Microsoft: The Check Is Not in the Mail

The CFO asks investors for patience as the company figures out what to do with $50 billion in cash.
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Be patient. That's what

Microsoft

(MSFT) - Get Report

on Thursday told investors who have been wondering what the company is going to do with its enormously large cash stash, which is inching toward the $50 billion mark.

As he addressed that longstanding question about the company's cash hoard at Microsoft's annual analyst day, CFO John Connors referred to a Willie Nelson song called,

If You've Got the Money (I've Got the Time)

. The basic message: Microsoft needs more time.

"We would ask that people be a little bit patient as we work through the litigation and the business model impact," CFO John Connors said during Microsoft's annual analyst day.

Until Microsoft sees its way through its legal issues -- including a European Union investigation, an antitrust suit from

Sun Microsystems

(SUNW) - Get Report

and class action suits -- the company will have no big program to announce, he said. "We don't have anything to announce today," he said.

"We're managing the money conservatively," he added. "We've got a very hard eye for avoiding investment that subjects these shareholders and other large shareholders to impairment."

Apparently seeking to comfort investors concerned about the world's largest software company's ability to manage such a large balance, Connors used the analyst day to outline how the company invests its money. He said that the company has two portfolios -- a Treasury portfolio primarily invested in fixed-income instruments, and a "strategic portfolio" in which Microsoft invests in other public and private companies. Together, their total exceeds the company's $49 billion in total cash and short-term investments because the company also has $13.7 billion in equity and other investments on its balance sheet.

Connors did acknowledge, however, that the company has had significant impairments in its strategic portfolio, of which 53% is currently dedicated to cable and satellite investments. Since its inception in 1989, he said the portfolio is up 1% to date. He did not disclose how much was invested in this portfolio.

Connors also noted that the company has used its cash to buy back $23.8 billion in stock in the past four years, and said the company's dividend declared earlier this year, costing $857 million, was "not inconsequential."

In the morning, company co-founder, Chairman and Chief Software Architect Bill Gates said Microsoft would spend $6.8 billion on research and development in the current fiscal year, which began in July.

In addition, the company is stepping up its efforts in the small- to medium-size business market, which the company estimates at 43 million customers. The company plans to invest $2 billion in the market, with 1,700 employees dedicated to research and development, and 2,500 selling to those customers.