
Microsoft Is Dead. Long Live Microsoft. - gibsonf1
http://www.nytimes.com/2004/07/23/opinion/23carr.html?ex=1248321600&en=313e86d1b0f2ac2f&ei=5090&partner=rssuserland
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BrandonM
I read about the fallout from that announcement sometime last year. By
announcing that they were giving back money to their shareholders, they opened
the door for savvy stock market gurus. These guys milked it for all it was
worth by first loading up on the stock in order to get the cash from the
dividends. Because all these people were buying the stock, its price became
artificially inflated, so they proceeded to borrow against the stock at this
point (in order to short-sell later). Then the dividends came, and they got
the $3/share from Microsoft. Immediately after this, they proceeded to sell
the stocks that got them the dividends, which led to the stock price falling
sharply. Finally, to round it all out, they proceeded to make good on the
short-sells once the stocks were low, leading to a nice profit all-around.

I wish I remembered where I read about this scheme; it sounded pretty
brilliant to me. I always wondered, though, if a bunch of people playing the
stock market profited from this, who lost out? I guess the long-time
shareholders and Microsoft, itself.

