A VC

Microsoft announced this evening that they were paying a $32bn dividend and also were initiating a $30bn stock buyback program.

I own shares in Mister Softee, as Jim Cramer calls the House That Gates Built.

But I sold about 1/3 of my position last week as I began to realize that the company was never going to generate the kinds of returns I want off the capital base they'd accumulated.

Am I sorry? Yes. I should have held on for the $3/share payout that all shareholders of record are going to get. But I still have 2/3 of my position so I am not terribly upset.

As we were headed back home from the airport tonight, the news came across my Blackberry.

My partner Brad and I talked about it. What does it mean?

For one, it means that Gates and Ballmer have realized that there is no way they can effectively invest the $60bn they have in the bank. They are going to give half of it back to the shareholders and invest the rest in buying back the stock over the next four years.

We decided its like Juian Robertson or George Soros recognizing that they can't generate the returns they want to with the huge capital bases they've accumulated and so they give it back to their investors. Gates and Ballmer are not any different.

Can they invest $10bn in their business over the next four years at the rates of return they want. Probably.

Can they invest $60bn? No way. So they are giving it back.

I think its a good move.

I am not sure how Wall Street will react but I think it should help the stock get moving again.

Since I still own 2/3 of my position, I sure hope it will.