3 January 2002 Leading US technology companies are coming under increasing pressure from investors and analysts to start paying their shareholders dividends – just like any other listed company.

And software giant Microsoft is coming under most pressure: The world’s biggest and most profitable software company is sitting on a pile of short-term securities and cash estimated at around $36 billion (€39.8bn). Microsoft’s argument that the money might be needed for ‘a rainy day’ has started to wear thin with industry analysts and investors who want to see some of that money returned to stockholders.

Other cash-rich high-tech groups such as telecoms equipment manufacturer Cisco Systems, hardware and IT services giant IBM – which used to pay dividends – and database market leader Oracle are in the same boat.

More and more investors have been asking why IT and telecoms companies refuse to do what the workhorses of mainstream industry, such as General Electric (GE), take for granted – return some of the cash they have amassed during the financial year to shareholders as a dividend.

To put things in perspective, say analysts, GE has $8.8 billion (€9.7bn) in cash and near-cash reserves, against IBM’s $4 billion (€4.4bn) and Microsoft’s $36 billion (€39.8bn). Microsoft has built up a bigger cash pile than any other company in the world, according to some estimates, and it continues to grow at a rate of around $1 billion (€1.1bn) every month.

Microsoft has always used the argument that it is a fast-growing and innovative business in a risky industrial sector to ward off such demands. That opinion is echoed by many other software vendors. For example, Oracle has claimed that re-investing earnings into the business remains the best way to serve the long-term interests of stockholders.

But given the mature state of the IT industry, fewer and fewer stockholders are prepared to accept such promises of ‘jam tomorrow’.