Much debate on what to do with future revenues --- dividends, buybacks, re-investment etc.  There is a good article in Forbes, <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />4/9/07 edition, pg 66 – “The King of Cash”.  The article describes a large investment fund that has done well by focusing on companies that spend their cash on their shareholders, rather that letting it sit in the bank or squandering it on expansion projects ---- it was said that cash spent on empire building ends up hurting share price.  One example cited is Boston Scientific’s purchase of Guidant, wherein BS stock is down 35%. 

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It was further noted that the distinction between profits spent on shareholders, and profits spent on growth is clear when looking at Microsoft and Intel side by side.  It is stated that Microsoft has given up on the idea of being a growth company (and holds $28 billion in cash, after the special $3 divy in ’04); while Intel continues to re-invest in its business without getting a good return on those investments. 

I went ahead and took the liberty of comparing share price performance going back 3 years and adjusting for dividends and splits:  Microsoft is up 28%, Intel is down 27%.

[Oh, and Patriot Scientific is up 762%.]

Maybe a ‘one trick pony’ with a ‘printing press’ in the back office isn’t a bad thing!!!

Best