In a bid to attract new investors, the software giant is giving more back to its shareholders to try and shift its stagnating share price. This will be the sixth time giant has raised its dividend since it introduced an 8 cents per share payment to shareholders in 2004.
Microsoft makes tens of billions, but current long-term investors are not happy, as many would have been hoping for a greater payout from the company's short-term investments. Long term investors are frustrated by a near rock-steady share price which offers little to no return.
The move is unlikely to boost the price of its shares, but may appease at least some shareholders.
Though the dividend is hardly to write home about, it is raised by a quarter from $0.16 a share to $0.20 cents a share -- topping the 23 percent or $0.03 a share dividend increase made a year ago.
Microsoft is continuing its $40 billion share repurchase program, which was approved by the company's board in fall 2008, with only $12.2 billion remaining as of July this year.
Shares reacted on Tuesday with Microsoft's share price rising $0.12 cents to $27 in extended trading.
Compared to other technology companies, Microsoft is in the mid- to high-range of other large technology firms on the playing field. Compared to Google and Apple, which do not pay dividends to its shareholders, Microsoft's failure to capitalise on the markets it is investing in and part of is highly reflected in its share price.
With this, it should lead to further questions about Ballmer's tenure over the past few years, particularly since he was made chief executive officer in 2000. Just by counting on one hand, Microsoft has missed search, belly-flopped music and its Zune product, and couldn't compete in the social media world.
Did Ballmer miss the mark and lead Microsoft down a rocky path to a point where the company's share price stagnates? Yes.
But can Ballmer steer the direction of the company back down a path where it does not rely mostly on enterprise licensing and sales of its desktop operating systems -- still only a portion of Microsoft's total product and service line?