Microsoft Corp. (MSFT), legendary for its massive cash reserves, had announced that it might prefer to leverage on external financing to fund the $44.6 billion acquisition of Yahoo, Inc. (YHOO), according to an Information Week article today. The article also stated that as of the end of its most recent quarter, Microsoft has about $21.1 billion of cash and equivalents. According to other sources, the deal would be a roughly 50/50 split between cash and Microsoft stock, which means that absent of external funding, Microsoft would have to use up all its available cash to consummate this deal.
According to an article in the Seattle PI last year, Microsoft had as much as $64.4 billion in cash and equivalents in Q3 2004 (see image from Seattle PI below). In Q4 2004, the company paid out a one-time special dividend totalling about $32 billion, which reduced the stockpile to shy of $35 billion. The company also doubled the dividend to about $0.32 a share to further "share the wealth". In Q3 2005, the cash level grew back to about $40 billion, but the cash situation had been downhill since then. As seen from the chart below, by Q4 2006, the comapny`s cash reserves dropped below $30 billion, and in a scant year, it was down almost another $10 billion to $21.1 billion.
So where did all the cash go?
...
Read Full Article >>