The Program for Financial Studies

Microsoft Corporation prepared its July 20, 2004 press release detailing its plan to pay out $75 billion over the next four years. Cassius King, a senior analyst in the Microsoft treasury department, pondered the imminent decision to 1) pay a one-time special dividend of $3.00 per share, for a total of $32 billion; 2) double the regular quarterly dividend from $0.04 to $0.08 per share, paying approximately $3.5 billion annually; and 3) repurchase up to $30 billion in MSFT shares over the next four years. In this case, students are asked to consider the effects such a major disbursement will have on the company, its shareholders, its employees, and its competitors.

Case id: 070302