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Dividends

Dividends

A dividend is the distribution or sharing of parts of profits to a company's shareholders.

Why companies pay dividends

The primary purpose of any business is to create profit for its owners, and the dividend is the most important way the business fulfills this mission. When a company earns a profit, some of this money is typically reinvested in the business and called retained earnings, and some of it can be paid to its shareholders as a dividend. Paying dividends reduces the amount of cash available to the business, but the distribution of profit to the owners is, after all, the purpose of the business.

Types of Dividends

The methods of sharing profits are as follows: # Cash dividends (most common) are those paid out in form of "real cash". It is a form of investment interest/income and are taxable in the year they are paid. It is the most common method of sharing corporate profits. # Stock dividends (common) are those paid out in form of additional stock shares of the issuing corporation, or other corporation (eg its subsidiary corporation). They are usually issued in proportion to shares owned (eg for every 100 shares of stock owned, 5% stock dividend will yield 5 extra shares). #
- When the company distributes these new shares to investors, the price of each share decreases to account for the new shares. This is a recalculation of cost basis. It means that the stock dividends will not be taxed when distributed. #
- Stock dividends benefit the corporation in that they don't need to pay out in "real cash", reducing the financial burdens and saving money for other business operations (eg business expansion). #
- Stock dividends also benefit the shareholder by increasing his/her number of shares of the company. # Property dividends (rare) are those paid out in form of assets from the issuing corporation, or other coporation (eg its subsidiary corporation). Property dividends are usually paid in the form of products or services provided by the corporation. When paying property dividends, the corporation will often use securities of other companies owned by the issuer.

Dividend-reinvestment plans

Some companies have dividend-reinvestment plans. These plans allow shareholders to use dividends to systematically buy small amounts of stock often at no commission. Dividends are not yet paid in gold certificates although this idea has been discussed by mining companies such as Goldcorp.

Reasons why companies avoid paying cash dividends

Companies have often avoid paying cash dividends for several reasons: # Company management and the board believe that it is important for the company to take advantage of opportunities before it, and reinvest its recent profits in order to grow, which will ultimately benefit investors more than a dividend payout at present. This reasoning is sometimes right, but is often wrong, and opponents of this reasoning (such as Benjamin Graham and David Dodd, who complained about the practice in the classic 1934 reference Security Analysis) usually note that this comprises company management dictating to the business's owners how to invest their own money (i.e. the profit of the business). # When dividends are paid, shareholders in many countries, including the United States, suffer from double taxation of those dividends: the company pays income tax to the government when it earns any income, and then when the dividend is paid, the individual shareholder pays income tax to the government on the dividend payment. This is often used as justification for retaining earnings, or for performing a stock buyback, in which the company buys back stock, thereby increasing the value of the stock left outstanding. The shareholder pays no income tax on this transaction. In addition, certain types of specialized investment companies (such as a REIT in the U.S.) allow the shareholder to partially or fully avoid double taxation of dividends. Microsoft is an example of a company who has historically been a proponent of retaining earnings; it did so from its IPO in 1986 until 2003, when it declared it would start paying dividends. By this point Microsoft had accumulated over US$43 billion in cash, and there had been increasing irritation from stockholders who believed this large pile of cash should lie in their hands and not in the company's. Originally, the official reason to amass this large sum was to create a reserve for Microsoft's legal battles; since then, Microsoft appears to have changed tactics such that the reserve is not as necessary.

Franking Credits

In Australia and New Zealand, companies also forward franking credits to shareholders along with dividends. These franking credits represent the tax paid by the company upon its pre-tax profits. One dollar of company tax paid generates one franking credit. Companies can forward any proportion of franking up to a maximum amount that is calculated from the prevailing company tax rate: for each dollar of dividend paid, the maximum level of franking is the company tax rate divided by (1 - company tax rate). At the current 30% rate, this works out at 0.30 of a credit per 70 cents of dividend, or 42.857 cents per dollar of dividend. The shareholders who are able to use them offset these credits against their income tax bills at a rate of a dollar per credit, thereby effectively eliminating the double taxation of company profits. This system is called dividend imputation.

About the name "Dividend"

The name comes from the arithmetic operation of division: if a / b = c then a is the dividend, b the divisor, and c the quotient. In the United States, credit unions generally use the term "dividends" to refer to interest payments they make to depositors. These are not dividends in the normal sense and are not taxed as such; they are just interest payments. Credit unions call them dividends since, as credit unions are owned by their members, interest payments are effectively payments to owners. In the United Kingdom, consumer co-operative societies use the term "dividend" for profit-sharing payments to their members. Unlike joint stock company dividends, these payments are made in proportion to a members' spending with the co-operative society, not the number of shares they hold in it.

External links

- [http://www.studyfinance.com/lessons/dividends/index.mv Dividend Policy] from studyfinance.com at the University of Arizona
- [http://www.greekshares.com/dividend.asp Stock Dividends]
- [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=667781 dividend discount formula] Category:Corporate finance Category:Fundamental analysis Category:Stock market

Shareholder

A shareholder or stockholder is an individual or company (including a corporation), that legally owns one or more shares of stock in a joint stock company. The shareholders are the owners of a corporation. Companies listed at the stock market strive to enhance shareholder value. The shareholder concept is the theory that a company only has responsibilities to its shareholders and owners, and should work solely to benefit these people. Stockholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, stockholder's rights to a company's assets are subordinate to the rights of the company's creditors. This means that stockholders typically receive nothing if a company is liquidated after bankruptcy (if the company had had enough to pay its creditors, it would not have entered bankruptcy), although a stock may have value after a bankruptcy if there is the possibility that the debts of the company will be restructured. Stockholders or shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders. Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other. However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in California, majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders. See Jones v. H. F. Ahmanson & Co., 1 Cal. 3d 93 (1969) [http://online.ceb.com/calcases/C3/1C3d93.htm]. The largest shareholders (in terms of percentages of companies owned) are often mutual funds, and especially passively managed exchange-traded funds.

Profit

:For the television series see Profit (TV series) Profit is a positive return made on an investment by an individual or by business operations. The word comes from Latin meaning "to go forward." It is a relatively ill-defined concept - methods of calculation differ between accountants and economists. Marxist economists refer to it as the 'surplus value' extracted by capitalists from their workers. Profitability refers to the amount of profit received relative to the amount invested, often measured by a rate of profit or rate of return on investment. Economists and accountants measure profit in slightly different ways. What is commonly known as profit is the difference between sales and costs by a business enterprise. However, the term is also used more generally to refer to value added, which only be the same when all the factors of production have been credited their full opportunity cost. The profit motive - enterprises being free to make as much profit as they can given market conditions - is often regarded to be a good thing. It is held to give firms incentives for allocative efficiency and technical efficiency. This idea is a corollary of the theorems of welfare economics and utility maximisation. However, profits can include economic rents, which do not produce efficiency. For instance, a monopoly can have very high profits but produce less economic welfare.

Economic definitions of profit

Caution - these definitions are different from those used by accountants In Economics, a firm is said to be making an economic profit when its revenue exceeds the total opportunity cost of its inputs. It is said to be making an accounting profit if its revenues exceed the total price the firm pays for those inputs. In a single-goods case, economic profit happens when the firm's average cost is less than the price of the product or service at the profit-maximizing output. The economic profit is equal to the quantity output multiplied by the difference between the average total cost and the price. (In circumstances of perfect competition, average cost = marginal cost at the profit-maximising position) All enterprises constitute investments by their owners of capital. The return to owners' capital under competitive competition is the accounting profit and compensates the owner for not being able to make alternative use of their capital. It is the opportunity costs of a venture. Accounting profit exceeds economic profit. The accounting profit sometimes include an element in recognition of the risks that an investor takes. It is often uncertain, because of incomplete information, whether an enterprise will succeed or not. In these cases, economists treat returns to risk as part of the accounting profit, as it is also an element of the cost of capital. Economic profit does not occur in perfect competition. Once risk is accounted for, long-lasting economic profit is thus viewed as an inefficiency caused by monopolies or some other form of market failure. Economic profit is sometimes referred to as supernormal profit and accounting profit as normal profit. The social profit from a firm's activities is the normal profit plus or minus any externalities that occur in its activity. A polluting oil monopoly may report huge profits, but be doing relatively little for the economy and damaging the environment. It would exhibit high economic profit but low social profit.

Accounting definitions of profit

Caution - these definitions are different from those used by economists In the accounting sense of the term, net profit (before tax) is the sales of the firm less costs like as wages, rent, fuel, raw materials, interest on loans and depreciation. Gross profit is profit before depreciation and interest, Net profit after tax is after the deduction of either corporate tax (for a company) or income tax (for an individual). Operating profit is a measure of a company's earning power from ongoing operations, equal to earnings before the deduction of interest payments and income taxes. To accountants, economic profit, or EP, is a single-period metric to determine the value created by a company in one period - usually a year. It is the net profit after tax less the equity charge, a risk-weighted cost of capital. This is almost identical to the economist's definition of economic profit. Some economists define further types of profit:
- Abnormal (or supernormal profit)
- Subnormal profit
- monopoly profit (super profit) Optimum Profit - This is the "right amount" of profit a business can achieve. In business, this figure takes account of marketing strategy, market position, and other methods of increasing returns above the competitive rate.

More varieties of profit

There are commentators who see benefit in making adjustments to economic profit such as eliminating the effect of amortised goodwill or capitalising expenditure on brand advertising to show it's value over multiple accounting periods. The underlying concept was first been introduced by Schmalenbach, but the commercial application of the concept of adjusted economic profit was by Stern Stewart & Co. which has trade-marked their adjusted economic profit as EVA or Economic Value Added.

Benjamin Graham

:This article is about an American economist. For information on the Australian AFL and NFL player, see Ben Graham. Benjamin Graham (1894 – 1976) was an influential economist and professional investor who is today often called "the father of value investing". He is perhaps best known today from frequent references made to him by billionaire investor Warren Buffett, who studied under Graham at Columbia University, and was his only pupil to receive an A+. Warren Buffett credits Graham as grounding him with a sound intellectual investment framework, and described him as the second most influential person in his life after his own father. Graham, a Jew, whose original last name was Grossbaum, was born in London and his family emigrated to the United States when he was one year old. He received his bachelor's degree from Columbia University in 1914. His book, Security Analysis, with David Dodd, was published in 1934 and has been considered a bible for serious investors since it was written. It and The Intelligent Investor published in 1949 (4th edition, 1976), are his two most widely acclaimed books. Warren Buffett describes The Intelligent Investor as the best investment book ever written. Graham exhorted the stock market participant to first draw a fundamental distinction between investment and speculation. He defined an investment operation as one which on a thorough analysis of the facts promises safety of principal and a satisfactory return; anything else is speculation. Graham wrote that the owner of equity stocks should regard them first and foremost as conferring part ownership of a business. With that perspective in mind, the stock owner should not be too concerned with erratic fluctuations in stock prices, since in the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine (i.e. its true value will in the long run be reflected in its stock price). Graham recommended that investors spend time and effort to analyze the financial state of companies. When a company is available on the market at a price which is at a discount to its intrinsic value, a "margin of safety" exists, which makes it suitable for investment. Graham wrote that investment is most intelligent when it is most business-like, a statement which Warren Buffett regarded as the most important words about investment ever written. Graham said that the stock investor is neither right nor wrong because others agreed or disagreed with him; he is right because his facts and analysis are right. Graham's favourite allegory is that of Mr. Market, a very obliging fellow who turns up every day at the stock holder's door offering to buy or sell his shares at a different price. Often, the price quoted by Mr. Market seems plausible, but often it is ridiculous. The investor is free to either agree with his quoted price and trade with him, or to ignore him completely. Mr. Market doesn't mind this, and will be back the following day to quote another price. The point is that the investor should not regard the whims of Mr. Market as determining the value of the shares that the investor owns. He should profit from market folly rather than participate in it. The investor is best off concentrating on the real life performance of his companies and receiving dividends, rather than be too concerned with Mr. Market's often irrational behaviour. Graham was critical of the corporations of his day for obfuscated and irregular financial reporting that made it difficult for investors to discern the true state of the business's finances. He was an advocate of dividend payments to shareholders rather than businesses keeping all of their profits as retained earnings. He also criticized those who advised that some types of stocks were a good buy at any price, because of the prospect of sustained stock price growth, without a good analysis of the business's actual financial condition. These observations remain extremely relevant today. Benjamin Graham wrote that he wished every day to do something foolish, something creative, and something generous. Warren Buffett said that Graham excelled most at the last. Undoubtedly, Graham's generosity in sharing his investment philosophy has benefitted generations of stock market participants.

External links

- [http://www.mises.org/journals/scholar/Leithner.pdf Ludwig von Mises, Meet Benjamin Graham: Value Investing from an Austrian Point of View] by Chris Leithner. Paper Prepared for "Austrian Economics and Financial Markets" | [http://www.mises.org/Media/?action=showname&ID=90 Audio lecture] on the paper, presented at the Ludwig von Mises Institute.
- [http://www.greekshares.com/valueinv.asp Value Investing]
- [http://www.wiley.com/legacy/products/subject/finance/bgraham/index.html The Rediscovered Benjamin Graham - selected writings of the wall street legend], by Janet Lowe.
- [http://bus.utk.edu/finance/fac_staff/Auxier/graham.pdf Honoring Benjamin Graham: The Father of Value Investing], Albert L. Auxier, Ph.D. Associate Professor of Finance, University of Tennessee, Knoxville.
- [http://www.investmentu.com/IUEL/2003/20030609.html Benjamin Graham: Intrinsic Value and Buying Cash at a Discount] by Dr. Steve Sjuggerud, Editor, The Investment U E-Letter. Graham, Benjamin Graham, Benjamin Graham, Benjamin Graham, Benjamin Grahman, Benjamin ja:ベンジャミン・グレアム

David Dodd

David L. Dodd is an academic colleague of Benjamin Graham at 'Columbia University'. Co-wrote 1934 classic book 'Security Analysis' with Benjamin Graham. Obit: Born David LeFevre Dodd on August 23, 1895, Berkeley County, WV; died of respiratory failure, September 18, 1988, in Portland, Me. Financial analyst, educator, and author. A respected expert in the field of finance, Dodd taught business at Columbia University for almost forty years. He served as associate dean of the Columbia Business School from 1948 to 1952 and retired from the Columbia faculty in 1961. He was co-author of Security Analysis, a book that was originally intended as a guide for the lay investor but became a standard college finance text.

Security Analysis

Security Analysis, written by Benjamin Graham and David L. Dodd in 1934, is an influential book on the subject of financial analysis and fundamental analysis.

Publications

- Graham, Benjamin. Dodd, David. Security Analysis: The Classic 1934 Edition. McGraw-Hill. 1996. ISBN 0070244960.

Stock buyback

In the United Kingdom, 'treasury stocks' refer to government bonds or gilts. The British equivalent of 'treasury stock' as used in the USA is treasury share. In the United States, a treasury stock or reacquired stock is stock which is bought back by the issuing company. It reduces the amount of outstanding stocks on the open market ("open market" including insiders holdings). On the balance sheet, treasury stock is listed under shareholder equity as a negative number. Sometimes, companies do this when they feel that their stock is undervalued on the open market. Other times, companies do this to provide a "bonus" or incentive compensation plans for employees. Rather than receive cash, the recipient would get an asset that might appreciate in value faster than cash saved in a bank account. Limitations of treasury stock include:
- Treasury stock does not pay dividend
- Treasury stock has no voting rights
- Total treasury stock can not exceed 5% of total capitalization After buyback, the company can either retire the shares or hold the shares for later resale. Buying back stocks reduces the number of outstanding shares, thus it can cause the value of outstanding shares to appreciate. In addition, it can serve as a signal to investors. One way of accounting for treasury stock is with the cost method. In this method, the paid-in capital account is reduced in the balance sheet when the treasury stock is bought. When the treasury stock is sold back on the open market, the paid-in capital is either debited or credited if is sold for more or less than the initial cost respectively. Another common way for accounting for treasury stock is the par value method. In the par value method, when the stock is purchased back from the market the books will reflect the action as a retirement of the shares. Therefore, common stock is debited and treasury stock is credited. However, when the treasury stock is resold back to the market the entry in the books will be the same as the cost method. In either method, any transaction involving treasury stock cannot decrease the amount of retained earnings. If the treasury stock is sold for more than cost, then the paid-in capital treasury stock is the account that is increased not retained earnings. In auditing financial statements, there is a common practice to check for this error to detect possible attempts to "cook the books".

Regulatory

In the US, the Companies Act of 1955 disallowed companies from holding their own shares. However, the Companies Act of 1993 later repealed this.

Real estate investment trust

A real estate investment trust or REIT (rhymes with treat) is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks. When organized as a public company, ownership shares in REITs trade on public stock market exchanges like shares of common stock in other firms. REITs generally pay no federal income tax but are subject to a number of special requirements set forth in the Internal Revenue Code, one of which is the requirement to annually distribute at least 90% of its taxable income in the form of dividends to its shareholders. In practice, many REITs distribute substantially all of their current earnings and more, often resulting in dividend yields comparable to bond yields. (If an investment company such as a REIT distributes more than it actually earns in a year, the excess distribution is considered "return of capital" and is treated differently for tax purposes.) The distribution requirement may hamper a REIT's ability to retain earnings and generate growth from internal resources. This and other restrictions imposed by the Code generally limit a REIT's suitability for growth-oriented investors, but investors would be well-advised to fully consider a REIT's upside (or downside) potential for changes in its stock price, which can be very sensitive to environmental factors (e.g. changes in prevailing interest rates).

REITs

- General Growth Properties
- The Link REIT
- Mills Corporation

External links

- [http://www.nareit.com/ National Association of Real Estate Trusts] a US organisation.

Microsoft

Microsoft Corporation (, ) is the world's largest software company, with 2005 global annual sales of 40 billion US dollars and more than 55,000 employees in 85 countries and regions. The company's headquarters are in Redmond, Washington, USA. Microsoft develops, manufactures, licenses, and supports a wide range of software products for computing devices. Its most popular products are the Microsoft Windows operating system and the Microsoft Office suite of productivity software, each of which has achieved near ubiquity in the desktop computer market. Microsoft has footholds in other markets, with assets such as the MSNBC cable television network, the MSN Internet portal, and the Microsoft Encarta computer encyclopedia. The company also markets home entertainment products, such as the Xbox and WebTV. "Micro-Soft" (short for microcomputer software) was founded in Albuquerque, New Mexico in 1975 by Bill Gates and Paul Allen, to develop and sell BASIC interpreters for the Altair 8800. After the market saw a flood of IBM PC clones in the mid-1980s, Microsoft used its new position, which it gained in part due to a contract from IBM, to dominate the home computer operating system market with its MS-DOS operating system. The company later released an initial public offering (IPO) in the stock market, which netted several of its employees millions of dollars due to the ensuing rise of the stock price. The price of the stock continued its rise steadily into the early 2000s. In Microsoft Windows, the company was selling what would become the most widely used operating system in the world, which was originally an add-on for their DOS operating system; Microsoft continued to push into multiple markets, such as computer hardware and television. In addition, Microsoft has historically given customer support over Usenet newsgroups and the World Wide Web, and awards Microsoft MVP status to volunteers who are deemed helpful in assisting the company's customers. With what is generally described as a developer-centric business culture, Microsoft has become widely known for some of its internal codes of conduct for its employees. One example is the "eat your own dogfood" mantra, which describes the practice of using pre-release products inside the company to test them in an environment geared towards the real world. Microsoft has also become notorious for its business practices—the U.S. Justice Department, among others, has sued Microsoft for antitrust violations and software bundling. In addition, Microsoft has been criticized for the security of its software. Despite this, Microsoft has won several awards, such as the "1993 Most Innovative Company Operating in the U.S." by Fortune Magazine. The company is on the Fortune 500 list of companies as of 2005. Microsoft opened its first research center outside the US at the Cambridge Science Park, UK. It currently has research centers around the world.

[http://en.wikipedia.org/w/index.php?title=Microsoft&action=edit§ion=header edit this section]

History

:See also: History of Microsoft Windows. First conceived in 1975 by Bill Gates and Paul Allen, Microsoft has evolved through several stages throughout its history. By 1985, the company was selling the Microsoft Windows operating system and MS-DOS, and had collaborated with IBM to produce OS/2 Warp. By 1992, Microsoft had released an IPO in the stock market and discontinued OS/2 development to focus directly on Windows. By 1995, Windows was the most widely used graphical operating system in the world, and with the introduction of Windows 95, the company became a more consumer-driven company. Microsoft would proceed to enter other business markets, such as publishing and video games, would be sued more than once by the U.S. Justice Department and other governments and companies, and would continue to dominate the operating system market.

1975–84: the founding of Micro-soft

video game.
Top row: Steve Wood (left), Bob Wallace, Jim Lane. Middle row: Bob O'Rear, Bob Greenberg, Marc McDonald, Gordon Letwin. Bottom row: Bill Gates, Andrea Lewis, Marla Wood, Paul Allen.]] Days after reading the January 1 1975, issue of Popular Electronics that demonstrated the Altair 8800, Bill Gates called the creators of the new microcomputer, MITS (Micro Instrumentation and Telemetry Systems), to inform them that he and others had developed a version of the programming language BASIC for the platform. Allen flew to MITS to unveil the new BASIC system. Allen had never handled an Altair, since Gates had carried out all of the product development; however, the demonstration was successful and resulted in a deal with MITS to buy the rights to Allen's and Gates' BASIC for the Altair platform. Having identified a valuable opportunity, Gates left Harvard University to pursue the market and eventually founded "Micro-soft" in Albuquerque, New Mexico. The name Microsoft, without the hyphen, was first used in a letter from Gates to Allen on November 29, 1975, and in November 26, 1976 the name became a registered trademark. The company's first international office was founded on November 1, 1978, in Japan, entitled "ASCII Microsoft". On January 1, 1979, the company moved from Albuquerque to a new home in Bellevue, Washington. Steve Ballmer joined the company on June 11, 1980, and would later succeed Bill Gates as CEO. The company restructured on June 25 1981, to become an incorporated business in its home state of Washington (with a further change of its name to "Microsoft, Inc."). As part of the restructuring, Bill Gates became president of the company and Chairman of the Board, and Paul Allen became Executive Vice President. Microsoft's first operating system was Xenix, released in 1980 and later sold to Santa Cruz Operation. However, the source of the real success for the company was the DOS operating system. On August 12, 1981, after negotiations with Digital Research failed, IBM awarded a contract to Microsoft to provide a version of the CP/M operating system, which was set to be used in the upcoming IBM Personal Computer (PC). However, Microsoft did not have an operating system at the time, so it purchased a CP/M clone called QDOS (Quick and Dirty Operating System) from Tim Paterson of Seattle Computer Products for $50,000, which Microsoft renamed to PC-DOS. Due to potential copyright infringement problems with CP/M, IBM marketed both CP/M and PC-DOS for $250 and $40, respectively, with PC-DOS eventually becoming the standard because of its lower price. Around 1983, in collaboration with numerous companies, Microsoft created a home computer system, MSX, which contained its own version of the DOS operating system, entitled MSX-DOS; this became relatively popular in Japan and Europe. Later, after Compaq successfully cloned the IBM BIOS, the market saw a flood of IBM PC clones. Microsoft was quick to use its position to dominate the home computer operating system market. Microsoft began licensing its operating system for use on non-IBM PC clones, and called this version of the operating system MS-DOS (short for Microsoft Disk Operating System). By marketing MS-DOS aggressively to manufacturers of IBM-PC clones, Microsoft rose from a small player to one of the major software vendors in the home computer industry. Starting on May 2, 1983, with the "Microsoft Mouse", Microsoft entered markets such as computer hardware. This expansion included Microsoft Press, a book publishing division, on November 10 the same year, which debuted with two titles: "Exploring the IBM PC Home Computer" by Peter Norton, and "The Apple Macintosh Book" by Cary Lu.

1985–91: the rise and fall of OS/2

Cary Lu The Republic of Ireland became home to Microsoft's first international production facility in 1985, and on November 20 Microsoft released its first retail version of Microsoft Windows, originally a graphical extension for its MS-DOS operating system. In August, Microsoft and IBM partnered in the development of a different operating system called OS/2. OS/2 was marketed in connection with a new hardware design proprietary to IBM, the PS/2. Shortly afterwards on February 16, 1986, Microsoft relocated to Redmond, Washington. Around one month later, on March 13, the company went public with an IPO, raising $61 million at $21.00 per share. By the end of the trading day, the price had risen to $28.00. In 1987, Microsoft eventually released their first version of OS/2 to OEMs. Continuing its trend of rebranding products from other companies, Microsoft announced SQL Server on January 13, 1988, a relational database management system for companies that was based on technology licensed from Sybase. In 1989, Microsoft announced at Comdex that the 1991 release of Windows 3.0 would be the last version of Windows. Over the next few years, Microsoft continued to issue statements indicating that OS/2 was the future of computing. On May 16, 1991, Bill Gates announced to Microsoft employees that the OS/2 partnership was over, and that Microsoft would henceforth focus its platform efforts on Windows and the Windows NT kernel. Some people, especially developers who had ignored Windows and committed most of their resources to OS/2, were taken by surprise, and accused Microsoft of deception. The Windows changeover was frequently referred to in the industry as "the head-fake". In the ensuing years, the popularity of OS/2 declined, and Windows quickly became the favored PC platform. 1991 also marked the founding of Microsoft Research, an organization in Microsoft for researching computer science subjects, and Microsoft Visual Basic, a popular development product for companies and individuals.

1992–95: domination of the corporate market

Microsoft Visual Basic During the transition from MS-DOS to Windows, the success of Microsoft's product Microsoft Office allowed the company to gain ground on application-software competitors, such as WordPerfect and Lotus 1-2-3. Some allege that Microsoft used its inside knowledge of the DOS and Windows kernels and of undocumented Application Programming Interface features to make Office perform better than its competitors, but internal sources at Microsoft later revealed that the Office team did not have access to the Windows source code at the time, and relied on reverse engineering. Eventually, Microsoft Office became the dominant business suite, with a market share far exceeding that of its competitors. In March 1992, Microsoft released Windows 3.1 along with its first promotional campaign on TV; the software sold over three million copies in its first two months on the market. In October, Windows for Workgroups 3.1 was released with integrated networking capabilities such as peer-to-peer file and printing sharing. In November, Microsoft released the first version of their popular database software Microsoft Access. By 1993, Windows had become the most widely used GUI operating system in the world. Fortune Magazine named Microsoft as the "1993 Most Innovative Company Operating in the U.S.". The year also marked the end of a five-year legal case brought by Apple, dubbed Apple Computer, Inc. v. Microsoft Corp., in which the ruling was in Microsoft's favor. That same year, Microsoft released Windows for Workgroups 3.11, a new version of the consumer line of Windows, and Windows NT 3.1, a server-based operating system with a similar user interface to consumer versions of the operating system, but with an entirely different kernel. As part of its strategy to broaden its business, Microsoft released Microsoft Encarta in 1994, the first encyclopedia designed to run on a computer. Microsoft also created the Microsoft Plus product support program for its customers, a service that offered cost savings on Microsoft products. The name of that program was later used for several expansion packs for Windows. The company changed its slogan to "Where do you want to go today?" in that year, as part of an attempt to appeal to nontechnical audiences in a US$ 100 million advertising campaign, which some critics regarded as uninspired. Dreamworks SKG and Microsoft formed a new company, Dreamworks Interactive, to produce interactive and multimedia entertainment properties in 1995. In March, Microsoft released Microsoft Bob, a Windows 3.1 program manager replacement, which is widely considered Microsoft's most unsuccessful product; its unpopularity became the source of many jokes. Up until 1995, Microsoft was a business-oriented company. However, in August 1995, it released a new version of its flagship software, Microsoft Windows 95, with a completely new user interface, including a novel start button; more than a million copies of Microsoft Windows 95 were sold in the first four days after its release. The new version of Windows was the start of a major transition towards a consumer-oriented company. In September, the Chinese government chose Windows to be the operating system of choice in that country, and entered into an agreement with the Company to standardize a Chinese version of the operating system. Microsoft also released the Microsoft Sidewinder 3D Pro joystick in an attempt to further expand its profile in the computer hardware market.

1995–99: foray into the Internet and other venues

computer hardware In the mid-90s, Microsoft began to expand its product line into computer networking and the World Wide Web. On August 24, 1995, it launched a major online service, MSN (Microsoft Network), as a direct competitor to AOL. MSN became an umbrella service for Microsoft's online services, using Microsoft Passport as a universal login system for all of its websites. The company continued to branch out into new markets in 1996, starting with a joint venture with NBC to create a new 24/7 cable news station, MSNBC. The station was launched on July 16 to compete with similar news outlets—in particular, CNN; in the same year, Microsoft launched Slate, an online magazine edited by Michael Kinsley, which offered political and social commentary along with the cartoon Doonesbury. In an attempt to extend its reach in the consumer market, the Company acquired WebTV, which enabled consumers to access the Internet from their televisions. Microsoft entered the palm computing market in November with Windows CE 1.0, a new built-from-scratch version of their flagship operating system, specifically designed to run on low-memory, low-performance machines, such as handhelds and other palm-sized computers. 1996 saw the release of Windows NT 4.0, which brought the Windows 95 GUI and Windows NT kernel together. While Microsoft largely failed to participate in the rise of the Internet in the early 1990s, some of the key technologies in which the company had invested to enter the Internet market started to pay off by the mid-90s. One of the most prominent of these was ActiveX, an application programming interface built on the Microsoft Component Object Model (COM); this enabled Microsoft and others to embed controls in many programming languages, including the company's own scripting languages, such as JScript and VBScript. ActiveX included frameworks for documents and server solutions. The company also released the Microsoft SQL Server 6.5, which had built-in support for internet applications. Later in 1997, Microsoft Office 97 as well as Internet Explorer 4.0 were released, marking the beginning of the takeover of the browser market from rival Netscape, and by agreement with Apple, Internet Explorer was bundled with the Apple Macintosh operating system as well as Windows. Windows CE 2.0, the handheld version of Windows, was released this year, which included a host of bug fixes and new features designed to make it more appealing to corporate customers. In October, the Justice Department filed a motion in the Federal District Court in which they stated that Microsoft had violated an agreement signed in 1994, and asked the court to stop the bundling of Internet Explorer with Windows. In 1998, Microsoft released an update to the consumer version of Windows, Windows 98. Windows 98 came with Internet Explorer 4.0 SP1 (which had Windows Desktop Update bundled), and included new features from Windows 95 OSR 2.x including the FAT32 file system, and new features specifically for Windows 98, such as support for multiple displays. Microsoft also launched its Indian headquarters that year, which would eventually become the company's second largest after its U.S. headquarters. Steve Ballmer was appointed president of Microsoft, and Bill Gates remained as Chair and CEO. Later in 1999, Microsoft Office 2000 was released, along with Internet Explorer 5.0.

2000–05: legal issues, XP, and .NET

Internet Explorer 5.0. The largest Microsoft campus outside the United States.]] On May 18, 1998, the U.S. Department of Justice and 20 U.S. states filed charges against Microsoft, stating that Microsoft illegally abused its monopoly power in its sales of Windows, in United States v. Microsoft. However, it was not until April 3, 2000 that a ruling was made that Microsoft had to be split into two companies. However, in June 2001, part of that ruling was overturned by a federal appeals court, and in September the Justice Department decided to seek a settlement with Microsoft instead of trying to split it up. While the trial was underway, on February 17, 2000 Microsoft released Windows 2000, which some consider a significant improvement over previous versions. It provided a similar OS stability to that of its Unix counterparts. Unlike previous consumer-level operating systems, Windows 2000 was built on the Windows NT kernel, rather than the DOS kernel as previous consumer versions of Windows had been. Windows 2000 also provided a DOS emulator that could run most old DOS applications from previous versions of Windows. During the trial, Bill Gates stepped down as CEO and Steve Ballmer became the new CEO, with Bill Gates remaining chairman and Chief Software Architect. In the same year, Microsoft released a new version of the consumer version of their flagship product, Windows Me, (Millennium Edition). Widely regarded as one of the most unstable operating systems Microsoft had ever produced, its main features were enhanced multimedia capabilities, such as an automated video editor. In June, the company released a new version of its hand-held operating system, Windows CE 3.0. The main change was the new programming APIs of the software. Previous versions of Windows CE supported only a small subset of the WinAPI, the main development library for windows, and with Version 3 of Windows CE, the operating system now supported nearly all of the core functionality of the WinAPI. In 2001, Microsoft released Windows XP, which brought the consumer and business lines of Windows together, combining the kernel of Windows 2000 with features of its consumer line of Windows, and enhancing the DOS emulation capabilities of the OS. Among the new features was an entirely new interface. However, it included the controversial Microsoft Product Activation, a part of that software that required people to register with Microsoft before using the product for the first time, and if they did not the product would cease to function. This would become a hallmark of the Company's other products, including Microsoft Office. Microsoft Product Activation In 2003, Microsoft launched the .NET initiative, along with new versions of some of its development products, such as Microsoft Visual Studio. The initiative has been an entirely new development API for Windows programming, and includes a new programming language, C#. Windows Server 2003 was launched, featuring enhanced administration capabilities, such as new user interfaces to server tools. In 2004, the Company released Windows XP Media Center Edition 2005, a version of Windows XP specifically designed for multimedia capabilities, and Windows XP Starter Edition, a version of Windows XP with a smaller feature set designed for entry-level consumers. In March 2004, the European Union brought legal action against Microsoft for antitrust violations. Eventually Microsoft was fined $613 million, ordered to divulge certain protocols to competitors, and to produce a version of Windows that did not include the Windows Media Player. Microsoft announced a new version of its MSN search service later in 2005, designed to compete with Google.

Product divisions

Microsoft sells a wide range of products, many of them developed internally, such as Microsoft BASIC and Microsoft Word. Others were acquired and rebranded by Microsoft:
- Microsoft Project, a project management package;
- Visio, a charting package;
- FoxPro, a database;
- Links, a golf game;
- Visual SourceSafe, a developer's tool;
- DoubleSpace, a compression tool;
- Virtual PC, software to emulate different version of Windows, which was acquired from Connectix; and
- MS-DOS itself, the basis for the company's success. Many of these products have undergone continual development by the Company. Internet Explorer is based on code licensed from Spyglass, Inc.; the initial development of the software was performed outside Redmond in Spyglass headquarters. In April 2002, Microsoft reorganized into seven core business groups—'each an independent financial entity—to delegate all responsibility and more closely track the performance of each unit. On September 20th, 2005, Microsoft announced a rationalization of its original seven business groups to three core divisions: the Windows Client, MSN and Server and Tool groups were merged into the Microsoft Platform Products & Services Division; the Information Worker and Microsoft Business Solutions groups were merged into the Microsoft Business Division; and the Mobile and Embedded Devices and Home and Entertainment groups were merged into the Microsoft Entertainment and Devices Division.

Microsoft Platform Products & Services Division

2005 This division produces Microsoft's flagship product, the Windows operating system. It has been produced in many versions, including Windows 3.1, Windows 95, Windows 98, Windows 2000, Windows XP and Windows Server 2003. Almost all IBM compatible personal computers designed for the consumer come with Windows preinstalled. The next planned version of Windows is Windows Vista (code-named Windows Longhorn). The online service MSN, the cable television station MSNBC, and the Microsoft online magazine Slate are all part of this division. Slate was later acquired by The Washington Post on December 21, 2004. At the end of 1997, Microsoft acquired Hotmail, the first and most popular webmail service, which it rebranded as "MSN Hotmail". Later in 1999 Microsoft introduced MSN Messenger, an instant messaging client, to compete with the popular AOL Instant Messenger. Microsoft Visual Studio is the company's set of programming tools and compilers. The software product is GUI-oriented and links easily with the Windows APIs, but must be specially configured if used with non-Microsoft libraries. The current version is Visual Studio .NET 2003, named after the .NET initiative, a Microsoft marketing initiative covering a number of technologies. Microsoft's definition of .NET continues to evolve. As of 2004, .NET aims to ease the development of Microsoft Windows-based applications that use the Internet, by deploying a new Microsoft communications system, Indigo. This will address some issues previously introduced by Microsoft's DLL design, which made it difficult to manage, install multiple versions of complex software packages on the same system (see DLL-hell), and provide a more consistent development platform for all Windows applications (see Common Language Infrastructure. In addition, the Company established a set of certification programs to recognize individuals who have expertise in its software and solutions. Similar to offerings from Cisco, Sun Microsystems, Novell, IBM, and Oracle Corporation, these tests are designed to identify a minimal set of proficiencies in a specific role; this includes developers ("Microsoft Certified Solution Developer"), system/network analysts ("Microsoft Certified Systems Engineer"), trainers ("Microsoft Certified Trainers") and administrators ("Microsoft Certified Systems Administrator"). Microsoft offers a suite of server software, entitled Windows Server System. Windows Server 2003, an operating system for network servers, is the core of the Windows Server System line. Another server product, Systems Management Server, is a collection of tools providing remote-control abilities, patch management, software distribution, and a hardware/software inventory. Other server products include:
- SQL Server, a relational database management system;
- Exchange Server, for certain business-oriented e-mail features;
- Small Business Server, for messaging and other small business-oriented features; and
- BizTalk Server, for employee integration assistance and other functions.

Microsoft Business Division

BizTalk Server The Microsoft Business Division produces Microsoft Office, which is the company's line of office software. The software product includes:
- Word, a word processor;
- Access, a personal relational database application;
- Excel, a spreadsheet program;
- Outlook, Windows-only groupware, frequently used with the Exchange server;
- PowerPoint, presentation software; and Microsoft FrontPage, a WYSIWYG HTML editor. With the release of Office 2003, a number of other products were brought under the Office banner, including Microsoft Visio, Microsoft Project, Microsoft MapPoint, Microsoft InfoPath, Microsoft Publisher and Microsoft OneNote. The division focuses on developing financial and business management software for companies. These products include products formerly produced by the Business Solutions Group, which was created in April 2001 with the acquisition of Great Plains. Subsequently, Navision was acquired to provide a similar entry into the European market, resulting in the planned release of Microsoft Navision 4.0 during the week of 18 October, 2004. The group markets Axapta and Solomon, catering to similar markets, which is scheduled to be combined with the Navision and Great Plains lines into a common platform called Microsoft Dynamics.

Microsoft Entertainment and Devices Division

Microsoft Dynamics Microsoft has attempted to expand the Windows brand into many other markets, with products such as Windows CE for PDAs and its "Windows-powered" Smartphone products. Microsoft initially entered the mobile market through Windows CE for handheld devices, which today has developed into Windows Mobile 5. The focus of the operating system is on devices where the OS may not directly be visible to the end user, in particular, appliances and cars. The company produces MSN TV, formerly WebTV, a television-based Internet appliance. Microsoft used to sell a set-top Digital Video Recorder (DVR) called the UltimateTV, which allowed users to record up to 35 hours of television programming from a direct-to-home satellite television provider DirecTV. This was the main competition in the UK for bSKYb's SKY + service, owned by Rupert Murdoch. UltimateTV has since been discontinued, with DirecTV instead opting to market DVRs from TiVo Inc. The division includes consumer and Macintosh software, along with computer hardware and entertainment software. Microsoft sells computer games that run on Windows PCs, including titles such as Age of Empires and the Microsoft Flight Simulator series. It produces a line of reference works that include encyclopedias and atlases, under the name Encarta. Microsoft Zone hosts free premium and retail games where players can compete against each other and in tournaments. Microsoft entered the multi-billion-dollar game console market dominated by Sony and Nintendo in late 2001, with the release of the Xbox. As of 2005, the console ranks second to Sony's PlayStation 2 and ahead of Nintendo's GameCube in market share in the United States (although behind the two worldwide). The console shipped 22 million units compared with competitor PlayStation 2 at 90 million units, and the company took a 4 billion dollar loss due to the console . Microsoft develops and publishes its own video games for this console, with the help of its Microsoft Game Studios subsidiary, in addition to "third party" Xbox video-game publishers such as Electronic Arts and Activision, who pay a license fee to publish games for the system. The most recent version of the Xbox is the Xbox 360. Microsoft markets a number of computing-related hardware products, including mice, keyboards, joysticks, and gamepads, along with other game controllers, the production of which is outsourced in most cases. The division houses Microsoft's Macintosh Business Unit, the largest developer of Macintosh software outside Apple itself; it produces such software as Microsoft Office for the Mac (sometimes called "Macintosh Office"), which includes Entourage, a Macintosh-specific application not available in the Windows version of Microsoft Office.

Business culture

Entourage Microsoft has often been described as having a developer-centric business culture. A great deal of time and money is spent each year on recruiting young university-trained software developers who meet very exacting criteria, and on keeping them in the company. For example, while many software companies often place an entry-level software developer in a cubicle desk within a large office space filled with other cubicles, Microsoft assigns a private or semiprivate closed office to every developer or pair of developers. In addition, key decision makers at every level are either developers or former developers. In a sense, the software developers at Microsoft are considered the "stars" of the company in the same way that the sales staff at IBM are considered the "stars" of their company. This culture is reflected in their hiring process—the "Microsoft Interview" is notorious for off-the-wall questions such as "Why is a manhole cover round?" and is a process often mimicked in other organizations. Note that, although they were once ubiquitous, recently fewer interviewers have been using these types of questions. Within Microsoft the expression "eating our own dog food" is used to describe the policy of using the latest Microsoft products inside the company in an effort to test them in "real-world" situations. Only prerelease and beta versions of products are considered dog food. This is usually shortened to just "dog food" and is used as noun, verb, and adjective. For fun, Microsoft also hosts the Microsoft Puzzle Hunt, an annual puzzle hunt (a live puzzle game where teams compete to solve a series of puzzles) held at the Redmond campus. It is a spin-off of the MIT Mystery Hunt. In an ever changing world, Microsoft expects its employees to be comfortable with ambiguity. They may not, for example, know with any degree of certainty when a product will ship, what it will be called, or what features will be included. The business culture expects agile thinkers to rapidly adjust to dramatic changes. Microsoft also fosters a general attitude of long-term strategic wariness in its managers, who are expected to be ready for any challenge from the competition or the market. In this frame of mind, being the largest software company in the world is not seen as a form of safety or a guarantee of future success. For instance, future competitors could rise from other industries, or computer hardware companies could try to become less dependent on Microsoft, or consumers could decide not to upgrade their software as often. Microsoft requires its managers to maintain vigilance and sustain a dynamic expansion in new markets.

User culture

Technical reference for developers and articles for various Microsoft magazines such as Microsoft Systems Journal (or MSJ) is available through Microsoft's MSDN site, short for Microsoft Developer Network. MSDN also offers subscriptions for companies and individuals, and the more expensive subscriptions usually offer access to pre-release beta versions of Microsoft software. In recent years, Microsoft launched a community site for developers and users, entitled Channel9, which provides many modern features such as a wiki and an Internet forum. Most free technical support available through Microsoft is provided through online Usenet newsgroups (in the early days it was also provided on Compuserve). There are several of these newsgroups for nearly every product Microsoft provides, and often they are monitored by Microsoft employees. People who are helpful on the newsgroups can be elected by other peers or Microsoft employees for Microsoft Most Valuable Professional (MVP) status, which entitles people to a sort of special social status, in addition to possibilities for awards and other benefits.

Corporate affairs

Corporate structure

The company is run by its Board of Directors, which consists of ten people, made up of mostly company outsiders (as is customary for publicly traded companies). Current members of the board of directors of Microsoft are: Steve Ballmer, James Cash, Jr., Dina Dublon, Bill Gates, Raymond Gilmartin, Ann Korologos, David Marquardt, Charles Noski, Helmut Panke, and Jon Shirley. The ten board members are elected every year at the annual shareholders' meeting, and those who do not get a majority of votes must submit a resignation to the board, which will subsequently choose whether or not to accept the resignation. There are five committees within the board which have oversight over more specific matters. These committees include the Audit Committee, which handles accounting issues with the company including auditing and reporting; the Compensation Committee, which approves compensation for the CEO and other employees of the company; the Finance Committee, which handles financial matters such as proposing mergers and acquisitions; the Governance and Nominating Committee, which handles various corporate matters including nomination of the board; and the Antitrust Compliance Committee, which attempts to prevent company practices from violating antitrust laws. There are several other aspects to the corporate structure of Microsoft. For worldwide matters there is the Executive Team, made up of sixteen company officers across the globe, which is charged with various duties including making sure employees understand Microsoft's culture of business. The sixteen officers of the Executive Team include the Chairman and Chief Software Architect, the CEO, the General Counsel and Secretary, the CFO, senior and group vice presidents from the business units, the CEO of the Europe, the Middle East and Africa regions; and the heads of Worldwide Sales, Marketing and Services; Human Resources; and Corporate Marketing. In addition to the Executive Team there is also the Corporate Staff Council, which handles all major staff functions of the company, including approving corporate policies. The Corporate Staff Council is made up of employees from the Law and Corporate Affairs, Finance, Human Resources, Corporate Marketing, and Advanced Strategy and Policy groups at Microsoft. Other Executive Officers include the Presidents and Vice Presidents of the various product divisions, leaders of the marketing section, and the CTO, among others.

Stock

When the company debuted its IPO in March 12, 1986, the stock price was $22. By the close of the first trading day, the stock had closed at twenty-eight dollars, or 97c, compared with the time period after the company's first nine splits. The initial close and ensuing rise in subsequent years made several Microsoft employees millions. The stock price peaked in 1999 at around 119 dollars (60,928 dollars adjusting for splits). While the company has had nine stock splits, the first of which was in September 18, 1987, the company did not start offering a dividend until January 16, 2003. The dividend for the 2003 fiscal year was eight cents per share, followed by a dividend of sixteen cents per share the subsequent year. The company switched from quarterly to yearly dividends in 2005, for eight cents a share per quarter with a special one-time payout of three dollars per share for the second quarter of the fiscal year. Around 2002 the stock price began a slow descent that continued through 2005. The company had its ninth split on February 2, 2003, in what could have been an attempt to arouse interest in the stock, but the price continued to stagnate regardless. On the September 23, 2005, episode of CNBC's Mad Money, the host of the show, Jim Cramer, called Microsoft's stock "the most hated stock on Wall Street".

Diversity

Microsoft received a 86% rating in the 2004 Corporate Equality Index from the Human Rights Campaign relating to its policies concerning LGBT (lesbian, gay, bisexual and transsexual) employees. According to the Human Rights Campaign, this was in line with the industry standard . Through the work of the Gay and Lesbian Employees at Microsoft (GLEAM) group and Diversity, Microsoft added gender expression to its antidiscrimination policies in April 2005, and the Human Rights Campaign upgraded Microsoft's Corporate Equality Index rating to 100%, putting it among the most progressive companies in the world. Microsoft also received criticism from the Human Rights Campaign and many others in April 2005 for withdrawing support for Washington's H.B. 1515 bill that would extend the state's current antidiscrimination laws to people with alternate sexual orientations. However, under harsh criticism from both outside and inside the company's walls, Microsoft eventually supported the bill again in May 2005 . Even though it hires many domestic American workers, Microsoft generally goes up to the annual limit in hiring foreign workers with H1B visas. Bill Gates has criticized Congress for the cap on the H1B visas, which he claims makes it difficult to hire employees for the company. Proponents of the cap cite economic and security reasons for the current law. Microsoft was also named one of the 100 Best Companies for Working Mothers in 2004 by Working Mother magazine.

Logo

Working Mother In 1987, Microsoft adopted its current logo, the so-called "Pacman Logo" designed by Scott Baker. According to the March 1987 Computer Reseller News Magazine, "The new logo, in Helvetica italic typeface, has a slash between the o and s to emphasize the "soft" part of the name and convey motion and speed." Employees ran a campaign to save the old logo, which was green, in all uppercase, and featured a fanciful letter O nicknamed the blibbet, but it was nevertheless discarded.

Criticism

Working Mother Microsoft has been the focus of much controversy in the computer industry, especially since the 1980s; in particular, which some some think its business tactics as unfair and anticompetitive. Some describe Microsoft's business tactics as "embrace, extend and extinguish", in which Microsoft initially embraces and extends a competing standard or product, only to later extinguish it through such actions as writing their own incompatible version of the software or standard. Microsoft has also been called a "velvet sweatshop" in reference to the company working its employees to the point where it might be bad for their health. The first instance of the term in reference to Microsoft originated from a Seattle Times article in 1989, and later became used to describe the company by some of Microsoft's own employees. In rulings following antitrust litigation, U.S. courts ruled that Microsoft is an abusive monopoly, and the company endures legal attacks along these lines in many countries around the world; these are successful to varying degrees, but have not yet forced serious reform such as forcing a separation of the company. Some also accuse Microsoft of allowing the user interface of its products to become inconsistent and overly complicated, requiring interactive "wizards" to function as an extra layer between the user and the interface. The security of Microsoft products (such as Internet Explorer) is also questioned by some as being overly vulnerable to computer viruses and malicious attacks. In addition, proponents of free software are engaged with Microsoft in a debate over the Total cost of ownership (TCO) of its products, as some perceive Microsoft software as more expensive to purchase, use and maintain than competitors' software. A July, 2003 article in the New York Times, accused Microsoft founder, Bill Gates, of stealing ideas for the development of Windows from its competitor, Apple. Microsoft has also been criticized for its end user license agreements, which some believe are too restrictive. As detailed in this article, Microsoft has purchased the products of many other companies to market as its own. It has also duplicated the innovations of other companies (Apple in particular) in products which have in many cases gone on

IPO

:initial public offering

Billion

:For the modem manufacturer, see Billion (company). The word "billion" and its equivalents in other languages refer to one of two different numbers.

10^¹²

The original meaning, established in the 15th century, was "a million of a million" (1,000,000², hence the name billion), or 10¹² = 1 000 000 000 000. This system, known in French as the échelle longue ("long scale"), was formerly used in the United Kingdom and is used in most countries where English is not the primary language. 10¹² is referred to as a trillion in the "short scale" system.

10^⁹

In the late 17th century a change was made in the way of writing large numbers. Numbers had been separated into groups of six digits, but at this time the modern grouping of three digits came into use. As a result, a minority of Italian and French scientists began using the word "billion" to mean 10⁹ (one thousand million, or 1 000 000 000), and correspondingly redefined trillion and higher numbers to mean powers of one thousand rather than one million. This is known in French as the échelle courte ("short scale") and is now officially used by English-speaking countries, as well as Brazil, Puerto Rico, Turkey and Greece.

Synonyms

Use of "thousand million" for 10⁹ and "million million" for 10¹² can avoid ambiguity; however, British media, including the BBC, which long used "thousand million" for this reason, use "billion" to mean 10⁹. The old word "milliard", also found in many other languages, can be used for 10⁹ but is unfamiliar even to many native English speakers. See long and short scales for a more detailed discussion and usage advice.

Trivia

The facts below give a sense of how large one billion (taken as 10⁹) is in the context of passage of time.
- About a billion seconds ago, the parents of middle school children were themselves in elementary school. (One billion seconds is roughly 31.7 years.)
- About a billion minutes ago, the Roman Empire was flourishing. (One billion minutes is roughly 1,900 years.)
- About a billion hours ago, modern men and their ancestors were living in the Stone Age (more precisely, the Middle Paleolithic). (One billion hours is roughly 114,000 years.)
- About a billion days ago, Australopithecus, an ape-like creature related to an ancestor of modern humans, roamed the African savannas. (One billion days is roughly 2.7 million years.)
- About a billion months ago, dinosaurs walked the earth during the late Cretaceous. (One billion months is roughly 82 million years.)
- About a billion years ago, the first multicellular organisms appeared on Earth. (The universe is now thought to be about 13.7 billion years old.) In terms of distance:
- A billion centimeters is about the distance from Chicago, Illinois, USA to Tokyo, Japan.
- A billion inches is 15,783 miles, more than halfway around the world and sufficient to reach any point on the globe from any other point.
- A billion meters is almost three times the distance from the Earth to the Moon.

External links

- [http://alt-usage-english.org/excerpts/fxbill00.html alt.usage.english FAQ] Category:Integers Category:Large numbers

Cash

Cash usually refers to money in the form of currency, such as bills or coins.

Etymology

The word comes from kachu in the Indian language Tamil.

Usage

Cash can also refer to checks, money orders, cashier's checks, bank drafts, or traveler's checks. In all these forms, the term indicates the most liquid form of assets, which have a fixed value and can be easily converted to currency. "Cash pay" (as opposed to, e.g., stock options) would almost always be in the form of a check or bank deposit — but the employee can easily get cash per se from the bank. As a verb, "to cash" an item (such as a check) denotes exchanging the item for cash. Category: Money tam:Kachu See Also: Johnny Cash

New Zealand

New Zealand or Aotearoa, the Land of the Long White Cloud, is a country of two large islands and many smaller islands in the south-western Pacific Ocean. New Zealand is notable for its isolation, being separated from Australia on the northwest by the Tasman Sea, some 2,000 km wide. The closest neighbours to the north are New Caledonia, Fiji and Tonga. The population of New Zealand is mostly of European descent, with the indigenous Māori as the largest minority. Non-Māori Polynesian and Asian peoples are also significant minorities, especially in the cities. Officially, Elizabeth II is the Queen of New Zealand and is represented in the country by a non-political Governor-General; though the Queen has no real political influence. Political power is held by the Prime Minister who is leader of the Government in the democratically elected Parliament of New Zealand. The monarch's Realm of New Zealand also includes the Cook Islands and Niue, which are entirely self-governing; Tokelau, which is moving towards self-government, and New Zealand's claim in Antarctica.

History

New Zealand is one of the most recently settled major land masses. Polynesian settlers arrived in their waka some time between 800 and 600 years ago to establish the indigenous Māori culture. Settlement of the Chatham Islands to the south-east of New Zealand produced the Moriori people but it is disputed whether they moved there from New Zealand or elsewhere in Polynesia. Most of New Zealand was divided into tribal territories called rohe, resources within which were controlled by an iwi ('tribe'). Usually no two iwi had overlapping rohe. Māori adapted to eating the local marine resources, flora and fauna for food, hunting the giant flightless moa (which soon became extinct), and ate the Polynesian Rat and kumara (sweet potato), which they introduced to the country. The first Europeans known to reach New Zealand were led by Abel Janszoon Tasman, who sailed up the west coast of the South and North islands in 1642. He named it Staten Landt, believing it to be part of the land Jacob Le Maire had discovered in 1616 off the coast of Chile. Staten Landt appeared on Tasman's first maps of New Zealand, but this was changed by Dutch cartographers to Nova Zeelandia, after the Dutch province of Zeeland, some time after Hendrik Brouwer proved the South American land to be an island in 1643. The Latin Nova Zeelandia became Nieuw Zeeland in Dutch. Lieutenant James Cook subsequently called the archipelago New Zealand, although the names he chose for the North and South islands were rejected, and the main three islands became known as North, Middle and South, with the Middle Island being later called the South Island. Cook began extensive surveys of the islands in 1769, leading to European whaling expeditions and eventually significant European colonisation. From as early as the 1780s, Māori had encounters with European sealers and whalers. Acquisition of muskets by those iwi in close contact with European visitors destabilised the existing balance of power between Māori tribes and there was a temporary but intense period of bloody inter-tribal warfare, known as the Musket Wars, that only ceased when all iwi were so armed. Concern about the exploitation of Māori by Europeans, Church Missionary Society lobbying and French interest in the region led the British to annex New Zealand by Royal Proclamation in January 1840. To legitimise the British annexation, Lieutenant Governor William Hobson had been dispatched in 1839; he hurriedly negotiated the Treaty of Waitangi with northern iwi on his arrival. The Treaty was signed in February, and in recent years it has come to be seen as the founding document of New Zealand. The Māori translation of the treaty promised the Māori tribes "tino rangatiratanga" would be preserved in return for cedeing kawanatanga, which the English versions translates as "chieftainship" for "sovereignty"; the real meanings are now disputed. Disputes over land sales and sovereignty caused the New Zealand land wars which took place between 1845 and 1872. In 1975 the Treaty of Waitangi Act established the Waitangi Tribunal, charged with hearing claims of Crown violations of the Treaty of Waitangi dating back to 1840. Some Māori tribes and the Moriori never signed the treaty. Although New Zealand was initially administered as a part of the Australian colony of New South Wales, it became a colony in its own right in 1841. European settlement progressed more rapidly than anyone anticipated, and settlers soon outnumbered Māori. Self-government was granted to the settler population in 1852. The first capital of New Zealand was Kororareka (known today as Russell) but shortly afterwards moved to Auckland. There were political concerns following the discovery of gold in Central Otago in 1861 that the South Island would form a separate colony. So in 1865 the capital was offically moved to the more central city of Wellington. New Zealand was involved in a Constitutional Convention in March 1891 in Sydney, New South Wales, along with the then-colonies of Australia. This was to consider a potential constitution for the proposed federation between the then-British Colonies of Australasia. New Zealand lost interest in joining Australia in a federation following this convention. New Zealand became an independent dominion on 26 September 1907 by royal proclamation. Full independence was granted by the United Kingdom Parliament with the Statute of Westminster in 1931; it was taken up upon the Statute's adoption by the New Zealand Parliament in 1947. Since then New Zealand has been a sovereign constitutional monarchy within the Commonwealth of Nations.

Politics

New Zealand is a constitutional monarchy with a parliamentary democracy. Under the New Zealand Royal Titles Act (1953), Queen Elizabeth II is Queen of New Zealand and is represented as head of state by the Governor-General, Dame Silvia Cartwright. The New Zealand Parliament has only one chamber, the House of Representatives which usually seats 120 members of Parliament. Parliamentary elections are every three years under a form of proportional representation called Mixed Member Proportional (MMP). The 2005 General Election created an 'overhang' of one extra seat (occupied by the Māori Party), due to that party winning more seats in constituencies than its proportional entitlement. There is no single written constitution; however, the Constitution Act (1986) is the principal formal statement of New Zealand's constitutional structure. The Governor-General has the power to appoint and dismiss Prime Ministers and to dissolve Parliament. The Governor-General also chairs the Executive Council which is a formal committee consisting of all ministers of the Crown. Members of the Executive Council are required to be members of Parliament, and most are also in Cabinet. Cabinet is the most senior policy-making body and is led by the Prime Minister who is also the Parliamentary leader of the governing party or coalition. The current Prime Minister is Helen Clark of the Labour Party. She has served two complete terms as Prime Minister and has begun her third. On 17 October 2005 she announced that she had come to a complex arrangement that guaranteed the support of enough parties for her Labour-led coalition to govern. The core of the coalition is a cabinet consisting of Labour Party ministers and Jim Anderton, the Progressive Party's only MP. In addition to the parties represented in cabinet the leaders of New Zealand First and United Future are to be appointed as Ministers outside Cabinet. An arrangement of this kind has never been attempted before in New Zealand. A further arrangement has been made with the Green Party, which has given a commitment not to vote against the government on confidence and supply. This commitment assures the government of a majority of seven MPs on confidence. The Leader of the Opposition is National Party leader Don Brash who was formerly Governor of the Reserve Bank. Also in opposition are the Māori Party and ACT New Zealand. The highest court in New Zealand is the Supreme Court of New Zealand. The Supreme Court was established in 2004 following the passage of the Supreme Court Act in 2003. The Act abolished the option to appeal Court of Appeal rulings to the Privy Council in London. The current Chief Justice is Dame Sian Elias. New Zealand's judicary also has a High Court which deals with serious criminal offences and civil matters, and a Court of Appeal, as well as subordinate courts.

Foreign relations and military

New Zealand maintains a strong profile on environmental protection, human rights and free trade, particularly for agriculture. New Zealand is a member of the following geo-political organisations: APEC, Commonwealth of Nations, OECD and the United Nations. It ha

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