February 09, 2011, 6:06 PM — There could be a lot of reasons why Microsoft (NASDAQ: MSFT) co-founder and chairman Bill Gates has sold 90 million shares of the company's stock in the past 12 months.
(Also see: Ballmer turns to geeks to save his own butt)
Maybe he's tired of taking out car loans. Maybe Gates wants to run for U.S. Senate and finance his own campaign, Meg Whitman-style. Maybe he was planning to buy The Huffington Post before being aced out by AOL's Tim Armstrong.
Or maybe, just maybe, Gates knows an increasingly bad investment when he sees it.
Check out this from InformationWeek's Paul McDougall:
Microsoft chairman Bill Gates is continuing to sell shares in the company at a rate that might set off alarm bells for some investors. Regulatory documents filed Monday show that Gates sold 5 million shares on Feb. 3, and documents filed last Friday reveal that he sold an additional 5 million on Feb. 2.
McDougall writes that Gates has sold 90 million shares over the past year. He still has 591 million shares, but the math says he's dumped 13.2 percent of his Microsoft holdings in the past 12 months. Going back two years, Gates has shed 22 percent of his MSFT shares.
Remember, this is a company the guy co-founded, one that made him the world's richest man. Sure, Gates still is Microsoft's largest shareholder, with 7 percent of the company's common shares outstanding. But as chairman of the board, he's surely aware that cashing out shares at such volumes and with such frequency doesn't exactly send a "stay the course" message to other shareholders.
Then again, there's setting an example, and there's being a dope. And Gates is no dope. He knows, as any Microsoft investor does, that shares have been stagnant for the better part of a decade, trading mostly in the $20-$30 range. MSFT closed Tuesday at 27.97. The 52-week high is 31.58, the 52-week low is 22.73. Compare that languid stock performance to the hypergrowth demonstrated by Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), Netflix (NASDAQ: NFLX) or Amazon.com (NASDAQ: AMZN), and Microsoft shareholders might as well be stuffing their money into mattresses.
The truth is, the once most powerful and feared technology company in the world -- target of numerous antitrust charges and investigations -- is now a hapless also-ran in a number of crucial, emerging markets. Whether it's smartphones, tablets, search or social networking (the company is an investor in Facebook, though that's not the same as being a player yourself), Microsoft is playing catch-up, and not playing it all that well. And each market is littered with Microsoft missteps and failures.
The one constant in all this is Ballmer, who has been CEO for 11 years now. You'd think Microsoft's board and investors would have run out of patience with him by now. But there he is still, bellowing, blustering and blaming others for the company's competitive rot. I have no idea why Gates isn't instigating a change in leadership, but I have a pretty good idea why he keeps selling off Microsoft shares.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.