company has
> | paid out nearly $100 billion through dividends and repurchasing
> | its own stock in the past five years.
> `----
>
> http://seattlepi.nwsource.com/business/309852_software02.html
>
> Riddle me this, Larry...
I hope you're not looking for a simple answer because when you're
talking about multiple tens of billions of dollars there isn't going
to be on. Let's use your article as the reference. Looking at the
chart you can see a huge drop in cash that took place in Q4 of 2004.
This is when MSFT inacted a stock dividend and payed a special one-
time $3/share dividend to investors. (Don't go off on dividends being
bad because they're not. IBM pays a dividend as does Exxon-Mobil,
General Electric, etc.) There were over 10-billion shares outstanding
at the time which means they payed out over $30 billion dollars to
shareholders. Hence, the cash reserve fell by $30-something billion.
Since then they've been paying a normal quarterly dividend of 10-cents
per share which means they are no longer stock-piling money the way
they once were. Factor out the dividend and cash would grow by an
additional $4 billion/year.
So in the time since Q4-2004 cash dropped by about $6 billion. If it
weren't for the quarterly dividend it would have increased by a few
billion. They also spent 10's of billions in cash for stock-buyback
program and acquisitions.
The thing to keep in mind is that all of this is and was completely
voluntary. Nobody forced them to pay out $3/share to every stock
holder or to pay the current quarterly dividend or to buy billions of
its own stock on the open market. They can stop this at any time and
as we see from this quarters financials... at the current rate they
will once again start growing their cash reserves by over $10 billion
dollars/year.
The Seattle Times story is an interesting in the same way that
statistics can be manipulated to portray whatever outcome you desire.
In this case, look at just the cash numbers in order to write the
article the author wants to write. But the article focuses on one
particular aspect (available cash) instead of looking at the entire
picture. Bad analogy... someone starts with $100k in the bank. They
put down a $50k downpayment to buy a home and still manages to save
another $10k. If one were to only look at "cash reserves" (like the
article did) the individual now only has $60k so their cash reserves
are plummeting by 40%.
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