eclaring its most threatening legal problems over and its business strong, Microsoft surprised Wall Street yesterday by announcing it would begin paying a dividend.

The step is significant mostly as an indication of the maturing corporate culture and psychology at Microsoft. But it does not seem to be a concession by the company's longtime leaders — Bill Gates, the chairman and co-founder, and Steven A. Ballmer, the chief executive — that Microsoft, the prototypical high-technology growth company, is slowing down.

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The company also announced that it would split its stock 2 for 1. Financially, the annual dividend of 16 cents a share, before the split, amounts to corporate pocket change. Microsoft's two largest shareholders, Mr. Gates and Mr. Ballmer, will receive yearly dividends of $97.9 million and $37.6 million, respectively, based on their current holdings. The annual dividend payout will cost Microsoft about $856 million a year.

Today, Microsoft sits on a cash pile totaling $43.4 billion, and its business generates cash at the rate of $1 billion a month.

"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.

"But after the settlement in the United States case, none of the remaining legal cases look like they will have a strategic impact on Microsoft's business," said Richard G. Sherlund, an analyst at Goldman, Sachs & Company.

That seems to be the view at Microsoft as well. "As we moved forward on or resolved several of our major legal issues, this seemed the appropriate time to do this, to begin paying a dividend," Mr. Connors of Microsoft said.

And he bridled at any suggestion that the dividend decision meant Microsoft was shifting to a slow-growth track. "Look at the results," Mr. Connors said. "This is still a growth company."

Microsoft reported that its revenues grew to $8.54 billion in its fiscal second quarter, ended in December, up 10 percent from the year-earlier quarter. That was slightly below the analysts' consensus estimate of $8.59 billion in revenue, but profits exceeded Wall Street's expectations. Microsoft's net income was $2.55 billion, or 47 cents a share. Excluding one-time charges to help pay for class-action settlements and writing down investments in companies, Microsoft earned 53 cents a share. The Wall Street estimate was for 46 cents a share from continuing operations.

Its desktop Windows operating system business was about flat compared with the year-earlier quarter. But the period a year earlier benefited from including the introduction of its Windows XP product.

Sales of software used to run corporate networks and databases — so-called server software — rose 12 percent, as Microsoft continued to gain market share in the corporate computing market. Its huge productivity software segment, led by Microsoft Office, grew 8 percent, to $2.29 billion. Advertising on its MSN online sites increased 40 percent. And sales of its Xbox video game consoles were somewhat lower than the company projected, which actually helped Microsoft's earnings since the company loses an estimated $75 to $100 on each console sold.

Microsoft executives offered a cautious outlook for the current quarter, saying it would probably report revenue of $7.7 billion to $7.8 billion and earnings of 47 cents or 48 cents a share, about in line with analysts' expectations.

Microsoft has weathered the slump in personal computer sales that began in late 2000 and lasted into the first half of last year. It kept growing partly by moving beyond the desktop market and into more lucrative server software. Microsoft also managed to collect increased revenues in the PC markets by selling more expensive professional versions of Windows and prodding corporate customers to agree to license regular upgrades of its Office productivity programs.

Microsoft executives yesterday called the general PC market "still pretty soft." But a report yesterday by IDC, a research firm, suggested that a gradual recovery was under way. Worldwide PC shipments rose 4.9 percent in the fourth quarter of 2002, and shipments in the United States rose 6.6 percent in the quarter, helped by solid consumer sales in the holiday season.

The current growth rates are meager compared with the high-growth days of the late 1990's, when gains were more than 20 percent annually, but the fourth-quarter numbers appeared to be an encouraging sign.

Hewlett-Packard, which has a large consumer PC business, nudged ahead of Dell Computer to regain the lead in worldwide market share, according to the IDC figures. To Microsoft, whose Windows operating system runs more than 90 percent of all PC's sold, it is the industrywide sales that matter.

"Microsoft has bets down all the possible squares," said Roger Kay, an analyst for IDC. "If anybody does well, Microsoft does well."