$40 billion, but nothing for the shareholders
Dan Gillmor posts about Microsoft's latest financials, pointing out that the company is now sitting on a $40 billion cash hoard. What most companies do when they are making as much money as Microsoft does these days is distribute some of those profits to shareholders in the form of dividends. But like most technology companies, Microsoft has never much believed in dividends. (Technology companies typically see themselves as "growth" companies that need to reinvest all their profits in the business.)
Gillmor says this is because Gates and other key Microsoft owners don't want to deal with the tax implications of dividends given the size of their holdings. Maybe -- I can't say I'm an expert on tax management for billionaires, never having had such worries.
But I also think the Microsoft hoarding instinct is a weird function of the company's ingrained, perpetual paranoia. As numerous insider accounts and much testimony at the antritrust trial have shown, Microsoft's culture imbues employees with the sense that disaster is always around the corner -- if they make one misstep, the competition will eat their lunch. This paranoia is a sort of management tool, to be sure, but it's also an attitude that emanates directly from the company's leadership. Microsoft is hanging on to its $40 billion because, hey, who knows how much money it might need when the next big seismic shift in the technological landscape threatens to unseat its monopoly? Think of that $40 billion as one big Windows replacement fund.
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