Bill Gates’ Days May Be Numbered At Microsoft
In a move calculated to stymie his influence in choosing a new CEO for Microsoft (NASDAQ: MSFT), three investors are lobbying hard to oust Bill Gates from his own company. The mere suggestion that Gates, who is an icon in the tech industry, should step down is nothing short of remarkable, but it illustrates the frustration of some investors who have seen their shares remain essentially static for the past 10 years.
According to Reuters the investors are concerned that Gates’ role as Chairman blocks the adoption of new strategies and would limit the power of a new chief executive to make substantial changes. A matter of contention appears to be Gates’ role on the special committee searching for Ballmer’s successor. They are also concerned that Gates exerts power out of proportion to his ever diminishing shares. Gates is currently selling his shares in the company at a rate of about 80 million per year, which would leave him with no stake in Microsoft by 2018.
Clearly Microsoft is still the quintessential software company, but has come under pressure lately as the PC market has been losing traction to mobile devices and tablets. In a bid to enter the devices and hardware sector, MSFT announced in September that it would acquire substantial consumer-facing parts of Nokia (NYSE: NOK) and pay more than $7 billion for the assets.
The acquisition could vault Nokia’s Stephen Elop to top contender to replace Ballmer, but the odds on favorite for the post is Ford (NYSE: F) CEO Alan Mulally, who has been with Ford for seven years and is a business rock star of sorts. Mulally was an intimate adviser to Microsoft CEO Steve Ballmer in his recent attempt to generate a new management structure for the company. One person critical to the decision will be Bill Gates, who stepped away from his role as CEO many years ago, to be replaced by Ballmer. Which brings us back to the three anonymous investors and their issues with Gates’ influence with the board’s decision on selecting a new CEO.
Is it really time for Bill Gates to go? It may be. People have been grumbling under their breath for years that Gates should leave, but this is the first time that anyone has had the chutzpah to say it out loud, though anonymously. Let’s face it, Gates spends the majority of his time tending to his philanthropic Bill & Melinda Gates Foundation. It’s not as though he needs the job. He has made billions from the company he founded 38 years ago. Microsoft has been slow to change, and many lay the blame at Gates’ door.
In the end he still owns around 4.5 percent of the company. The three dissatisfied, anonymous investors own a combined 5 percent. There is no sign that the board does agree with them, or will agree with them. It is Gates’ company and really always will be. I doubt that he is going anywhere until 2018, but time will tell.
Disclosure: The author has no position in the stocks mentioned in this article, and does not intend to initiate any position in the next 48 hours.
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