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Dividend

Dividend

A dividend is the distribution or sharing of parts of profits to a company's shareholders.

Why companies pay dividends

The primary purpose of any business is to create profit for its owners, and the dividend is the most important way the business fulfills this mission. When a company earns a profit, some of this money is typically reinvested in the business and called retained earnings, and some of it can be paid to its shareholders as a dividend. Paying dividends reduces the amount of cash available to the business, but the distribution of profit to the owners is, after all, the purpose of the business.

Types of Dividends

The methods of sharing profits are as follows: # Cash dividends (most common) are those paid out in form of "real cash". It is a form of investment interest/income and are taxable in the year they are paid. It is the most common method of sharing corporate profits. # Stock dividends (common) are those paid out in form of additional stock shares of the issuing corporation, or other corporation (eg its subsidiary corporation). They are usually issued in proportion to shares owned (eg for every 100 shares of stock owned, 5% stock dividend will yield 5 extra shares). #
- When the company distributes these new shares to investors, the price of each share decreases to account for the new shares. This is a recalculation of cost basis. It means that the stock dividends will not be taxed when distributed. #
- Stock dividends benefit the corporation in that they don't need to pay out in "real cash", reducing the financial burdens and saving money for other business operations (eg business expansion). #
- Stock dividends also benefit the shareholder by increasing his/her number of shares of the company. # Property dividends (rare) are those paid out in form of assets from the issuing corporation, or other coporation (eg its subsidiary corporation). Property dividends are usually paid in the form of products or services provided by the corporation. When paying property dividends, the corporation will often use securities of other companies owned by the issuer.

Dividend-reinvestment plans

Some companies have dividend-reinvestment plans. These plans allow shareholders to use dividends to systematically buy small amounts of stock often at no commission. Dividends are not yet paid in gold certificates although this idea has been discussed by mining companies such as Goldcorp.

Reasons why companies avoid paying cash dividends

Companies have often avoid paying cash dividends for several reasons: # Company management and the board believe that it is important for the company to take advantage of opportunities before it, and reinvest its recent profits in order to grow, which will ultimately benefit investors more than a dividend payout at present. This reasoning is sometimes right, but is often wrong, and opponents of this reasoning (such as Benjamin Graham and David Dodd, who complained about the practice in the classic 1934 reference Security Analysis) usually note that this comprises company management dictating to the business's owners how to invest their own money (i.e. the profit of the business). # When dividends are paid, shareholders in many countries, including the United States, suffer from double taxation of those dividends: the company pays income tax to the government when it earns any income, and then when the dividend is paid, the individual shareholder pays income tax to the government on the dividend payment. This is often used as justification for retaining earnings, or for performing a stock buyback, in which the company buys back stock, thereby increasing the value of the stock left outstanding. The shareholder pays no income tax on this transaction. In addition, certain types of specialized investment companies (such as a REIT in the U.S.) allow the shareholder to partially or fully avoid double taxation of dividends. Microsoft is an example of a company who has historically been a proponent of retaining earnings; it did so from its IPO in 1986 until 2003, when it declared it would start paying dividends. By this point Microsoft had accumulated over US$43 billion in cash, and there had been increasing irritation from stockholders who believed this large pile of cash should lie in their hands and not in the company's. Originally, the official reason to amass this large sum was to create a reserve for Microsoft's legal battles; since then, Microsoft appears to have changed tactics such that the reserve is not as necessary.

Franking Credits

In Australia and New Zealand, companies also forward franking credits to shareholders along with dividends. These franking credits represent the tax paid by the company upon its pre-tax profits. One dollar of company tax paid generates one franking credit. Companies can forward any proportion of franking up to a maximum amount that is calculated from the prevailing company tax rate: for each dollar of dividend paid, the maximum level of franking is the company tax rate divided by (1 - company tax rate). At the current 30% rate, this works out at 0.30 of a credit per 70 cents of dividend, or 42.857 cents per dollar of dividend. The shareholders who are able to use them offset these credits against their income tax bills at a rate of a dollar per credit, thereby effectively eliminating the double taxation of company profits. This system is called dividend imputation.

About the name "Dividend"

The name comes from the arithmetic operation of division: if a / b = c then a is the dividend, b the divisor, and c the quotient. In the United States, credit unions generally use the term "dividends" to refer to interest payments they make to depositors. These are not dividends in the normal sense and are not taxed as such; they are just interest payments. Credit unions call them dividends since, as credit unions are owned by their members, interest payments are effectively payments to owners. In the United Kingdom, consumer co-operative societies use the term "dividend" for profit-sharing payments to their members. Unlike joint stock company dividends, these payments are made in proportion to a members' spending with the co-operative society, not the number of shares they hold in it.

External links

- [http://www.studyfinance.com/lessons/dividends/index.mv Dividend Policy] from studyfinance.com at the University of Arizona
- [http://www.greekshares.com/dividend.asp Stock Dividends]
- [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=667781 dividend discount formula] Category:Corporate finance Category:Fundamental analysis Category:Stock market

Shareholder

A shareholder or stockholder is an individual or company (including a corporation), that legally owns one or more shares of stock in a joint stock company. The shareholders are the owners of a corporation. Companies listed at the stock market strive to enhance shareholder value. The shareholder concept is the theory that a company only has responsibilities to its shareholders and owners, and should work solely to benefit these people. Stockholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, stockholder's rights to a company's assets are subordinate to the rights of the company's creditors. This means that stockholders typically receive nothing if a company is liquidated after bankruptcy (if the company had had enough to pay its creditors, it would not have entered bankruptcy), although a stock may have value after a bankruptcy if there is the possibility that the debts of the company will be restructured. Stockholders or shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders. Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other. However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in California, majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders. See Jones v. H. F. Ahmanson & Co., 1 Cal. 3d 93 (1969) [http://online.ceb.com/calcases/C3/1C3d93.htm]. The largest shareholders (in terms of percentages of companies owned) are often mutual funds, and especially passively managed exchange-traded funds.

Profit

:For the television series see Profit (TV series) Profit is a positive return made on an investment by an individual or by business operations. The word comes from Latin meaning "to go forward." It is a relatively ill-defined concept - methods of calculation differ between accountants and economists. Marxist economists refer to it as the 'surplus value' extracted by capitalists from their workers. Profitability refers to the amount of profit received relative to the amount invested, often measured by a rate of profit or rate of return on investment. Economists and accountants measure profit in slightly different ways. What is commonly known as profit is the difference between sales and costs by a business enterprise. However, the term is also used more generally to refer to value added, which only be the same when all the factors of production have been credited their full opportunity cost. The profit motive - enterprises being free to make as much profit as they can given market conditions - is often regarded to be a good thing. It is held to give firms incentives for allocative efficiency and technical efficiency. This idea is a corollary of the theorems of welfare economics and utility maximisation. However, profits can include economic rents, which do not produce efficiency. For instance, a monopoly can have very high profits but produce less economic welfare.

Economic definitions of profit

Caution - these definitions are different from those used by accountants In Economics, a firm is said to be making an economic profit when its revenue exceeds the total opportunity cost of its inputs. It is said to be making an accounting profit if its revenues exceed the total price the firm pays for those inputs. In a single-goods case, economic profit happens when the firm's average cost is less than the price of the product or service at the profit-maximizing output. The economic profit is equal to the quantity output multiplied by the difference between the average total cost and the price. (In circumstances of perfect competition, average cost = marginal cost at the profit-maximising position) All enterprises constitute investments by their owners of capital. The return to owners' capital under competitive competition is the accounting profit and compensates the owner for not being able to make alternative use of their capital. It is the opportunity costs of a venture. Accounting profit exceeds economic profit. The accounting profit sometimes include an element in recognition of the risks that an investor takes. It is often uncertain, because of incomplete information, whether an enterprise will succeed or not. In these cases, economists treat returns to risk as part of the accounting profit, as it is also an element of the cost of capital. Economic profit does not occur in perfect competition. Once risk is accounted for, long-lasting economic profit is thus viewed as an inefficiency caused by monopolies or some other form of market failure. Economic profit is sometimes referred to as supernormal profit and accounting profit as normal profit. The social profit from a firm's activities is the normal profit plus or minus any externalities that occur in its activity. A polluting oil monopoly may report huge profits, but be doing relatively little for the economy and damaging the environment. It would exhibit high economic profit but low social profit.

Accounting definitions of profit

Caution - these definitions are different from those used by economists In the accounting sense of the term, net profit (before tax) is the sales of the firm less costs like as wages, rent, fuel, raw materials, interest on loans and depreciation. Gross profit is profit before depreciation and interest, Net profit after tax is after the deduction of either corporate tax (for a company) or income tax (for an individual). Operating profit is a measure of a company's earning power from ongoing operations, equal to earnings before the deduction of interest payments and income taxes. To accountants, economic profit, or EP, is a single-period metric to determine the value created by a company in one period - usually a year. It is the net profit after tax less the equity charge, a risk-weighted cost of capital. This is almost identical to the economist's definition of economic profit. Some economists define further types of profit:
- Abnormal (or supernormal profit)
- Subnormal profit
- monopoly profit (super profit) Optimum Profit - This is the "right amount" of profit a business can achieve. In business, this figure takes account of marketing strategy, market position, and other methods of increasing returns above the competitive rate.

More varieties of profit

There are commentators who see benefit in making adjustments to economic profit such as eliminating the effect of amortised goodwill or capitalising expenditure on brand advertising to show it's value over multiple accounting periods. The underlying concept was first been introduced by Schmalenbach, but the commercial application of the concept of adjusted economic profit was by Stern Stewart & Co. which has trade-marked their adjusted economic profit as EVA or Economic Value Added.

Benjamin Graham

:This article is about an American economist. For information on the Australian AFL and NFL player, see Ben Graham. Benjamin Graham (1894 – 1976) was an influential economist and professional investor who is today often called "the father of value investing". He is perhaps best known today from frequent references made to him by billionaire investor Warren Buffett, who studied under Graham at Columbia University, and was his only pupil to receive an A+. Warren Buffett credits Graham as grounding him with a sound intellectual investment framework, and described him as the second most influential person in his life after his own father. Graham, a Jew, whose original last name was Grossbaum, was born in London and his family emigrated to the United States when he was one year old. He received his bachelor's degree from Columbia University in 1914. His book, Security Analysis, with David Dodd, was published in 1934 and has been considered a bible for serious investors since it was written. It and The Intelligent Investor published in 1949 (4th edition, 1976), are his two most widely acclaimed books. Warren Buffett describes The Intelligent Investor as the best investment book ever written. Graham exhorted the stock market participant to first draw a fundamental distinction between investment and speculation. He defined an investment operation as one which on a thorough analysis of the facts promises safety of principal and a satisfactory return; anything else is speculation. Graham wrote that the owner of equity stocks should regard them first and foremost as conferring part ownership of a business. With that perspective in mind, the stock owner should not be too concerned with erratic fluctuations in stock prices, since in the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine (i.e. its true value will in the long run be reflected in its stock price). Graham recommended that investors spend time and effort to analyze the financial state of companies. When a company is available on the market at a price which is at a discount to its intrinsic value, a "margin of safety" exists, which makes it suitable for investment. Graham wrote that investment is most intelligent when it is most business-like, a statement which Warren Buffett regarded as the most important words about investment ever written. Graham said that the stock investor is neither right nor wrong because others agreed or disagreed with him; he is right because his facts and analysis are right. Graham's favourite allegory is that of Mr. Market, a very obliging fellow who turns up every day at the stock holder's door offering to buy or sell his shares at a different price. Often, the price quoted by Mr. Market seems plausible, but often it is ridiculous. The investor is free to either agree with his quoted price and trade with him, or to ignore him completely. Mr. Market doesn't mind this, and will be back the following day to quote another price. The point is that the investor should not regard the whims of Mr. Market as determining the value of the shares that the investor owns. He should profit from market folly rather than participate in it. The investor is best off concentrating on the real life performance of his companies and receiving dividends, rather than be too concerned with Mr. Market's often irrational behaviour. Graham was critical of the corporations of his day for obfuscated and irregular financial reporting that made it difficult for investors to discern the true state of the business's finances. He was an advocate of dividend payments to shareholders rather than businesses keeping all of their profits as retained earnings. He also criticized those who advised that some types of stocks were a good buy at any price, because of the prospect of sustained stock price growth, without a good analysis of the business's actual financial condition. These observations remain extremely relevant today. Benjamin Graham wrote that he wished every day to do something foolish, something creative, and something generous. Warren Buffett said that Graham excelled most at the last. Undoubtedly, Graham's generosity in sharing his investment philosophy has benefitted generations of stock market participants.

External links

- [http://www.mises.org/journals/scholar/Leithner.pdf Ludwig von Mises, Meet Benjamin Graham: Value Investing from an Austrian Point of View] by Chris Leithner. Paper Prepared for "Austrian Economics and Financial Markets" | [http://www.mises.org/Media/?action=showname&ID=90 Audio lecture] on the paper, presented at the Ludwig von Mises Institute.
- [http://www.greekshares.com/valueinv.asp Value Investing]
- [http://www.wiley.com/legacy/products/subject/finance/bgraham/index.html The Rediscovered Benjamin Graham - selected writings of the wall street legend], by Janet Lowe.
- [http://bus.utk.edu/finance/fac_staff/Auxier/graham.pdf Honoring Benjamin Graham: The Father of Value Investing], Albert L. Auxier, Ph.D. Associate Professor of Finance, University of Tennessee, Knoxville.
- [http://www.investmentu.com/IUEL/2003/20030609.html Benjamin Graham: Intrinsic Value and Buying Cash at a Discount] by Dr. Steve Sjuggerud, Editor, The Investment U E-Letter. Graham, Benjamin Graham, Benjamin Graham, Benjamin Graham, Benjamin Grahman, Benjamin ja:ベンジャミン・グレアム

Security Analysis

Security Analysis, written by Benjamin Graham and David L. Dodd in 1934, is an influential book on the subject of financial analysis and fundamental analysis.

Publications

- Graham, Benjamin. Dodd, David. Security Analysis: The Classic 1934 Edition. McGraw-Hill. 1996. ISBN 0070244960.

Stock buyback

In the United Kingdom, 'treasury stocks' refer to government bonds or gilts. The British equivalent of 'treasury stock' as used in the USA is treasury share. In the United States, a treasury stock or reacquired stock is stock which is bought back by the issuing company. It reduces the amount of outstanding stocks on the open market ("open market" including insiders holdings). On the balance sheet, treasury stock is listed under shareholder equity as a negative number. Sometimes, companies do this when they feel that their stock is undervalued on the open market. Other times, companies do this to provide a "bonus" or incentive compensation plans for employees. Rather than receive cash, the recipient would get an asset that might appreciate in value faster than cash saved in a bank account. Limitations of treasury stock include:
- Treasury stock does not pay dividend
- Treasury stock has no voting rights
- Total treasury stock can not exceed 5% of total capitalization After buyback, the company can either retire the shares or hold the shares for later resale. Buying back stocks reduces the number of outstanding shares, thus it can cause the value of outstanding shares to appreciate. In addition, it can serve as a signal to investors. One way of accounting for treasury stock is with the cost method. In this method, the paid-in capital account is reduced in the balance sheet when the treasury stock is bought. When the treasury stock is sold back on the open market, the paid-in capital is either debited or credited if is sold for more or less than the initial cost respectively. Another common way for accounting for treasury stock is the par value method. In the par value method, when the stock is purchased back from the market the books will reflect the action as a retirement of the shares. Therefore, common stock is debited and treasury stock is credited. However, when the treasury stock is resold back to the market the entry in the books will be the same as the cost method. In either method, any transaction involving treasury stock cannot decrease the amount of retained earnings. If the treasury stock is sold for more than cost, then the paid-in capital treasury stock is the account that is increased not retained earnings. In auditing financial statements, there is a common practice to check for this error to detect possible attempts to "cook the books".

Regulatory

In the US, the Companies Act of 1955 disallowed companies from holding their own shares. However, the Companies Act of 1993 later repealed this.

Microsoft

Microsoft Corporation (, ) is the world's largest software company, with 2005 global annual sales of 40 billion US dollars and more than 55,000 employees in 85 countries and regions. The company's headquarters are in Redmond, Washington, USA. Microsoft develops, manufactures, licenses, and supports a wide range of software products for computing devices. Its most popular products are the Microsoft Windows operating system and the Microsoft Office suite of productivity software, each of which has achieved near ubiquity in the desktop computer market. Microsoft has footholds in other markets, with assets such as the MSNBC cable television network, the MSN Internet portal, and the Microsoft Encarta computer encyclopedia. The company also markets home entertainment products, such as the Xbox and WebTV. "Micro-Soft" (short for microcomputer software) was founded in Albuquerque, New Mexico in 1975 by Bill Gates and Paul Allen, to develop and sell BASIC interpreters for the Altair 8800. After the market saw a flood of IBM PC clones in the mid-1980s, Microsoft used its new position, which it gained in part due to a contract from IBM, to dominate the home computer operating system market with its MS-DOS operating system. The company later released an initial public offering (IPO) in the stock market, which netted several of its employees millions of dollars due to the ensuing rise of the stock price. The price of the stock continued its rise steadily into the early 2000s. In Microsoft Windows, the company was selling what would become the most widely used operating system in the world, which was originally an add-on for their DOS operating system; Microsoft continued to push into multiple markets, such as computer hardware and television. In addition, Microsoft has historically given customer support over Usenet newsgroups and the World Wide Web, and awards Microsoft MVP status to volunteers who are deemed helpful in assisting the company's customers. With what is generally described as a developer-centric business culture, Microsoft has become widely known for some of its internal codes of conduct for its employees. One example is the "eat your own dogfood" mantra, which describes the practice of using pre-release products inside the company to test them in an environment geared towards the real world. Microsoft has also become notorious for its business practices—the U.S. Justice Department, among others, has sued Microsoft for antitrust violations and software bundling. In addition, Microsoft has been criticized for the security of its software. Despite this, Microsoft has won several awards, such as the "1993 Most Innovative Company Operating in the U.S." by Fortune Magazine. The company is on the Fortune 500 list of companies as of 2005. Microsoft opened its first research center outside the US at the Cambridge Science Park, UK. It currently has research centers around the world.

[http://en.wikipedia.org/w/index.php?title=Microsoft&action=edit§ion=header edit this section]

History

:See also: History of Microsoft Windows. First conceived in 1975 by Bill Gates and Paul Allen, Microsoft has evolved through several stages throughout its history. By 1985, the company was selling the Microsoft Windows operating system and MS-DOS, and had collaborated with IBM to produce OS/2 Warp. By 1992, Microsoft had released an IPO in the stock market and discontinued OS/2 development to focus directly on Windows. By 1995, Windows was the most widely used graphical operating system in the world, and with the introduction of Windows 95, the company became a more consumer-driven company. Microsoft would proceed to enter other business markets, such as publishing and video games, would be sued more than once by the U.S. Justice Department and other governments and companies, and would continue to dominate the operating system market.

1975–84: the founding of Micro-soft

video game.
Top row: Steve Wood (left), Bob Wallace, Jim Lane. Middle row: Bob O'Rear, Bob Greenberg, Marc McDonald, Gordon Letwin. Bottom row: Bill Gates, Andrea Lewis, Marla Wood, Paul Allen.]] Days after reading the January 1 1975, issue of Popular Electronics that demonstrated the Altair 8800, Bill Gates called the creators of the new microcomputer, MITS (Micro Instrumentation and Telemetry Systems), to inform them that he and others had developed a version of the programming language BASIC for the platform. Allen flew to MITS to unveil the new BASIC system. Allen had never handled an Altair, since Gates had carried out all of the product development; however, the demonstration was successful and resulted in a deal with MITS to buy the rights to Allen's and Gates' BASIC for the Altair platform. Having identified a valuable opportunity, Gates left Harvard University to pursue the market and eventually founded "Micro-soft" in Albuquerque, New Mexico. The name Microsoft, without the hyphen, was first used in a letter from Gates to Allen on November 29, 1975, and in November 26, 1976 the name became a registered trademark. The company's first international office was founded on November 1, 1978, in Japan, entitled "ASCII Microsoft". On January 1, 1979, the company moved from Albuquerque to a new home in Bellevue, Washington. Steve Ballmer joined the company on June 11, 1980, and would later succeed Bill Gates as CEO. The company restructured on June 25 1981, to become an incorporated business in its home state of Washington (with a further change of its name to "Microsoft, Inc."). As part of the restructuring, Bill Gates became president of the company and Chairman of the Board, and Paul Allen became Executive Vice President. Microsoft's first operating system was Xenix, released in 1980 and later sold to Santa Cruz Operation. However, the source of the real success for the company was the DOS operating system. On August 12, 1981, after negotiations with Digital Research failed, IBM awarded a contract to Microsoft to provide a version of the CP/M operating system, which was set to be used in the upcoming IBM Personal Computer (PC). However, Microsoft did not have an operating system at the time, so it purchased a CP/M clone called QDOS (Quick and Dirty Operating System) from Tim Paterson of Seattle Computer Products for $50,000, which Microsoft renamed to PC-DOS. Due to potential copyright infringement problems with CP/M, IBM marketed both CP/M and PC-DOS for $250 and $40, respectively, with PC-DOS eventually becoming the standard because of its lower price. Around 1983, in collaboration with numerous companies, Microsoft created a home computer system, MSX, which contained its own version of the DOS operating system, entitled MSX-DOS; this became relatively popular in Japan and Europe. Later, after Compaq successfully cloned the IBM BIOS, the market saw a flood of IBM PC clones. Microsoft was quick to use its position to dominate the home computer operating system market. Microsoft began licensing its operating system for use on non-IBM PC clones, and called this version of the operating system MS-DOS (short for Microsoft Disk Operating System). By marketing MS-DOS aggressively to manufacturers of IBM-PC clones, Microsoft rose from a small player to one of the major software vendors in the home computer industry. Starting on May 2, 1983, with the "Microsoft Mouse", Microsoft entered markets such as computer hardware. This expansion included Microsoft Press, a book publishing division, on November 10 the same year, which debuted with two titles: "Exploring the IBM PC Home Computer" by Peter Norton, and "The Apple Macintosh Book" by Cary Lu.

1985–91: the rise and fall of OS/2

Cary Lu The Republic of Ireland became home to Microsoft's first international production facility in 1985, and on November 20 Microsoft released its first retail version of Microsoft Windows, originally a graphical extension for its MS-DOS operating system. In August, Microsoft and IBM partnered in the development of a different operating system called OS/2. OS/2 was marketed in connection with a new hardware design proprietary to IBM, the PS/2. Shortly afterwards on February 16, 1986, Microsoft relocated to Redmond, Washington. Around one month later, on March 13, the company went public with an IPO, raising $61 million at $21.00 per share. By the end of the trading day, the price had risen to $28.00. In 1987, Microsoft eventually released their first version of OS/2 to OEMs. Continuing its trend of rebranding products from other companies, Microsoft announced SQL Server on January 13, 1988, a relational database management system for companies that was based on technology licensed from Sybase. In 1989, Microsoft announced at Comdex that the 1991 release of Windows 3.0 would be the last version of Windows. Over the next few years, Microsoft continued to issue statements indicating that OS/2 was the future of computing. On May 16, 1991, Bill Gates announced to Microsoft employees that the OS/2 partnership was over, and that Microsoft would henceforth focus its platform efforts on Windows and the Windows NT kernel. Some people, especially developers who had ignored Windows and committed most of their resources to OS/2, were taken by surprise, and accused Microsoft of deception. The Windows changeover was frequently referred to in the industry as "the head-fake". In the ensuing years, the popularity of OS/2 declined, and Windows quickly became the favored PC platform. 1991 also marked the founding of Microsoft Research, an organization in Microsoft for researching computer science subjects, and Microsoft Visual Basic, a popular development product for companies and individuals.

1992–95: domination of the corporate market

Microsoft Visual Basic During the transition from MS-DOS to Windows, the success of Microsoft's product Microsoft Office allowed the company to gain ground on application-software competitors, such as WordPerfect and Lotus 1-2-3. Some allege that Microsoft used its inside knowledge of the DOS and Windows kernels and of undocumented Application Programming Interface features to make Office perform better than its competitors, but internal sources at Microsoft later revealed that the Office team did not have access to the Windows source code at the time, and relied on reverse engineering. Eventually, Microsoft Office became the dominant business suite, with a market share far exceeding that of its competitors. In March 1992, Microsoft released Windows 3.1 along with its first promotional campaign on TV; the software sold over three million copies in its first two months on the market. In October, Windows for Workgroups 3.1 was released with integrated networking capabilities such as peer-to-peer file and printing sharing. In November, Microsoft released the first version of their popular database software Microsoft Access. By 1993, Windows had become the most widely used GUI operating system in the world. Fortune Magazine named Microsoft as the "1993 Most Innovative Company Operating in the U.S.". The year also marked the end of a five-year legal case brought by Apple, dubbed Apple Computer, Inc. v. Microsoft Corp., in which the ruling was in Microsoft's favor. That same year, Microsoft released Windows for Workgroups 3.11, a new version of the consumer line of Windows, and Windows NT 3.1, a server-based operating system with a similar user interface to consumer versions of the operating system, but with an entirely different kernel. As part of its strategy to broaden its business, Microsoft released Microsoft Encarta in 1994, the first encyclopedia designed to run on a computer. Microsoft also created the Microsoft Plus product support program for its customers, a service that offered cost savings on Microsoft products. The name of that program was later used for several expansion packs for Windows. The company changed its slogan to "Where do you want to go today?" in that year, as part of an attempt to appeal to nontechnical audiences in a US$ 100 million advertising campaign, which some critics regarded as uninspired. Dreamworks SKG and Microsoft formed a new company, Dreamworks Interactive, to produce interactive and multimedia entertainment properties in 1995. In March, Microsoft released Microsoft Bob, a Windows 3.1 program manager replacement, which is widely considered Microsoft's most unsuccessful product; its unpopularity became the source of many jokes. Up until 1995, Microsoft was a business-oriented company. However, in August 1995, it released a new version of its flagship software, Microsoft Windows 95, with a completely new user interface, including a novel start button; more than a million copies of Microsoft Windows 95 were sold in the first four days after its release. The new version of Windows was the start of a major transition towards a consumer-oriented company. In September, the Chinese government chose Windows to be the operating system of choice in that country, and entered into an agreement with the Company to standardize a Chinese version of the operating system. Microsoft also released the Microsoft Sidewinder 3D Pro joystick in an attempt to further expand its profile in the computer hardware market.

1995–99: foray into the Internet and other venues

computer hardware In the mid-90s, Microsoft began to expand its product line into computer networking and the World Wide Web. On August 24, 1995, it launched a major online service, MSN (Microsoft Network), as a direct competitor to AOL. MSN became an umbrella service for Microsoft's online services, using Microsoft Passport as a universal login system for all of its websites. The company continued to branch out into new markets in 1996, starting with a joint venture with NBC to create a new 24/7 cable news station, MSNBC. The station was launched on July 16 to compete with similar news outlets—in particular, CNN; in the same year, Microsoft launched Slate, an online magazine edited by Michael Kinsley, which offered political and social commentary along with the cartoon Doonesbury. In an attempt to extend its reach in the consumer market, the Company acquired WebTV, which enabled consumers to access the Internet from their televisions. Microsoft entered the palm computing market in November with Windows CE 1.0, a new built-from-scratch version of their flagship operating system, specifically designed to run on low-memory, low-performance machines, such as handhelds and other palm-sized computers. 1996 saw the release of Windows NT 4.0, which brought the Windows 95 GUI and Windows NT kernel together. While Microsoft largely failed to participate in the rise of the Internet in the early 1990s, some of the key technologies in which the company had invested to enter the Internet market started to pay off by the mid-90s. One of the most prominent of these was ActiveX, an application programming interface built on the Microsoft Component Object Model (COM); this enabled Microsoft and others to embed controls in many programming languages, including the company's own scripting languages, such as JScript and VBScript. ActiveX included frameworks for documents and server solutions. The company also released the Microsoft SQL Server 6.5, which had built-in support for internet applications. Later in 1997, Microsoft Office 97 as well as Internet Explorer 4.0 were released, marking the beginning of the takeover of the browser market from rival Netscape, and by agreement with Apple, Internet Explorer was bundled with the Apple Macintosh operating system as well as Windows. Windows CE 2.0, the handheld version of Windows, was released this year, which included a host of bug fixes and new features designed to make it more appealing to corporate customers. In October, the Justice Department filed a motion in the Federal District Court in which they stated that Microsoft had violated an agreement signed in 1994, and asked the court to stop the bundling of Internet Explorer with Windows. In 1998, Microsoft released an update to the consumer version of Windows, Windows 98. Windows 98 came with Internet Explorer 4.0 SP1 (which had Windows Desktop Update bundled), and included new features from Windows 95 OSR 2.x including the FAT32 file system, and new features specifically for Windows 98, such as support for multiple displays. Microsoft also launched its Indian headquarters that year, which would eventually become the company's second largest after its U.S. headquarters. Steve Ballmer was appointed president of Microsoft, and Bill Gates remained as Chair and CEO. Later in 1999, Microsoft Office 2000 was released, along with Internet Explorer 5.0.

2000–05: legal issues, XP, and .NET

Internet Explorer 5.0. The largest Microsoft campus outside the United States.]] On May 18, 1998, the U.S. Department of Justice and 20 U.S. states filed charges against Microsoft, stating that Microsoft illegally abused its monopoly power in its sales of Windows, in United States v. Microsoft. However, it was not until April 3, 2000 that a ruling was made that Microsoft had to be split into two companies. However, in June 2001, part of that ruling was overturned by a federal appeals court, and in September the Justice Department decided to seek a settlement with Microsoft instead of trying to split it up. While the trial was underway, on February 17, 2000 Microsoft released Windows 2000, which some consider a significant improvement over previous versions. It provided a similar OS stability to that of its Unix counterparts. Unlike previous consumer-level operating systems, Windows 2000 was built on the Windows NT kernel, rather than the DOS kernel as previous consumer versions of Windows had been. Windows 2000 also provided a DOS emulator that could run most old DOS applications from previous versions of Windows. During the trial, Bill Gates stepped down as CEO and Steve Ballmer became the new CEO, with Bill Gates remaining chairman and Chief Software Architect. In the same year, Microsoft released a new version of the consumer version of their flagship product, Windows Me, (Millennium Edition). Widely regarded as one of the most unstable operating systems Microsoft had ever produced, its main features were enhanced multimedia capabilities, such as an automated video editor. In June, the company released a new version of its hand-held operating system, Windows CE 3.0. The main change was the new programming APIs of the software. Previous versions of Windows CE supported only a small subset of the WinAPI, the main development library for windows, and with Version 3 of Windows CE, the operating system now supported nearly all of the core functionality of the WinAPI. In 2001, Microsoft released Windows XP, which brought the consumer and business lines of Windows together, combining the kernel of Windows 2000 with features of its consumer line of Windows, and enhancing the DOS emulation capabilities of the OS. Among the new features was an entirely new interface. However, it included the controversial Microsoft Product Activation, a part of that software that required people to register with Microsoft before using the product for the first time, and if they did not the product would cease to function. This would become a hallmark of the Company's other products, including Microsoft Office. Microsoft Product Activation In 2003, Microsoft launched the .NET initiative, along with new versions of some of its development products, such as Microsoft Visual Studio. The initiative has been an entirely new development API for Windows programming, and includes a new programming language, C#. Windows Server 2003 was launched, featuring enhanced administration capabilities, such as new user interfaces to server tools. In 2004, the Company released Windows XP Media Center Edition 2005, a version of Windows XP specifically designed for multimedia capabilities, and Windows XP Starter Edition, a version of Windows XP with a smaller feature set designed for entry-level consumers. In March 2004, the European Union brought legal action against Microsoft for antitrust violations. Eventually Microsoft was fined $613 million, ordered to divulge certain protocols to competitors, and to produce a version of Windows that did not include the Windows Media Player. Microsoft announced a new version of its MSN search service later in 2005, designed to compete with Google.

Product divisions

Microsoft sells a wide range of products, many of them developed internally, such as Microsoft BASIC and Microsoft Word. Others were acquired and rebranded by Microsoft:
- Microsoft Project, a project management package;
- Visio, a charting package;
- FoxPro, a database;
- Links, a golf game;
- Visual SourceSafe, a developer's tool;
- DoubleSpace, a compression tool;
- Virtual PC, software to emulate different version of Windows, which was acquired from Connectix; and
- MS-DOS itself, the basis for the company's success. Many of these products have undergone continual development by the Company. Internet Explorer is based on code licensed from Spyglass, Inc.; the initial development of the software was performed outside Redmond in Spyglass headquarters. In April 2002, Microsoft reorganized into seven core business groups—'each an independent financial entity—to delegate all responsibility and more closely track the performance of each unit. On September 20th, 2005, Microsoft announced a rationalization of its original seven business groups to three core divisions: the Windows Client, MSN and Server and Tool groups were merged into the Microsoft Platform Products & Services Division; the Information Worker and Microsoft Business Solutions groups were merged into the Microsoft Business Division; and the Mobile and Embedded Devices and Home and Entertainment groups were merged into the Microsoft Entertainment and Devices Division.

Microsoft Platform Products & Services Division

2005 This division produces Microsoft's flagship product, the Windows operating system. It has been produced in many versions, including Windows 3.1, Windows 95, Windows 98, Windows 2000, Windows XP and Windows Server 2003. Almost all IBM compatible personal computers designed for the consumer come with Windows preinstalled. The next planned version of Windows is Windows Vista (code-named Windows Longhorn). The online service MSN, the cable television station MSNBC, and the Microsoft online magazine Slate are all part of this division. Slate was later acquired by The Washington Post on December 21, 2004. At the end of 1997, Microsoft acquired Hotmail, the first and most popular webmail service, which it rebranded as "MSN Hotmail". Later in 1999 Microsoft introduced MSN Messenger, an instant messaging client, to compete with the popular AOL Instant Messenger. Microsoft Visual Studio is the company's set of programming tools and compilers. The software product is GUI-oriented and links easily with the Windows APIs, but must be specially configured if used with non-Microsoft libraries. The current version is Visual Studio .NET 2003, named after the .NET initiative, a Microsoft marketing initiative covering a number of technologies. Microsoft's definition of .NET continues to evolve. As of 2004, .NET aims to ease the development of Microsoft Windows-based applications that use the Internet, by deploying a new Microsoft communications system, Indigo. This will address some issues previously introduced by Microsoft's DLL design, which made it difficult to manage, install multiple versions of complex software packages on the same system (see DLL-hell), and provide a more consistent development platform for all Windows applications (see Common Language Infrastructure. In addition, the Company established a set of certification programs to recognize individuals who have expertise in its software and solutions. Similar to offerings from Cisco, Sun Microsystems, Novell, IBM, and Oracle Corporation, these tests are designed to identify a minimal set of proficiencies in a specific role; this includes developers ("Microsoft Certified Solution Developer"), system/network analysts ("Microsoft Certified Systems Engineer"), trainers ("Microsoft Certified Trainers") and administrators ("Microsoft Certified Systems Administrator"). Microsoft offers a suite of server software, entitled Windows Server System. Windows Server 2003, an operating system for network servers, is the core of the Windows Server System line. Another server product, Systems Management Server, is a collection of tools providing remote-control abilities, patch management, software distribution, and a hardware/software inventory. Other server products include:
- SQL Server, a relational database management system;
- Exchange Server, for certain business-oriented e-mail features;
- Small Business Server, for messaging and other small business-oriented features; and
- BizTalk Server, for employee integration assistance and other functions.

Microsoft Business Division

BizTalk Server The Microsoft Business Division produces Microsoft Office, which is the company's line of office software. The software product includes:
- Word, a word processor;
- Access, a personal relational database application;
- Excel, a spreadsheet program;
- Outlook, Windows-only groupware, frequently used with the Exchange server;
- PowerPoint, presentation software; and Microsoft FrontPage, a WYSIWYG HTML editor. With the release of Office 2003, a number of other products were brought under the Office banner, including Microsoft Visio, Microsoft Project, Microsoft MapPoint, Microsoft InfoPath, Microsoft Publisher and Microsoft OneNote. The division focuses on developing financial and business management software for companies. These products include products formerly produced by the Business Solutions Group, which was created in April 2001 with the acquisition of Great Plains. Subsequently, Navision was acquired to provide a similar entry into the European market, resulting in the planned release of Microsoft Navision 4.0 during the week of 18 October, 2004. The group markets Axapta and Solomon, catering to similar markets, which is scheduled to be combined with the Navision and Great Plains lines into a common platform called Microsoft Dynamics.

Microsoft Entertainment and Devices Division

Microsoft Dynamics Microsoft has attempted to expand the Windows brand into many other markets, with products such as Windows CE for PDAs and its "Windows-powered" Smartphone products. Microsoft initially entered the mobile market through Windows CE for handheld devices, which today has developed into Windows Mobile 5. The focus of the operating system is on devices where the OS may not directly be visible to the end user, in particular, appliances and cars. The company produces MSN TV, formerly WebTV, a television-based Internet appliance. Microsoft used to sell a set-top Digital Video Recorder (DVR) called the UltimateTV, which allowed users to record up to 35 hours of television programming from a direct-to-home satellite television provider DirecTV. This was the main competition in the UK for bSKYb's SKY + service, owned by Rupert Murdoch. UltimateTV has since been discontinued, with DirecTV instead opting to market DVRs from TiVo Inc. The division includes consumer and Macintosh software, along with computer hardware and entertainment software. Microsoft sells computer games that run on Windows PCs, including titles such as Age of Empires and the Microsoft Flight Simulator series. It produces a line of reference works that include encyclopedias and atlases, under the name Encarta. Microsoft Zone hosts free premium and retail games where players can compete against each other and in tournaments. Microsoft entered the multi-billion-dollar game console market dominated by Sony and Nintendo in late 2001, with the release of the Xbox. As of 2005, the console ranks second to Sony's PlayStation 2 and ahead of Nintendo's GameCube in market share in the United States (although behind the two worldwide). The console shipped 22 million units compared with competitor PlayStation 2 at 90 million units, and the company took a 4 billion dollar loss due to the console . Microsoft develops and publishes its own video games for this console, with the help of its Microsoft Game Studios subsidiary, in addition to "third party" Xbox video-game publishers such as Electronic Arts and Activision, who pay a license fee to publish games for the system. The most recent version of the Xbox is the Xbox 360. Microsoft markets a number of computing-related hardware products, including mice, keyboards, joysticks, and gamepads, along with other game controllers, the production of which is outsourced in most cases. The division houses Microsoft's Macintosh Business Unit, the largest developer of Macintosh software outside Apple itself; it produces such software as Microsoft Office for the Mac (sometimes called "Macintosh Office"), which includes Entourage, a Macintosh-specific application not available in the Windows version of Microsoft Office.

Business culture

Entourage Microsoft has often been described as having a developer-centric business culture. A great deal of time and money is spent each year on recruiting young university-trained software developers who meet very exacting criteria, and on keeping them in the company. For example, while many software companies often place an entry-level software developer in a cubicle desk within a large office space filled with other cubicles, Microsoft assigns a private or semiprivate closed office to every developer or pair of developers. In addition, key decision makers at every level are either developers or former developers. In a sense, the software developers at Microsoft are considered the "stars" of the company in the same way that the sales staff at IBM are considered the "stars" of their company. This culture is reflected in their hiring process—the "Microsoft Interview" is notorious for off-the-wall questions such as "Why is a manhole cover round?" and is a process often mimicked in other organizations. Note that, although they were once ubiquitous, recently fewer interviewers have been using these types of questions. Within Microsoft the expression "eating our own dog food" is used to describe the policy of using the latest Microsoft products inside the company in an effort to test them in "real-world" situations. Only prerelease and beta versions of products are considered dog food. This is usually shortened to just "dog food" and is used as noun, verb, and adjective. For fun, Microsoft also hosts the Microsoft Puzzle Hunt, an annual puzzle hunt (a live puzzle game where teams compete to solve a series of puzzles) held at the Redmond campus. It is a spin-off of the MIT Mystery Hunt. In an ever changing world, Microsoft expects its employees to be comfortable with ambiguity. They may not, for example, know with any degree of certainty when a product will ship, what it will be called, or what features will be included. The business culture expects agile thinkers to rapidly adjust to dramatic changes. Microsoft also fosters a general attitude of long-term strategic wariness in its managers, who are expected to be ready for any challenge from the competition or the market. In this frame of mind, being the largest software company in the world is not seen as a form of safety or a guarantee of future success. For instance, future competitors could rise from other industries, or computer hardware companies could try to become less dependent on Microsoft, or consumers could decide not to upgrade their software as often. Microsoft requires its managers to maintain vigilance and sustain a dynamic expansion in new markets.

User culture

Technical reference for developers and articles for various Microsoft magazines such as Microsoft Systems Journal (or MSJ) is available through Microsoft's MSDN site, short for Microsoft Developer Network. MSDN also offers subscriptions for companies and individuals, and the more expensive subscriptions usually offer access to pre-release beta versions of Microsoft software. In recent years, Microsoft launched a community site for developers and users, entitled Channel9, which provides many modern features such as a wiki and an Internet forum. Most free technical support available through Microsoft is provided through online Usenet newsgroups (in the early days it was also provided on Compuserve). There are several of these newsgroups for nearly every product Microsoft provides, and often they are monitored by Microsoft employees. People who are helpful on the newsgroups can be elected by other peers or Microsoft employees for Microsoft Most Valuable Professional (MVP) status, which entitles people to a sort of special social status, in addition to possibilities for awards and other benefits.

Corporate affairs

Corporate structure

The company is run by its Board of Directors, which consists of ten people, made up of mostly company outsiders (as is customary for publicly traded companies). Current members of the board of directors of Microsoft are: Steve Ballmer, James Cash, Jr., Dina Dublon, Bill Gates, Raymond Gilmartin, Ann Korologos, David Marquardt, Charles Noski, Helmut Panke, and Jon Shirley. The ten board members are elected every year at the annual shareholders' meeting, and those who do not get a majority of votes must submit a resignation to the board, which will subsequently choose whether or not to accept the resignation. There are five committees within the board which have oversight over more specific matters. These committees include the Audit Committee, which handles accounting issues with the company including auditing and reporting; the Compensation Committee, which approves compensation for the CEO and other employees of the company; the Finance Committee, which handles financial matters such as proposing mergers and acquisitions; the Governance and Nominating Committee, which handles various corporate matters including nomination of the board; and the Antitrust Compliance Committee, which attempts to prevent company practices from violating antitrust laws. There are several other aspects to the corporate structure of Microsoft. For worldwide matters there is the Executive Team, made up of sixteen company officers across the globe, which is charged with various duties including making sure employees understand Microsoft's culture of business. The sixteen officers of the Executive Team include the Chairman and Chief Software Architect, the CEO, the General Counsel and Secretary, the CFO, senior and group vice presidents from the business units, the CEO of the Europe, the Middle East and Africa regions; and the heads of Worldwide Sales, Marketing and Services; Human Resources; and Corporate Marketing. In addition to the Executive Team there is also the Corporate Staff Council, which handles all major staff functions of the company, including approving corporate policies. The Corporate Staff Council is made up of employees from the Law and Corporate Affairs, Finance, Human Resources, Corporate Marketing, and Advanced Strategy and Policy groups at Microsoft. Other Executive Officers include the Presidents and Vice Presidents of the various product divisions, leaders of the marketing section, and the CTO, among others.

Stock

When the company debuted its IPO in March 12, 1986, the stock price was $22. By the close of the first trading day, the stock had closed at twenty-eight dollars, or 97c, compared with the time period after the company's first nine splits. The initial close and ensuing rise in subsequent years made several Microsoft employees millions. The stock price peaked in 1999 at around 119 dollars (60,928 dollars adjusting for splits). While the company has had nine stock splits, the first of which was in September 18, 1987, the company did not start offering a dividend until January 16, 2003. The dividend for the 2003 fiscal year was eight cents per share, followed by a dividend of sixteen cents per share the subsequent year. The company switched from quarterly to yearly dividends in 2005, for eight cents a share per quarter with a special one-time payout of three dollars per share for the second quarter of the fiscal year. Around 2002 the stock price began a slow descent that continued through 2005. The company had its ninth split on February 2, 2003, in what could have been an attempt to arouse interest in the stock, but the price continued to stagnate regardless. On the September 23, 2005, episode of CNBC's Mad Money, the host of the show, Jim Cramer, called Microsoft's stock "the most hated stock on Wall Street".

Diversity

Microsoft received a 86% rating in the 2004 Corporate Equality Index from the Human Rights Campaign relating to its policies concerning LGBT (lesbian, gay, bisexual and transsexual) employees. According to the Human Rights Campaign, this was in line with the industry standard . Through the work of the Gay and Lesbian Employees at Microsoft (GLEAM) group and Diversity, Microsoft added gender expression to its antidiscrimination policies in April 2005, and the Human Rights Campaign upgraded Microsoft's Corporate Equality Index rating to 100%, putting it among the most progressive companies in the world. Microsoft also received criticism from the Human Rights Campaign and many others in April 2005 for withdrawing support for Washington's H.B. 1515 bill that would extend the state's current antidiscrimination laws to people with alternate sexual orientations. However, under harsh criticism from both outside and inside the company's walls, Microsoft eventually supported the bill again in May 2005 . Even though it hires many domestic American workers, Microsoft generally goes up to the annual limit in hiring foreign workers with H1B visas. Bill Gates has criticized Congress for the cap on the H1B visas, which he claims makes it difficult to hire employees for the company. Proponents of the cap cite economic and security reasons for the current law. Microsoft was also named one of the 100 Best Companies for Working Mothers in 2004 by Working Mother magazine.

Logo

Working Mother In 1987, Microsoft adopted its current logo, the so-called "Pacman Logo" designed by Scott Baker. According to the March 1987 Computer Reseller News Magazine, "The new logo, in Helvetica italic typeface, has a slash between the o and s to emphasize the "soft" part of the name and convey motion and speed." Employees ran a campaign to save the old logo, which was green, in all uppercase, and featured a fanciful letter O nicknamed the blibbet, but it was nevertheless discarded.

Criticism

Working Mother Microsoft has been the focus of much controversy in the computer industry, especially since the 1980s; in particular, which some some think its business tactics as unfair and anticompetitive. Some describe Microsoft's business tactics as "embrace, extend and extinguish", in which Microsoft initially embraces and extends a competing standard or product, only to later extinguish it through such actions as writing their own incompatible version of the software or standard. Microsoft has also been called a "velvet sweatshop" in reference to the company working its employees to the point where it might be bad for their health. The first instance of the term in reference to Microsoft originated from a Seattle Times article in 1989, and later became used to describe the company by some of Microsoft's own employees. In rulings following antitrust litigation, U.S. courts ruled that Microsoft is an abusive monopoly, and the company endures legal attacks along these lines in many countries around the world; these are successful to varying degrees, but have not yet forced serious reform such as forcing a separation of the company. Some also accuse Microsoft of allowing the user interface of its products to become inconsistent and overly complicated, requiring interactive "wizards" to function as an extra layer between the user and the interface. The security of Microsoft products (such as Internet Explorer) is also questioned by some as being overly vulnerable to computer viruses and malicious attacks. In addition, proponents of free software are engaged with Microsoft in a debate over the Total cost of ownership (TCO) of its products, as some perceive Microsoft software as more expensive to purchase, use and maintain than competitors' software. A July, 2003 article in the New York Times, accused Microsoft founder, Bill Gates, of stealing ideas for the development of Windows from its competitor, Apple. Microsoft has also been criticized for its end user license agreements, which some believe are too restrictive. As detailed in this article, Microsoft has purchased the products of many other companies to market as its own. It has also duplicated the innovations of other companies (Apple in particular) in products which have in many cases gone on

US dollar

:USD redirects here. For other uses, see USD (disambiguation). The United States dollar, or American dollar, is the official currency of the United States. It is also widely used as a reserve currency outside the United States. Currently, the issuance of currency is controlled by the Federal Reserve Banking system. The most commonly used symbol for the U.S. dollar is the dollar sign ($). The ISO 4217 code for the United States Dollar is USD; the U.S. dollar is also referenced as US$ by the International Monetary Fund. In 1995, over $380 billion (380 G$) in U.S. currency was in circulation, two-thirds of it overseas. As of April 2004 nearly $700 billion [http://www.federalreserve.gov/boarddocs/speeches/2004/20040426/default.htm] was in circulation, with an estimated half to two-thirds of it still being held overseas [http://www.federalreserve.gov/paymentsystems/coin/default.htm]. The United States is one of many countries that use a currency known as a dollar. Several countries use the U.S. dollar as their official currency, and many others allow it to be used in a de facto legal capacity. See dollar. The colloquialism buck is often used to refer to a U.S. dollar. This term, dating to the 18th century, may have originated with the colonial fur trade. Grand, sometimes shortened to simply G, is a common term for the amount of $1,000. Banknotes' nicknames are usually the same as their values (such as five, twenty, etc.); however, the $1 bill is often called a single, and the $100 bill has gotten the nickname benjamin (after the portrait of Benjamin Franklin that it bears).

Overview

The U.S. dollar uses the decimal system, consisting of 100 cents (symbol ¢). In another division, there are 1,000 mills or ten dimes to a dollar; additionally, the term eagle was used in naming gold coins. However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the name of the coin with the value of 10¢, while "eagle" and "mill" are largely unknown to the general public, though mills are sometimes used in matters of tax levies and gasoline prices. When currently issued in circulating form, denominations equal to or less than a dollar are emitted as U.S. coins while denominations equal to or greater than a dollar are emitted as Federal Reserve notes. (Both one-dollar coins and notes are produced today, although the note form is significantly more common.) In the past, paper money was occasionally issued in denominations less than a dollar (Fractional Currency) and gold coins were issued for circulation up to the value of twenty dollars. U.S. coins are produced by the United States Mint. U.S. dollar banknotes have been printed by the Bureau of Engraving and Printing for the Federal Reserve since 1914. They began as large-sized notes. In 1928, they switched to small-sized notes, for reasons that have yet to be explained. A logical explanation would be to reduce costs in producing bills, by allowing more bills to be printed on the same amount of paper. small-sized note Notes above the $100 denomination ceased being printed in 1946 and were officially withdrawn from circulation in 1969. These notes were used primarily either in inter-bank transactions or by organized crime; it was the latter usage that prompted President Richard Nixon to issue an executive order in 1969 halting their use. With the advent of electronic banking, they became unnecessary. Notes in denominations of $500, $1,000, $5,000, $10,000, and $100,000 were all produced at one time; see large denomination bills in U.S. currency for details. See History of the American dollar for more info about the currency's history.

United States coins

Main article: United States coinage In normal circulation, there are coins in the denominations 1¢ (penny), 5¢ (nickel), 10¢ (dime), 25¢ (quarter), 50¢ (half dollar; uncommon), and $1 (uncommon). Dollar coins have not been very popular in the United States. Silver dollars were created from 1794 through 1935 with many gaps; then a copper-nickel dollar of the same large size was minted from 1971 through 1978. The Susan B. Anthony dollar coin was introduced in 1979; these proved to be unpopular because they were often mistaken for quarters, thanks to their nearly-equal size, their milled edge, and their similar color. Minting of these dollars for circulation ended in 1980 (collectors' pieces were struck in 1981), but, as with all past U.S. coins, they remain legal tender. As the number of Anthony dollars held by the Federal Reserve and dispensed primarily to make change in postal and transit vending machines had been virtually exhausted, additional Anthony dollars were struck in 1999. In 2000, a new $1 coin featuring Sacagawea was introduced, which corrected some of the mistakes of the Anthony dollar by having a smooth edge and a gold color, without requiring changes to vending machines which accept the Anthony dollar. However, this new coin has failed to achieve the popularity of the still-existing $1 bill and is rarely used in daily transactions. The failure to simultaneously withdraw the dollar bill (the Save the Greenback Act of 1995 banned its phasing out) and weak publicity efforts have been cited by coin proponents as primary reasons for the failure of the dollar coin to gain popular support. Some cynics also point out that the Federal Reserve makes more profit from dollar bills than dollar coins because they wear out in a few years, whereas coins are more permanent. As most vending machines are incapable of making change in banknotes, they commonly only accept $1 bills, though a few will give change in dollar coins. Also, some banks, such as Bank of America only distribute dollar coins through the same mechanisms as one would purchase foreign currency. Reaching into the past, the United States has minted other coin denominations since 1793: half-cent, two-cent, three-cent, twenty-cent, $2.50, $3.00, $4.00, $5.00, $10.00, and $20.00. Technically, all these coins are still legal tender at face value, though they are far more valuable today for their numismatic value, and for gold and silver coins, their precious metal value. The United States Mint also produces gold and platinum bullion coins, called "American Eagles", all of which are legal tender though their use in everyday transactions is virtually non-existent. The reason for this is that they are not intended for use in transactions and thus the face value of the coins are much lower than the worth of the precious metals in them. The American Silver Eagle bullion coin is only issued in the $1 (1 troy oz) denomination. The American Gold Eagle bulllion coin denominations (with gold content) are: $5 (1/10 troy oz), $10 (1/4 troy oz), $25 (1/2 troy oz), and $50 (1 troy oz). The American Platinum Eagle bullion coin denominations (with platinum content) are: $10 (1/10 troy oz), $25 (1/4 troy oz), $50 (1/2 troy oz), and $100 (1 troy oz). The silver coin is 99.9% silver, the gold coins are 91.67% gold (22 karat), and the platinum coins are 99.95% platinum. These coins are not available from the Mint for individuals, but must be purchased from authorized dealers. The Mint also produces high quality "proof" coins, intended for collectors, in the same denominations and bullion content, which are available for individuals. The largest denomation of currency currently printed or minted by the United States is the $100 bill and the $100 troy ounce Platinum Eagle.

International use

karat A few nations besides the United States use the U.S. dollar (USD) as their official currency. Ecuador, El Salvador, and East Timor all adopted the currency independently. The former members of the US-administered Trust Territory of the Pacific Islands, including Palau, the Federated States of Micronesia, Northern Mariana Islands and the Marshall Islands, chose not to issue their own currency after becoming independent. Additionally, the local currencies of Bermuda, the Bahamas, Panama, and a few other states can be freely exchanged at a 1:1 ratio for USD. The currency of Barbados is similarly convertible at a 2:1 ratio. Argentina used a fixed 1:1 exchange rate between the Argentine peso and the U.S. dollar from 1991 until 2002. In Lebanon, one dollar is equal to 1500 Lebanese pound, and is used interchangeably with local currency as a de facto legal tender. The exchange rate between the Hong Kong dollar and the United States dollar has also been linked since 1983 at HK$7.8/USD, and Pataca of Macau, pegged to Hong Kong dollar at MOP1.03/HKD, indirectly linked to the US dollar roughly at MOP8/USD. Several oil-producing Gulf Arab countries, including Saudi Arabia and Kuwait, also peg their currencies to the dollar, since the dollar is the currency used in the international oil trade. The renminbi used by the People's Republic of China had been informally and controversially pegged to the dollar since the mid-1990s at Y8.28/USD until July 21, 2005. Likewise, Malaysia had pegged its ringgit at RM3.8/USD since 1997. However, on July 21, 2005, both countries removed their respective pegs and adopted managed floats against a basket of currencies. The dollar is also used as the standard unit of currency in international markets for commodities such as gold and oil. Even foreign companies with little direct presence in the United States, such as the European company Airbus, list and sell their products in dollars, although some argue this is attributed to the aerospace market being dominated by US companies. At the present time, the U.S. dollar remains the world's foremost reserve currency, primarily held in $100 denominations. The majority of U.S. notes are actually held outside the United States. According to economist Paul Samuelson, the overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate and the flow of trade to readjust. Not long after the introduction of the euro (€; ISO 4217 code EUR) as a cash currency in 2002, the dollar began to steadily depreciate in value on the international scene. After the euro started to rise in value in March 2002, the U.S. trade and budget deficits continued to increase. By Christmas 2004 the dollar had fallen to new lows against all major currencies, especially its rival the euro. The euro rose above $1.36 /€ (under 0.74 €/$) for the first time in late December 2004, in sharp contrast to its lows in early 2003 (rate of $0.87/€). Beginning in late May into early June though the Dollar rose sharply against the Euro as European states reported stagnation in the overall EU economy and doubts were raised over the EU Constitution which was voted down in two member states: France and The Netherlands. As unemployment rates rise in the Euro zone and economic growth slows the EU may see a drop in the value of the Euro against the Dollar for at least part of 2005 although the Euro is expected to maintain its strength, if in a slightly diminished manner.

Origin of the name dollar

The United States dollar derives from the Spanish 8 reales coin which was composed of just under one ounce of silver. This coin was popular among American colonists, who called it the Spanish dollar, the name having derived from a German coin of similar size and composition known as the thaler. The first dollar coins issued by the United States mint were of the same size and composition as the Spanish dollar and even after the American Revolutionary War the Spanish and U.S. silver dollars circulated side by side in the United States. Although private banks issued currency backed by Spanish and U.S. silver dollars, the federal government did not do so until the American Civil War. For further history of the name, see Dollar.

The dollar symbol

Main Article: Dollar sign There are various stories on origin of the "$" sign to represent "dollar." Because the dollar was originally the Spanish 8 reales coin, it is suggested that the 'S' derives from the number '8' which appeared on the coin. The most widely accepted explanation, according to the U.S. Bureau of Engraving and Printing, is that "$" is a corruption of the letters "PS" (for 'peso' or 'piastre' - especially the former, as each letter could represent each syllable of "Pe-So") written over each other in Spanish. Eventually, the 'P' was reduced to a vertical line - | - since the hump disappeared into the upper curve of the 'S' anyway. Examination of old manuscripts yields support for this theory. The "$" symbol was widely in use before formal adoption of the Spanish dollar as U.S. currency in 1785. The dollar sign is sometimes written with two vertical strokes. This is probably just a carry-over of the old habit of using three strokes to write the original sign: One stroke for the 'S' (it is physically easier to write the 'S' first, then the 'P'), a second stroke for the vertical line '|,' and then a third stroke for the hump of the 'P.' People in a hurry or who simply do not care about making a perfectly formed 'P' (especially as the 'hump' will disappear into the 'S' anyway), probably just made the third stroke a second vertical line. There are, however, a number of fanciful explanations for the second vertical line - ranging from superimposition of the letters 'U' and 'S' (the bottom of the 'U' disappearing into the bottom curve of the 'S,' effectively leaving two vertical lines that eventually merge into one as the sign '$'), to the very amusing but original idea that the dollar sign with two vertical lines represents the two pillars of the original Temple of Solomon at Jerusalem. Neither of these stories holds up, however, first because this version of the symbol pre-dates the founding of the United States (whence came the notion of 'U' superimposed over 'S'); and, second, because there is simply no evidence for the theory in the history of the Spanish coin. Rather, this theory seems to trace to the traditions of Freemasonry; and, indeed, some Masonic symbols do appear on U.S. currency - but they did not in 1785. A few people write the sign with one vertical stroke for small sums of money and two vertical strokes for large sums of money. ($5 with one stroke and $1,000,000 with two strokes) However, this is only a matter of style, and it certainly has little to do with the original variation. For further information about the symbol, see Dollar. See also Pieces of Eight.

Current USD exchange rates

[http://finance.yahoo.com/currency/convert?amt=1&from=AUD&to=USD&submit=Convert AUD] | [http://finance.yahoo.com/currency/convert?amt=1&from=CAD&to=USD&submit=Convert CAD] | [http://finance.yahoo.com/currency/convert?amt=1&from=EUR&to=USD&submit=Convert EUR] | [http://finance.yahoo.com/currency/convert?amt=1&from=GBP&to=USD&submit=Convert GBP] | [http://finance.yahoo.com/currency/convert?amt=1&from=INR&to=USD&submit=Convert INR] | [http://finance.yahoo.com/currency/convert?amt=1&from=NZD&to=USD&submit=Convert NZD] | [http://finance.yahoo.com/currency/convert?amt=1&from=BRL&to=USD&submit=Convert BRL] | [http://www.exchangerate.com Lots of exchange rates]

External links

- [http://www.moneyfactory.com/ US Bureau of Engraving and Printing]
- [http://www.treas.gov/topics/currency/index.html The U.S. Treasury's Coins & Currency portal]
- [http://www.frbsf.org/currency/ American Currency Exhibit at the San Francisco Federal Reserve Bank]
- [http://www.moneyfactory.com/section.cfm/4 U.S. Treasury page with images of all current banknotes]
- [http://www.friesian.com/notes.htm U.S. paper money]
- [http://misyte3.tripod.com/clipart/id47.html Presidential currency]
- [http://www.westegg.com/inflation/ The Inflation Calculator]
- [http://www.mabico.com Financial News] Analitics, Trading Info, and Forum
- [http://www.openforex.com Open Forex] Forecasts Dollars
- [http://www.forex.dj Forex] First dollar guide
- [http://www.currencyworld.biz/acecalc/ Ace Currency Calculator]
- [http://www.wheresgeorge.com/ The Where's George? Currency Tracking Project]
- [http://www.coolnumbers.com Cool Numbers] analyzes patterns of dollar-bill serial numbers and other types of numbers. Dollar, US ja:アメリカ合衆国ドル simple:United States dollar th:ดอลลาร์สหรัฐ

Cash

Cash usually refers to money in the form of currency, such as bills or coins.

Etymology

The word comes from kachu in the Indian language Tamil.

Usage

Cash can also refer to checks, money orders, cashier's checks, bank drafts, or traveler's checks. In all these forms, the term indicates the most liquid form of assets, which have a fixed value and can be easily converted to currency. "Cash pay" (as opposed to, e.g., stock options) would almost always be in the form of a check or bank deposit — but the employee can easily get cash per se from the bank. As a verb, "to cash" an item (such as a check) denotes exchanging the item for cash. Category: Money tam:Kachu See Also: Johnny Cash

Australia

The Commonwealth of Australia is a country in the Southern Hemisphere comprising the world's smallest continent and a number of islands in the Southern, Indian and Pacific Oceans. Australia's neighbouring countries are Indonesia, East Timor and Papua New Guinea to the north, the Solomon Islands, Vanuatu and New Caledonia to the northeast, and New Zealand to the southeast. The continent of Australia has been inhabited for over 40,000 years by Indigenous Australians. After sporadic visits by fishermen from the north and by European explorers and merchants starting in the 17th century, the eastern half of the continent was claimed by the British in 1770 and officially settled as the penal colony of New South Wales on 26 January 1788. As the population grew and new areas were explored, another five largely self-governing Crown Colonies were successively established over the course of the 19th century. On 1 January 1901, the six colonies federated and the Commonwealth of Australia was formed. Since federation, Australia has maintained a stable liberal democratic political system and remains a Commonwealth Realm. The current population of around 20.4 million is concentrated mainly in the large coastal cities of Sydney, Melbourne, Brisbane, Perth and Adelaide.

Origin and history of the name

The name Australia is derived from the Latin australis, meaning southern. Legends of an "unknown southern land" (terra australis incognita) date back to the Roman times and were commonplace in mediæval geography, but they were not based on any actual knowledge of the continent. The Dutch adjectival form Australische ("Australian," in the sense of "southern") was used by Dutch officials in Batavia to refer