Dividends reward short term shareholders. Capital reinvestment rewards long term shareholders (if it's successful).
Microsoft is like the electric utility of the technology business -- they should embrace that or wake up and break up the company into manageable parts.
Buying Skype? That's not creating shareholder value.
1: http://www.microsoft.com/investor/InvestorServices/FAQ/defau...
There aren't many very large brand name "statement" acquisitions there. Most are small companies you've probably never heard of. I think this Skype acquisition is a clear message that Microsoft is playing hardball now.
That's a big if for them right now. When you're trading at a P/E in the single digits ex cash, the market is telling you they have no faith in your ability to re-invest your earnings(especially when interest rates are so low).