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Ballmer Sells Part of his Stake in Microsoft
An anonymous reader writes "The Financial Times reports that Steve Ballmer has sold part of his MS shares (my early morning math isn't very good, it seems a shade under 10%). Short of cash? Parking tickets? Or the start of a strategy to get rid of it all without causing too much upset in one go? No idea, but speculation is sure to be with us for a while."
Microsoft said the sales were undertaken so that Mr Ballmer could diversify his financial interests.
my guess is that some of those interests may include this, this, and if he's lucky after all that, maybe this.
Mike
Of his ADHD problem?
More links for the video
"We make our world significant by the courage of our questions and by the depth of our answers." Carl Sagan
I !!! ::whoa, the stock is worth that?!::
LOVE !!
THIS !!
SELL !!!
YEEEAAAAHHHH !!!!
Vonal Declosion
The thing is, most of the upper management of Microsoft that have been with the company from early on have most of their wealth in Microsoft shares. The problem is that they have to sell it off slowly or they wouldn't manage to get a decent price for it.
Accountants!
Accountants!
If your going to try to get cheap karma at least get it right.
Monty python quote:
It's fun to charter an accountant
And sail the wide accountancy,
To find, explore the funds offshore
And skirt the shoals of bankruptcy!
It can be manly in insurance.
We'll up your premium semi-annually.
It's all tax deductible.
We're fairly incorruptible,
We're sailing on the wide accountancy!
Like it or not, Microsoft is doing fine. They have good profits for the forseeable future. His claim that he just wants to diversify is completely plausible. I'm sure his portfolio is disproportionatelyMicrosoft.
Democracy Now! - your daily, uncensored, corporate-free
Geez. The guy is just diversifying his portfolio. He is the least diverse of all the software billionaires or Buffett.
Unfricking believable that this is actually a slashdot story.
I mean, come one. Isn't it amazing enough that he mades $12 billion or whatever on MSFT? Now, the implication of this being on slashdot is that this smells of some sort of bad omen for MS. It's a little late for that given that HE HAS $12 BILLION WORTH OF STOCK!!! (insert Sam Kinison "oh! oh! OooooH!" here)
"If you want to improve, be content to be thought foolish and stupid." - Epictetus
Links to the Developers, Developers, Developers Steve Ballmer dance video.
NetInfo connection failed for server 127.0.0.1/local
He finaly saw a Gnu/Linux desktop running.
But the main reason Microsoft ust keep stock options valuable is that they don't pay very well, and they compensate for that by diluting shares by issuing stock options regularly instead. As long as their share price keeps sky rocketing this is a good deal for everyone involved. However as soon as the share price is flat or falling, Microsoft massive stock options issuing risks causing further share price decline, and the low value of the stock options makes it less attractive for top people to work at Microsoft.
Their alternative if they can't sustain massive growth is increasing salaries and bonuses, and that will cut dramatically into their profit margins, which certainly will further damage their share price.
It's an extremely high risk strategy on their account - as long as they can grow, they look extremely good to investors. The moment they can't sustain it their problems will quickly multiply thanks to their dependence on rapid growth.
Any publicly listed company has a DUTY to their shareholders to increase the shareholders investments as rapidly as possible.
(IANAL-RU?)
CEOs don't have a duty to increase the stock's value as quickly as possible. They just have a fiduciary duty to provide a reasonable ROI. This can take the form of increased stock price or healthy dividends, or even simply preserving the stock price in a downward economy.
While a CEO needs to be compelled to act in the interest of all stockholders, there is no reason to add qualifiers to that.
Interest group?
Ballmer wanted to sell his stock. He would not have been able to sell it unless there existed a buyer. He most likely sold the shares through a brokerage, which would have done the following:
1) Filled any orders from its own customers that could be filled against Ballmer's order. The price charged to those customers would likely be a little bit higher than the price Ballmer wanted to sell it for, since there is typically a difference (called buy/sell spread) in the price to buy vs sell a share of the same stock. The brokerage would have likely determined the buy price for its customers based on the best price available anywhere in the market (this is typically a part of the agreement between a brokerage and its customers). The difference in price becomes brokerage profit.
2) Assuming that once all of the Brokerage's customers' orders had been filled there were still some of Ballmer's shares left over, the Brokerage might buy some of the shares itself (they are cheaper than market price, because of the avoidance of the buy/sell spread).
3) If there are any shares left, the brokerage would likely attempt to fill any orders submitted to the electronic trading system (a computerized system that matches buyers and sellers). Again, doing this allows the Brokerage to keep the spread.
4) The remaining shares would be sold to one or more market making firms. Market making firms (or "Market Makers") are in the business of owning positions in a variety of stocks and profit based on the buy/sell spread when shares are bought and sold. Incidentally, competetive forces between market makers keep the buy/sell spread small, since most brokerages will typically do business with the market maker offering the best price.
I've just described what would happen if Ballmer decided to sell a relatively small chunk of stock (small enough that some people might talk about it a bit, and it might even appear on Slashdot, but not large enough to cause a major market movement). Suppose Ballmer wanted to sell ALL of his Microsoft shares...
If Ballmer wanted to sell all of his shares, he might expect to be able to sell them for $22 per share (for example). Suppose the market realized that this was happening. Prices would likely fall as people considered the impact of a large sell off. Opportunistic investors would quickly sell their own shares, expecting the price to fall further, and would plan to buy the shares back later once the price had fallen (there are also a variety of speculative financial instruments that would simplify executing this kind of strategy). Ballmer would now be unable to liquidate his shares for a reasonable price, because once the market knows that he is determined to sell, he'll have lots of competition.
Obviously, this would never happen, because it would greatly diminish the benefit of Ballmer's decision to sell, and would dissuade him from making the decision.
To accomodate this situation, Ballmer's broker would attempt to arrange the transaction behind the scenes, without the use of all of the machinery described above. This would likely take the form of a few phone calls to the large trades desk at other brokerages. "Psst. If you have a client interested in a large trade of MSFT, I might be able to help". The advantage is to be secretive so as to avoid giving away information that would tip off the market, while still finding someone to sell the shares to.
The eventual price of the shares would probably fall significantly below the market price of the stock. Why? To put it simply, liquidity costs money. It is still cheaper to use this approach than to try to sell a massive number of shares on the open market.
So, Ballmer may have made a life changing decision to sell all of his shares, or he may just want to diversify a bit, but his best move is always to sell it in small chunks in order to get the best price possible for the shares. As you can see, liquidity costs money.
Amazing magic tricks
Slashdot reader SgtChaireBourne mentioned this 2 weeks ago in a comment titled Pump & Dump, in response to a post of mine saying that probably Microsoft code is difficult to maintain because Microsoft isn't fixing bugs.
According to SgtChaireBourne, selling of Microsoft stock by Microsoft executives is common. He said, "Both the frequency and volume of sales is increasing: They're all selling as fast as they get."
SgtChaireBourne pointed to the SEC (U.S. government Securities and Exchange Commission) list of Microsoft executive trades of stock. I looked around and quickly found an example. A Microsoft Group Vice President, Kevin R. Johnson, received 322,560 shares of stock and sold it the same day. He received 244,760 shares of stock on March 6, 2003 and sold that the same day.
SgtChaireBourne also said, "Don't forget that benefits [employee benefits at Microsoft] have been cut way back and there's also been outsourcing like mad. Consultants and contractors don't show up as layoffs when you let them go.
Earlier in this thread, RoLi said, "Microsoft executives know that Microsoft has a lot to lose and not much to gain. The only market where they are strong (the desktop) they have no room to grow, everywhere else they are losing (servers, embedded systems, gaming consoles)." (RoLi's comment #6030636.)
To this must be added that most people who bought a computer as powerful as a Pentium III 866 MHz won't buy another computer. The faster Pentium IIIs were good enough for almost everyone. I have often seen computers survive for more than 10 years. I have a voicemail computer with a 386 SX-16 processor that is perhaps 15 years old, and has been in continual use. The computer market is fast collapsing.