So is Bill Gates fed up with Microsoft?
Paul McDougall at Information Week reports that over the past 12 months, Gates has sold a massive 90 million shares in Microsoft, reducing his holdings by 13%. Over the past two years, he has cut his interest in the company he co-founded by about 22% through more than a dozen separate transactions. So what's going on?
McDougall reckons it's because Microsoft is not that flash an investment. "If you invested one dollar in Microsoft in 2001 and cashed out that holding today, your compound annual return over the five-year period would be a measly 2.74%.'' he writes. "That same dollar invested in Apple would have returned 38.8% annually over the half decade, in Google the payback would have been 11.12%, in Oracle 30%, and in IBM 17.37%. (Who knew, without checking, that IBM and Oracle were better investments than Google over the past five years.)"
Yes, Gates still is Microsoft's largest shareholder, with 7% of the company's common shares. But he is also chairman of the board and Bill Gates is not stupid. He would know that cashing out shares at such volumes and with such frequency doesn't send a "stay the course" message to other shareholders. It's not exactly a vote of confidence in Microsoft CEO Steve Ballmer.
Late last month, Microsoft reported weaker earnings on the back of low shipments of personal computers. Ballmer is planning a management shake-up. The sell-off by Gates is sending him a very clear signal.
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