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Originally published January 22, 2005 at 12:00 AM | Page modified January 22, 2005 at 12:02 AM

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Microsoft dividend bumped up personal income

Commerce Department says Microsoft's $32.6 billion special dividend payment last month raised personal income nationwide and probably worsened the U.S. current-account deficit in the fourth quarter.

Bloomberg News

Microsoft's $32.6 billion special dividend payment last month raised personal income nationwide and probably worsened the U.S. current-account deficit in the fourth quarter, the Commerce Department said.

About $24 billion of the payment will be recorded as personal-dividend income in December, for an annual rate of $288 billion, the department's Bureau of Economic Analysis said yesterday in a statement. That's enough to boost total U.S. personal income by 2.9 percent in the month.

The $3-a-share, one-time payout by Microsoft, the world's third-biggest company by market value after General Electric and Exxon Mobil, is the largest return of capital ever for a U.S. company. Investors had demanded that the Redmond-based software maker return some of its cash.

"One-time events, such as the Microsoft dividend payout, can have a large effect on the quarterly and monthly estimates" because they are based on annual rates, the statement said. The bureau publishes annualized estimates so that different time periods can be more easily compared.

The statement was issued to answer questions about the dividend, said Ralph Stewart, a spokesman for the Bureau of Economic Analysis. Microsoft has no comment on the bureau's conclusions, said company spokesman Kent Hollenbeck.

The projected surge in personal income would be the biggest since a 3.4 percent gain in December 1993, when many Americans took steps to increase earnings recorded that year ahead of tax increases slated to begin in 1994. Personal income fell by the same percentage the following month, as the one-time gains weren't repeated.

The U.S. current-account balance will "become more negative" by the amount of Microsoft dividends distributed to overseas shareholders, the bureau said. The current-account deficit, the broadest measure of trade, reached a record $164.7 billion in the third quarter.

December figures for personal income are scheduled for release from the Commerce Department on Jan. 31. Fourth-quarter current-account figures will be released March 16.

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