July 23, 2004

How Microsoft Can Keep Growing

Microsoft's announcement on July 20 that it will distribute a large chunk of its cash hoard to shareholders makes it look like the software giant has finally accepted that it's a mature company. After all, it will spend an astonishing $75 billion over the next four years on dividends and stock buybacks -- instead of investing that money in new growth opportunities. Investors will be able to count on Microsoft (MSFT) as a steady profit earner and source of dividend income -- much like a regulated monopoly.

But just because Microsoft is handing a load of cash to stockholders doesn't mean it won't have plenty of dough to invest in its future. After it makes a onetime special dividend payment of $32 billion in December, it will still have more than $20 billion in cash. And thanks to its profitable Windows and Office monopolies, it's racking up $1 billion in cash every month.

Link: TheIndyChannel.com

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