Oracle starts a new trend of tech dividends?
Oracle (ORCL) did two things yesterday: It beat Wall Street earnings forecasts, and it set its first dividend. The second action may be more important than the first. The pay-out will be 5 cents a share.
Critics have complained that cash-rich tech companies have not been paying money out to shareholders. This cash is rarely used for M&A activity, or, when it is, only a relatively small amount of the balance sheet is drained. Many of the most successful tech firms like Google (GOOG) and Apple (AAPL) add billions of dollars to their holdings each quarter as their businesses post huge profits.Oracle's move may herald a new trend in Silicon Valley. With shares prices in may big tech companies at or near multi-year lows, investors have limited reasons to buy their shares. Building a yield into the stocks may help reverse that.
Douglas A. McIntyre is an editor at 24/7 Wall St.