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Microsoft (MSFT) Investors Revolt Against Chairman Bill Gates

By: , dated October 11th, 2013

Microsoft (MSFT) shareholders recently started a revolt against chairman Bill Gates, who co-founded the company 38 years ago and is still widely regarded as the face of the company. Three of the top 20 investors in Microsoft, which together own 5% of the company, are pressuring the board to force Bill Gates to step down, to allow the next CEO of the company to make radical changes. The revolt follows the resignation of CEO Steve Ballmer, who had been seen as a major factor in Microsoft’s delayed reaction in following tech trends.

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Despite the lobbying effort, however, there is no indication that the shareholders will really have any effect in booting Gates out of the picture. Gates currently owns 4.5% of the $277 billion company and is the company’s largest individual shareholder. However, it raises a troubling question – would a new CEO benefit from complete autonomy from Gates, or would he or she fumble?

Steve Ballmer was eventually forced into retirement by activist investor ValueAct Capital Management, and the company is now searching for a new CEO. Unfortunately, a new CEO will face the same challenges that Ballmer faced – an insignificant market share in mobile phones, the decline of PCs, and an unclear future for the XBox One, which is aiming to become an all-in-one media center for the living room. Meanwhile, Microsoft’s Office franchise is on the ropes, hit hard by free cloud-based alternatives like Google (GOOG) Drive.

Some analysts believe that Gates should play a larger, not smaller, role in the company he helped create. Fort Pitt Capital Group analyst Kim Caughey Forrest noted, “I’ve thought that the company has been missing a technology visionary. Bill would fit the bill.”

Honestly, the point is moot since Gates is already on course to completely divest from the company. Before Microsoft went public in 1986, Gates owned 49% of the company. He sells approximately 80 million shares annually under a pre-set plan, which would reduce his stake to 0% by 2018. Gates currently spends most of his time on philanthropic efforts with the non-profit $38 billion Bill & Melinda Gates Foundation, and there is no clear indication that he is even interested in dictating the future of Microsoft.

Microsoft has struggled in recent years, and last quarter it reported a $900 million writedown due to the failure of its Surface tablets. Despite that harrowing loss, Microsoft hasn’t given up on the tablet, which runs on Windows 8 and Windows RT. It recently introduced the next generation of Surface tablets, the Surface 2 and Surface 2 Pro, in a bid to revitalize the ailing PC market and to challenge a tablet market dominated by Apple (AAPL) and Google.

Other News About MSFT
Microsoft Trying to Win HTC Back to Windows Phone
Can Microsoft convince an ailing HTC to produce more Windows Phones?
Gates, Ballmer Seek Re-Election to Microsoft Board
Can the two founders stay on Microsoft’s board?

Other Stocks in the News
HTC Under Pressure to Find Partner After First Quarterly Loss
Will HTC join BlackBerry as a mobile has-been?
Noodles CEO Reddy Sees `Huge Potential’  in U.S.
Is Noodles poised for more growth?

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Leo Sun Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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One Response to “Microsoft (MSFT) Investors Revolt Against Chairman Bill Gates”

  1. Joshua Salihu says:

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