Reuters Summit - Microsoft CFO sees tech mergers on rise

NEW YORK Fri May 14, 2010 10:25pm IST

Microsoft CFO Peter Klein takes questions during a Reuters Global Technology Summit  in New York May 14, 2010. REUTERS/Jessica Rinaldi

Microsoft CFO Peter Klein takes questions during a Reuters Global Technology Summit in New York May 14, 2010.

Credit: Reuters/Jessica Rinaldi

Related Topics

NEW YORK (Reuters) - More technology deals are on the way as the industry recovers from the recession, but Microsoft Corp is not poised to make a big deal soon, its chief financial officer told Reuters on Friday.

Potential acquisition targets felt that buyers weren't willing to pay high enough premiums during the market downturn, but that is starting to change, said Microsoft CFO Peter Klein at the Reuters Global Technology Summit in New York.

"The stock market has clearly rebounded, so you sort of feel like you're back to equilibrium," said Klein, who took over as CFO of the world's largest software company last November.

Microsoft, which has $39.7 billion in cash and short-term investments on its balance sheet, makes dozens of smaller deals each year, mostly under $250 million. But Klein said the company is unlikely to do a "mega-acquisition," two years after its failed $47.5 billion bid to buy Yahoo Inc.

"They are very hard to do," said Klein.

Tech deals are on the rise this year, with Hewlett-Packard Coslated to buy Palm Inc, and Germany's SAP agreeing to buy database software maker Sybase Inc for $5.8 billion.

Microsoft isn't interested in launching a counter offer for Sybase, said Klein, nor is it looking to buy SAP -- the world's top maker of business management software for large corporations -- after looking at such a deal about five years ago.

Microsoft constantly reviews potential deals in each of its five key business areas, said Klein.

"We try and think ahead, so that when things happen there is not this big fire drill -- 'Oh my God, somebody bought something.'"

Microsoft, which handed more than $30 billion to shareholders in a special dividend in 2004, has no plans to repeat such a payout.

"There is nothing under consideration now that is different than what we've been doing in the last several years," said Klein, asked about a special dividend.

Microsoft started paying an annual dividend in 2003 and moved to quarterly dividends the year after, as it looked to channel more money back to shareholders as growth rates moderated.

Taxes on dividends are set to return to about 40 percent next year as tax cuts enacted by the Bush administration expire.

"We want to get their (investors') feedback on dividends, buybacks, and how tax policy may effect how they feel about that," said Klein. "Many of our holders are tax-free, so that tax issue may not effect them enough, but it's absolutely something we're thinking about."

(For other news from the Reuters Global Technology Summit, click here)

(Additional reporting by Jim Finkle and Paul Thomasch, Editing by Tiffany Wu and Derek Caney)

(For more business news on Reuters Money visit www.reutersmoney.in)

FILED UNDER:

Reuters Showcase

Legal Complaints

Legal Complaints

Government's payday from telecoms auction could be delayed  Full Article 

Running State Banks

Running State Banks

India signals private-sector bosses could run state-owned banks  Full Article 

India Forecast Raised

India Forecast Raised

S&P raises India's GDP forecasts, says it's a bright spot in Asia  Full Article 

StanChart CEO

StanChart CEO

StanChart picks ex-JPMorgan exec Winters as CEO to replace Sands  Full Article 

Wockhardt Plant

Wockhardt Plant

Wockhardt says FDA raises new concerns about Waluj plant  Full Article 

Banking Sector

Banking Sector

State-owned banks' capital needs may be higher - RBI deputy  Full Article 

Shares Sale

Shares Sale

Bharti Airtel says raised $310 mln through share sale in tower unit  Full Article 

Inflation Target

Inflation Target

India should meet RBI inflation target by Jan 2016 - RBI deputy  Full Article 

International Exchange

International Exchange

NSE plans to set up international exchange in Gujarat  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage