toequitythatcouldhavebeenpaidtostockholders.InJune
2000, for instance, the following table reports Microsoft’s
holdings of near-cash investments (in millions of dollars):
1999 2000
Cash and Equivalents
Cash $635 $849
Commercial paper 3,805 1,986
Certificates of deposit 522 1,017
U.S. government and agency securities 0 729
Corporate notes and bonds 0 265
Money market preferreds 13 0
Subtotal $ 4,975 $ 4,846
Short-Term Investments
Commercial paper $ 1,026 $612
U.S. government and agency securities3,592 7,104
Corporate notes and bonds 6,996 9,473
Municipal securities 247 1,113
Certificates of deposit 400 650
Subtotal $12,261$18,952
Total cash and short-term investments $17,236$23,798WhenvaluingMicrosoft,weshouldclearlyconsiderthis$24
billioninvestmentaspartofthefirm’svalue.Theinteresting
question is whether there should be a discount, reflecting
investor’sfearsthatthecompanymayusethecashtomake
poorinvestmentsinthefuture.Overitslife,Microsofthasnot
beenpunishedforholdingtocash,largelyasaconsequence
of its impeccable track record in delivering both