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Strategies & Market Trends : Sonki's Links List -- Ignore unavailable to you. Want to Upgrade?

To: Sonki who wrote (25)	12/3/1997 6:06:00 PM
From: Sonki	Read Replies (1) \| Respond to of 395

Microsoft Preferred Stock Offering: Q&A What is preferred stock? Preferred shares carry a dividend and have prior claim over common shares on any dividends and corporate assets issued by the company. These preferred shares will have no voting rights. What is "convertible exchangeable principal-protected preferred stock" This type of convertible preferred stock is a financial instrument that combines elements of a common stock with elements of preferred stock. This long title is a financial technical term for what many investors look for in a high-grade preferred stock. "Convertible" means that these preferred shares convert into common shares after three years. "Exchangeable" means that these shares can eventually be exchanged into debt that pays interest rather than dividends. The "Principal-protected" feature means that at the time of maturity, the investor will receive no less than the par value at which it is initially offered; in this case, $79 7/8. At the same time, investors in this preferred stock have a capped upside compared to the common stock. This cap has been set at 28% over three years, or $102.24. This type of security provides holders with a scheduled current income return and downside protection, in exchange for a capped upside. What are the pricing details on the Microsoft preferred stock offering? Total offering: $1 billion Price: $79 7/8 per share (closing price of MS common stock on Dec 17) Dividend rate: 2.75% per annum Upside cap: 28% over 3 years, or $102.24 Floor: $79 7/8 per share What is the dividend rate? The dividend rate has been set at 2.75% per year (approx. $2.20 per share). Dividends are cumulative and payable quarterly in arrears. "Cumulative" means that dividend rates are defined in advance and provide some guarantee of payment. Why is Microsoft issuing preferred stock? This is the first time Microsoft has issued preferred stock. The stated purpose for the proceeds of this offering is to repurchase common stock. Additionally, some potential investors have expressed an interest in receiving a dividend on Microsoft stock, and some investors will only invest in income-yielding companies. This offering of preferred stock gives those investors a vehicle that allows them to participate in the potential growth of our company, while also What is the dividend rate? The dividend rate has been set at 2.75% per year (approx. $2.20 per share). Dividends are cumulative and payable quarterly in arrears. "Cumulative" means that dividend rates are defined in advance and provide some guarantee of payment. Why is Microsoft issuing preferred stock? This is the first time Microsoft has issued preferred stock. The stated purpose for the proceeds of this offering is to repurchase common stock. Additionally, some potential investors have expressed an interest in receiving a dividend on Microsoft stock, and some investors will only invest in income-yielding companies. This offering of preferred stock gives those investors a vehicle that allows them to participate in the potential growth of our company, while also receiving dividend income. As with any investment decision, people who are considering purchasing Microsoft preferred stock should contact their own tax and investment advisors and thoroughly read the offering prospectus. When did Microsoft begin issuing preferred stock? The first day of the preferred stock offering was Wednesday, December 18, 1996. The initial price of the preferred stock was set at the closing price of the common stock on Tuesday, Dec. 17: $79 7/8. What is the stock symbol for Microsoft preferred stock? The stock symbol for Microsoft preferred is MSFTP. The stock symbol for Microsoft common is MSFT.