SEATTLE – Microsoft Corp. plans to pay out a substantial chunk of its cash hoard directly to shareholders through a combination of dividends and stock buybacks totaling up to $75 billion over four years, the software maker said Tuesday, ending speculation about what it planned to do with its billions in cash reserves.
The Redmond-based company said it would pay a one-time dividend of $3 per share and would double its annual dividend to 32 cents per share. Microsoft, which has amassed cash holdings of at least $56 billion, also said it plans to buy back up to $30 billion of the company’s stock over the next four years.
The buyback and dividends will not affect the company’s spending on research and development, executives said.
“We will continue to make major investments across all our businesses and maintain our position as a leading innovator in the industry, but we can now also provide up to $75 billion in total value to shareholders over the next four years,” chief executive Steve Ballmer said.
Microsoft announced plans for its cash reserves after the close of markets. Shares of Microsoft closed up 37 cents at $28.32. In after-hours trading they surged nearly 6 percent to $29.91.
Curt Anderson, Microsoft’s senior director of investor relations, said the plan is subject to shareholder approval of an amendment that would prevent employees who hold stock options or stock awards from being put at a disadvantage by the one-time payout.
The special one-time dividend is to be paid out Dec. 2 to shareholders of record on Nov. 17.
The company will ask shareholders to approve a plan to adjust its employee stock compensation to account for the big payout at its annual shareholders meeting in November.
Anderson said the company had not yet worked out the details of how the massive cash buyback would work.