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Teenage Death Boy

Microsoft's share price

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Well, recently I was taking a look into some of the business aspects of Microsoft, reading through all the news relating to the court cases, the monopoly threads in the lounge, all the M$ hater people etc and suddenly thought: I'm not really into business so could someone explain why the share price of the largest existing software company is still at around $25-$30. From the reports I read, it seems to be the same as it was in 1998. I don't really know much about businesses but after reading all the articles, none of which explain WHY it's still the same, I wondered if any one here could help?

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Well it might happen that the price was $25, then rose to $250. Then MS decided that each share would become 10 shares - if you have 13 shares they give you 117 so you now have 130. At the same time they become revalued to 1/10 of the price = $25.

This is common in the UK, has a proper name too. Or maybe the .Com slump hit them and they're just recovering?

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Microsoft had a 2-for-1 split about a year ago, as I recall, and it was trading at about $60 at the time.

I think all of the antitrust lawsuits, plus the fact that the desktop computer industry as a whole went through a slump, has kept the price down.

[Edit: That's about $60 pre-split; $30 after]

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Share splits and the fact that Microsoft sits on a huge pile of cash it has begun distributing as dividends keeps the share price stable and pretty high compared to the SP500 index.

-cb

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They're called splits, and they're used to lower the price of stocks to make them more affordable, and encourage smaller investors.

Good article on them, with, interestingly enough, what MS's stock price would be without splits.

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Hmm, googling seems to show the term is simply "stock split".

MSFTs Stock Split FAQ mentions they have had 9 stock splits in their history, but a lot of other articles seem to make no mention of it:

Quote:
The company was also queried about its stock price, which has hovered in the same range despite the company's growth in profits and the plans for the cash payout, stock buyback and boosted dividend. On Tuesday morning PT, the price stood at $29.51.
"Our stock has been flat for four years," said one shareholder, noting that the enthusiasm and energy of executives has not translated into stock growth.


Source: ZDnet News

Though I am guessing its the same thing, they just didn't mention the stock splits being the reason?

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Look at the balance sheet. Close to half the assets are CASH! And cash doesn't grow at the same rate as other parts of the company. In fact, cash doesn't grow at all once you factor in inflation and a comparable average zero-risk interest rate!

-cb

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