New York, July 21: Microsoft Corp., with its global dominance in PC software, is sometimes said to have a license to print money. But Microsoft might find it tougher to deploy its cash hoard of $49 billion.

When it released fiscal-year 2003 results last Thursday, Microsoft said it added $2.9 billion of cash in the quarter ended June 30. It earned $689 million from investments, nearly one-third of its pre-tax income, according to its fiscal fourth-quarter income statement. And on its balance sheet, Microsoft reported $13.7 billion in equity and other investments for the period ended June 30, 2003. This Thursday, at its Redmond, Washington, campus, Chief Financial Officer John Connors is expected to tell analysts how Microsoft invests its cash.

Microsoft, whose co-founder and Chairman Bill Gates is the world's wealthiest and most famous college dropout, has nearly one-tenth of all cash on hand reported by companies whose shares make up the Standard & Poor's 500 index.

Worth noting: Microsoft's pile of cash is double what it was three years ago, despite an economic downturn and a three-year bear market in equities.

"We want to give a much broader time allocation to the management of that portfolio and what we're doing to grow it and protect it," Connors said in a conference call with analysts and investors after the Thursday earnings release.
The review might give some help -- or sobering lessons -- to investors at a time when many short-term investments yield less than 1 percent, while experts expect bond yields to rise -- and prices to fall -- as the economy gains momentum.

"While it has been challenging for treasurers, many haven't made major changes in their strategies," said Cathy Gregg, a partner at Treasury Strategies Inc. in Chicago, which advises corporate treasurers. "They're just suffering like other bond investors."

Make no mistake, $49 billion is plenty of money. Lay that much in $100 bills end to end, and they stretch more than 47,000 miles, nearly twice around the Earth at the equator.

Still, Microsoft kept just $6.4 billion of its cash in "cash" investments, which mature within a year or so and are all but risk-free. The other $42.6 billion was in "short-term investments," which might yield more but carry more risk.

"Most of the investors we deal with in the bond market, when they talk about short-term investments, are referring to a one- to three-year maturity," said Steve Berkeley, head of global fixed-income indices at Lehman Brothers. "A money market investor would look shorter than that."