Published March 4, 2011
Gates has been unloading shares of Microsoft stock at a brisk pace in the past year. The massive selloff by Gates raises questions other investors might be having about the value of Microsoft stock. Microsoft continues to fall behind trends in technology and Gates might be putting return on investment over any sentimental ties he has with his old business.
Expenditure in Microsoft does not mean anything at all
In February, Bill Gates has already sold 10 million shares in Microsoft stock. Gates has cashed out on ninety million Microsoft shares in the past 12 months. Over the prior 2 years, the Microsoft co-founder has reduced his interest in the business by 22 percent. For about 10 years, Microsoft shares haven’t changed at all even though the company made Gates the richest man in the world. There has been a huge increase in shares for other companies though. This includes Google, Amazon, Netflix and Apple. $1 investment in Microsoft stock in 2001 cashed out now would net a compound annual return over five years of 2.74 percent. The five year return if it had been invested in Apple instead would have been at 38.8 percent.
Gates no more helping Microsoft much
The largest stockholder in Microsoft is nevertheless Gates. He owns about 591 million shares right now. Out of the 8.4 billion Microsoft shares, that is about 7 percent. The officials of the company explained that Gates is diversifying Microsoft holdings. This was the explanation. Keeping up with technology is something Microsoft has had a really hard time with. This has been the case ever since Gates stepped from the company in order to start the Bill and Melinda Gates foundation. In sectors such as online music, smartphones, search engines, social networking and tablet PCs, Microsoft has entered the game late with inferior offerings that easily fade after the marketing campaigns run their course.
Ballmer eliminating Microsoft stock also as CEO
Bill Gates' Microsoft selloff might be a message to company CEO Steve Ballmer. For 11 years, Ballmer has been running Microsoft to the ground. A smaller role is going to be given to marketing executives while engineering and product specialists can be promoted to leadership in the changes with management that Ballmer has planned. That move could placate investors in the short term, but it might not satisfy Gates. Hopefully, investors don’t follow Gates for Ballmer’s sake. About 49.3 million in shares of Microsoft stock was sold by Ballmer in November though. That is $1.3 billion that Ballmer got back.