Friday, April 23, 2010

Microsoft -- Big Cash -- Small Dividend

Microsoft (MSFT) the technology company everybody used to hate released improved results and watched its stock bounce off the 52 week high. The press release was disclosure challenged as it contained next to no substantive management information. When you read the conference call transcript you become a lot smarter about the company. But not smart enough. Analysts asked a few product related questions but really did not turn up anything new.

Microsoft has over 10% of its market cap in cash and equivalents. The dividend yield is under 2%. Who cares if Appleā€™s (AAPL) market cap exceeds Microsoft. At this stage in the game Microsoft has decided not to send a dividend signal. Its either growth or value. At 1.7% yield and the stock bouncing off the 52 week high it has become neither.

Sure Windows 7 is growing nicely and Office 2010 should do well. But what do the shareholders get? And when will it be?

Disclosure: No position in this stock