Microsoft Splits Stock Two-For-One Action Makes Shares Easier For Small Investors To Buy

Microsoft Corp. on Tuesday announced a 2-for-1 stock split, just hours after a company officer dodged the question at the annual shareholders meeting.

Shareholders will receive one additional share for every share held on the record date of Nov. 22, the company said in a statement.

“This is the sixth time the stock has split since the company went public on March 13, 1986. This split should make our stock more accessible to a broad range of investors,” said Chief Financial Officer Mike Brown.

As of Oct. 31, Redmond-based Microsoft, the world’s largest maker of personal-computer software, had approximately 600 million shares outstanding.

The announcement was made after trading ended for the day on the NASDAQ, where Microsoft closed at $141.75, down $1.875.

When Chairman Bill Gates spoke to more than 1,200 shareholders at the annual meeting at Meydenbauer Center earlier in the day, he didn’t mention the much-talked-about possibility of a stock split.

So when someone from the audience asked the question, there were murmurs of approval throughout the room. But Chief Operating Office Bob Herbold, who answered the question, didn’t reveal much.

“The board of directors is constantly looking at this issue,” Herbold said, acknowledging shareholder interest.

A stock split really doesn’t do much of anything, but, historically, stocks have “trended up” afterward, said Rob Owens, a research analyst at Pacific Crest Securities in Portland.

A split, which doubles the number of shares and cuts in half the price of a stock, “brings a stock to a price point that more retail investors can get into the stock,” Owens said.

It’s been a good year for Microsoft thanks to Windows 95, Windows NT and strong sales in business software. Profits doubled - to $2.2 billion - between fiscal year 1995 and 1996.

In the coming year and beyond, Microsoft’s activities are focusing on the Internet and easier personal computing, Gates said.

“Microsoft is betting that over the next decade Internet use will grow dramatically,” Gates said in an annual statement to shareholders. “Next year, research and development spending … will grow to $2 billion, at a growth rate faster than sales.”