Bill Gates has been dumping shares of Microsoft stock as he watches his company become an also-ran under CEO Steve Ballmer. Image: CC World Economic Forum/Wikemedia Commons

Bill Gates has been unloading shares of Microsoft stock at a brisk pace in the past year. Gates has unloaded such a big chunk of his Microsoft holdings that other Microsoft shareholders could question the value of their investment. Gates may be hedging his bets after watching the company he built into the world’s dominant technology brand become an also-ran trying to play catch-up in recent years.

Microsoft stock stagnant as rival shares soar

Bill Gates sold 10 million shares in Microsoft stock so far in February. Gates has cashed out on 90 million Microsoft shares in the past 12 months. Over the past two years, the Microsoft co-founder has reduced his interest in the company by 22 percent. Microsoft made Gates the richest man in the world, but Microsoft shares have stagnated for about 10 years. In that time frame, shares in companies such as Google, Amazon, Netflix and Apple have soared to exponential rates. A $1 investment in Microsoft stock in 2001 cashed out now would net a compound annual return over five years of 2.74 percent. If that dollar would have been invested in Apple, the five-year return would be 38.8 percent.

Gates Microsoft holdings

Bill Gates is still the largest stockholder in Microsoft with about 591 million shares. That’s about 7 percent of 8.4 billion outstanding Microsoft shares. Company officials said Gates is only diversifying his Microsoft holdings. But since Gates stepped away from Microsoft to become a philanthropist via the Bill and Melinda Gates Foundation, he has watched the company come out on the wrong side of the most important trends in technology. In sectors such as online music, smartphones, search engines, social networking and tablet PCs, Microsoft has entered the game late with inferior offerings that quickly fade after the marketing campaigns run their course.

CEO Ballmer also dumping Microsoft stock

Bill Gates’ Microsoft selloff could be a message to company CEO Steve Ballmer. Ballmer has presided over Microsoft’s long, slow decline for 11 years. Industry insiders have said that Ballmer will shake up company management by promoting engineering and product specialists to leadership positions and give the marketing executives a lessor role. That move could placate investors in the short term, but it may not satisfy Gates. Ballmer can only hope investors don’t follow Gates’ example en masse. But in November Ballmer showed lack of confidence in his own efforts by unloading 49.3 million shares of Microsoft stock worth $1.3 billion.

Sources

Information Week: http://www.informationweek.com/news/windows/microsoft_news/showArticle.jhtml?articleID=229204354&cid=RSSfeed_IWK_All

ComputerWeekly: http://www.computerweekly.com/Articles/2011/02/10/245336/Gates-sells-90-million-Microsoft-shares-in-a-year.htm

IT World: http://www.itworld.com/business/136492/gates-casts-vote-confidence-ballmer-selling-90-million-shares-microsoft

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