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Last Updated: Friday, 12 September, 2003, 15:45 GMT 16:45 UK
Microsoft doubles dividend
Software giant Microsoft has announced that it will double its dividend payment to shareholders.

The decision comes after the payment of Microsoft's first ever dividend announced in January, on the back of pressure from investors to distribute a cash pile now approaching $50bn.

The new dividend will cost the company about $1.73bn, based on about 10.8 billion outstanding shares.

The dividend, to be paid on 7 November, will amount to 16 cents a share for the fiscal year ending in June.

The dividend awarded in January was eight cents a share.

"It's a step in the right direction, but we all know that with nearly $13bn a year in free cash flow, the company can afford a lot more," said AG Edwards & Sons analyst Jason Kraft.

Coming of age

The decision to start paying dividends represents Microsoft's transition from an archetypal "growth" company, which reinvests profits in development, to one which pays them to shareholders.

Most technology firms in the United States have never paid dividends.

As of 30 June, Microsoft laid claim to a cash pile of $49bn, despite a weak economy in the US.

Consequently, some shareholders have been calling for a larger dividend, perhaps as high as 50 cents a share.

There has also been much speculation as to whether the cash would be used for an acquisition or a major investment.

Microsoft shares were up 7 cents at $27.91 in late morning trade on the Nasdaq market.

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