Coming off Microsoft's best first quarter since 1999, one might have expected the company's shareholders, who met in Seattle today, to be more jubilant. And there were several kudos passed on to the company's leadership, in the persons of Chairman Bill Gates, CEO Steve Ballmer, CFO Chris Liddell and General Counsel Brad Smith, during the question-and-answer period that followed the meeting.
But more than one shareholder asked why executives cashed in shares in the days after that quarterly report, which boosted the stock to levels not seen in six years.
"Like all the shareholders in this room and elsewhere, we were delighted three weeks ago when the stock took a nice bounce up and exceeded its six-year high," said Peter Schroeder, a Seattle man who said he owns 60,000 shares and has been an investor in the company since 1986. "Curiously, after that, for about the next 10 days, the stock has been decreasing, falling down every day."
The fact that top management, including Gates and other board members, made significant stock sales in that period signaled to Scrhoeder -- and, he said, to Wall Street -- "a certain lack of confidence in the future of where the company was going."
"Let me comment as a non-seller first, and I definitely respect people selling stock. Management, boards, people will buy and sell at different times for differing sets of reasons. Our board members, our top management, Bill and I, are all, and remain all significant shareholders in the company. It's a significant part of what we own and our net worth and there's a lot of confidence I think in the future of the company, but from time to time people will certainly sell shares.
"To remind all shareholders that the stock moves as it moves over time and it's never a perfect reflection of the actual performance of the company. Nothing magic happened three weeks ago. In a sense, we've been doing whatever we've been doing consistently over time."
Then Gates responded:
"As Steve said, the stock market is not predictable to us or explainable by us and I think over the last few weeks there are a number of factors having to do with the market as whole. You can see technology stocks have been affected by that. They tend to have a fairly high beta. In terms of any sales by myself, I have the majority of my net worth in Microsoft stock. I've sold the same number of shares every quarter for over five years, so that's a plan that I've been on, so that's a very predictable thing. I do think that if you look at the volume that, clearly there are factors in terms of overall market sentiment that are involved there, but I certainly agree with you we all want the stock to be as high as possible."
For the record, Gates sold 13,000,000 shares between Oct. 31 and Nov. 7, which brought him $476,682,276.50, according to SEC filings. He still owns 864,499,336 shares.