This document summarizes a case study about Microsoft's dividend policy. It lists the team members working on the case and provides an agenda covering the introduction, case background, dividend policy, types of cash dividends, types of share repurchases, advantages of dividends, and reasons for taking on debt. Key points include that Microsoft did not pay dividends for 28 years but began doing so in 2003 through cash dividends and share repurchases, financing these with $6 billion in new debt to avoid repatriation taxes.

2. Our team members are…..
Abhilash Kumar
Akansha
Anupam kaul
Ganeshkrishna Kuldeepak Prabhu
Gaurav Kumar Thakur
Kanik Vijay
Isha Mishra

3. Agenda
Introduction
About the case
Dividend policy
Cash dividends
Types of repurchase
Advantages of dividend
Reason for taking debt

4. Introduction
Microsoft is an multinational computer
technology corporation.
The history of Microsoft began on April 4,
1957, when it was founded by Bill Gates and
Paul Allen in Albuquerque.
In 1980, Microsoft formed a partnership with
IBM that allowed them to bundle Microsoft’s
operating system with IBM computers, paying
Microsoft a royalty for every sale.

5. In the year 1986 the company went public to
raise $61 million capital.
In the year 1996 Microsoft interred into
internet segment.

6. About case
This case is all about Dividend Policy used by
Microsoft corporation.
Microsoft has not paid divined for 28 years. It
believes in ploughing back money into its
research and development.
In year 2003 the company declared its first
ever dividend for common stock.

7. Microsoft continued its return to the
shareholders both in the form of cash
dividends and share repurchases.
 The management of the company decided to
raise a debt of $6 billion in order to pay for the
dividend and the share buyback.

8. Dividend policy
There are four different ways to give dividend to its
shareholders….
a) Cash dividend
b) Bonus share
c) Share split
d) Shares buyback
Between year 2003 to 2010 the company paid
dividends to its shareholders in the form of cash
dividend and buyback of shares.

10. Cash dividend
They provide the cash to their shareholders
from their…..
a) Reserve and surplus
b) Other accounting sources(debt).
Here is some detail about cash dividend of
Microsoft……

12. Types of repurchases
1) Open market operation: Company can buyback
its share through authorised broker in open
market.
2) Tender offer: In this company will specify the
purchase price, total amount and period within
which shares will be bought back.
3) Dutch auction: In this Auctioneer begins with a
high asking price which is lowered until some
participant is willing the auctioneers price is
reached. The winning participant pays the last
announce price.

13. 4) Targeted price: A target company attempts to
stop a hostile takeover by buying back its own
stock and shares, often pays a premium above
the market price.
5) Greenmail: A premium paid to a rider to get
him/her to terminate a takeover attempt.

15. Advantages of Dividends
1) Return to surplus cash to shareholders.
2) Tax savings by companies.
3) Enhancing shareholders value.

16. Reason for taking debt in spite of
having surplus cash
1) To provide dividend to its shareholders
Microsoft went for debt because they did not
want to return the cash which has been
invested outside the US as it would have to
pay the tax.
2) The Federal Reserve move to soften the
interest rate made it attractive for the
companies with highest rating to raise the
debt at cheapest rate.

17. CONCLUSION……