Steve Ballmer Insists There’s Nothing To See Here. Move Along!

Posted by on Nov 10, 2010 | 6 Comments

It was reported recently that Steve Ballmer, Microsoft CEO, sold 12% of his shares in the company. This equates to over $1.3 billion worth of shares.

Ballmer, being the extremely astute businessman that he is, knew that this was not something that would go unnoticed by the public within the tech community or, more important, fellow Microsoft shareholders. So with eager anticipation, Ballmer got to the post first and issued a public statement. Basically Ballmer tried to justify his share selling extravaganza as a personal financial diversification and tax planning exercise.

“Even though this is a personal financial matter, I want to be clear about this to avoid any confusion. I am excited about our new products and the potential for our technology to change people’s lives, and I remain fully committed to Microsoft and its success.”

Please, Mr. Ballmer, members of the tech community would have much more respect for you if you just came out and told the truth. I personally find his statement a little bizarre. Don’t get me wrong, I know why Ballmer got to the the media first in order to release the statement. If this really had anything to do with better financial management or tax purposes, surely would he not just move his business about as opposed to selling it? Regardless of the way you look at this, Ballmer has shown, in the strongest possible manner, that he no longer has any faith in Microsoft.

Steve Ballmer has obviously taken a look at the recent stock market figures for Apple and decided Microsoft’s situation is worse than he previously expected. No doubt, Ballmer will be just the beginning of the Microsoft board selling share holds and stocks. Oh, wait a second, Bill Gates has also been reported as selling one million shares equating to $27.2 million. Of course, Bill Gates is no longer officially at Microsoft; nevertheless, he is still the father of MS.

To an untrained, non-business eye — and correct me if I am wrong — this looks very much like the captain jumping ship before it sinks. I know loads of people will be saying that there is no chance of Microsoft sinking and that it could never happen, but not that long ago, people said there was no chance that Apple could grip hold of more market share than Microsoft.

Many people said that when Bill Gates left Microsoft and handed over the rains to Ballmer, the company would take a massive dip. It has and it has also only reinforced another speculation relating to Ballmer and that is: he was good for nothing and was a prime example of “in the right place at the right time.”

Far be it for me to criticise an icon such as Ballmer. Love him or hate him, nobody can deny that he certainly brought character and colour to the world of tech. (“Developers, developers, developers!”)

My name is Ivor Harrison, however, my friends all call me Harry. The name Harry originates from my time in the British Army. As a young recruit, all are referred to by their surname and friends develop nicknames from that, just to take away the formality. I have been married to my wonderful wife for sixteen years and together we have three beautiful children aged 10, 8, and 6 — two girls and a boy. I’ve got my own blog, and I can also be found on Twitter and YouTube. Please stop by and say hello!

  • http://www.mpwinsma.com Michael Wein, CPA and financial advisor

    I am far from being a fan of Steve Ballmer and although a stockholder of Microsoft, I am very uhappy with the performance of the stock since I bought it some years ago when I expected it to continue its high-flyer progress. But I am even less a fan of people who jump to conclusions about things they know little about.

    Steve Ballmer and Bill Gates (I’m not crazy about him either) were involved in Microsoft since the beginning and in a normal emerging company, it is normal to retain/hold the stock in a company you believe in AND continue to work for AND are dedicated to its growth. When a company matures, as MSFT has by now, it is normal for the founders to sell some of their holdings for diversification purposes. Actually, in any mature company, where the growth probably will continue but not at the same huge rate as in the past, it is foolish NOT to sell some of your holdings and diversify your own portfolio. But that is just one reason to do so (and I was surprised that it took Steve Ballmer so long to do this).

    But the other reason, for tax purposes, is more of a mystery to you. As an expert in the field, I can tell you there are MANY good reasons to sell some stock. He know HIS situation. You do not. And I do not either. Maybe these were stock option acquired shares (probably so) and there are any other of a multitude of good reasons to sell for tax purposes.

    To summarize, while I do not think that Microsoft has the investment potential it had in the past, the present is one of a blue chip company and as a financial advisor I would have no hesitancy to recommend it to those who are looking for decent investments that will not be “get rich quick” investments (those more often lead to “get less-rich-quick” results) but belong in a well-balanced diversified portfolio.

    I will keep my shares and eventually probably leave them to my own heirs. I firmly believe in buying long-term investments and pursuing a gradually increment in my own net worth.

  • Ron May

    You said “and correct me if I am wrong” so here’s my take:

    Balmer’s explanation sounds plausible to me, although only his army of financial consultants and tax attorneys would know for sure. $1.3 billion is a chunk of change, but the flip side is that he’s retaining 88% of his M$ holdings. That’s not jumping ship. (And Gate’s $27.2 million sale is “walking around money” at his level)

    What often happens with the mega-wealthy is their advisors sometimes bend the tax rules a bit too far and they have to pay back what essentially has been a tax-free loan from the government. In order to do that, they have to cash in some equity.

    It also sounds reasonable that he might want to take a small portion of his holdings and diversify into some high-risk (but promising) venture. That’s something even small investors do, along with most of Balmer’s companions on the Forbes 400 richest Americans. (He’s #16 on on that latest list and #33 worldwide)

    ISTM your title is accurate, though.

  • Ron May

    Sorry. A phrase in the above should have been “interest free loan” (not “tax free loan”).

  • Talon Meyer

    …or maybe he was just telling the truth?

  • http://wp3.lockergnome.com/nocturnalslacker/ V. T. Eric Layton

    I wish I had a few 1000 shares of MS to sell. ;)

  • Chris J

    One reason to sell now is that, unless tax laws change which is always a possibility, capital gains tax rates go up Jan 1, 2011.