Microsoft Might Open Its Wallet

Connors said there is no particular timetable for resolving the EU case and declined to comment on a flurry of recent press reports. On Wednesday, wire services reported that the European Union pushed back the dates for final closed-door hearings in the case to March 15 and March 22 from previously scheduled dates March 3 and March 15.

A settlement may still be possible, Connors indicated. "We are very focused on getting things settled and having a good relationship with the EU," he said.

Ken Broad, a portfolio manager at Transamerica Investment Management, called Connors' commitment to move ahead by July very positive. "Where we stand, it's pretty clear-cut they're egregiously overcapitalized," said Broad, whose firm holds Microsoft shares.

His hope would be for Microsoft to distribute half to two-thirds of its cash in the form of a special dividend and then distribute about 50% of its earnings on an ongoing basis either in the form of a dividend or stock repurchases.

Conceding the latter proposal is controversial, Broad acknowledged he can't think of any tech company that pays such a high dividend. Outside of tech, he points to payroll services company Paychex(PAYX), which pays an annual dividend of 48 cents and earned 80 cents a share. "That hasn't hindered their growth one bit," he said. (Broad's fund is long Paychex.)

Microsoft could be in the same position, Broad suggested. "They don't have very much in the way of capital requirements so a lot of their earnings are backed up with free cash flow," Broad said. "So they are in the enviable position of being able to pay out a high proportion of their earnings -- i.e. 50% in the form of a dividend -- without hindering their growth one bit."

Shares of Microsoft were recently down 18 cents, or 0.7%, at $26.70.

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