How to spend $50 billion
CNN | at | by Mike
Microsoft despite its ailing stock price, ended its fiscal year in June with $38 billion in cold hard cash, plus another $14 billion in equity holdings. That's more than the value of all of AOL Time Warner, which, with a market cap of $47 billion. The problem is what to do with the cash. Some investors would love Microsoft to return the money to them in the form of a dividend. But as Michael Mauboussin, an analyst with Credit Suisse First Boston, argued in an excellent report this week, two shareholders who'd hate to see a dividend are Bill Gates and Steve Ballmer. Because dividends are taxed as ordinary income, Gates and Ballmer would have to pay taxes at a rate of 38.6 percent, compared with 20 percent for long-term capital gains.