''This is a surprise, but it mostly reflects the economics of the business,'' said Charles di Bona, an analyst at Sanford C. Bernstein. ''It is not a sign that this is the end of growth for Microsoft. It is a recognition that this company is throwing off more cash than anyone has ever seen.''

Still, Microsoft had long resisted calls that it use some of its ample cash to pay a dividend, saying that shareholders were better served by having the management reinvest in new growth opportunities. But in the last few years, complaints from some institutional shareholders became louder as Microsoft's cash pile continued to grow and some of the management team's investments in cable TV and telecommunications companies proved to be big losers.

In an interview, John G. Connors, Microsoft's chief financial officer, said that the company's board had reviewed the dividend issue repeatedly in recent years. A major obstacle, Mr. Connors explained, was the uncertainty created by the government's antitrust suit against Microsoft that began in 1998.

Last November, the biggest hurdle was removed when a federal judge approved the Bush administration's settlement with Microsoft, which did not significantly alter the company's structure or strategy. Last week, Microsoft agreed to a $1.1 billion settlement in class-action antitrust suits brought by the residents in California, the largest of the class-action cases against Microsoft involving accusations it used its monopoly power to overcharge consumers.

There are other cases still pending, including an antitrust investigation by the European Commission and private suits by competitors including Sun Microsystems and AOL Time Warner. The European Commission could fine Microsoft up to 10 percent of its revenues, or more than $3 billion, and force the company to share technical information with competitors.