Bill Gates, Microsoft
Bill Gates considered former Intel CEO Andy Grove a mentor. Both have made immeasurable contributions to technology. | Source: Reuters

Microsoft’s Stunning 44-Year Journey from MS-DOS to the $1 Trillion Club

By CCN: In case you missed it, Microsoft is now a $1 trillion company. The tech giant’s better-than-anticipated third-quarter earnings sent the stock soaring over the top, catapulting the 44-year old company into the coveted $1 trillion-club that counts Jeff Bezos’ Amazon among its members.

Microsoft didn’t get there overnight – a then 30-year-old Bill Gates brought the company public in 1986 (a decade before Amazon) at $21 per share, raising $61 million. That price was higher than Gates sought. Oddly enough, he shied away from a valuation of more than half-a-billion dollars in favor of something more conservative. Hate to tell you, Bill, but your baby has just surpassed another threshold that even you couldn’t have seen coming.

Fortune reported at the time:

“The biggest winner was William H. Gates III, the company’s co-founder and chairman. He got only $1.6 million for the shares he sold, but going public put a market value of $350 million on the 45% stake he retains. A software prodigy who helped start Microsoft while still in his teens, Gates, at 30, is probably one of the 100 richest Americans.”

Microsoft, Microsoft stock

Microsoft’s valuation crossed into $1 trillion-territory on Weds. | Source: The Verge

Who Is Getting Richer?

Many savvy Microsoft investors are laughing all the way to the bank now that the valuation has ballooned to $1 trillion. Microsoft is one of those early tech stocks that has continued to generate returns hand-over-fist for everyone from the average Joe to the biggest institutional investors who can thank Gates for dreaming up the company in his Albuquerque garage. So whose getting richer? On the institutional side, it’s Vanguard, BlackRock, and StateStreet, which are the top trio of institutional holders. But it’s Microsoft C-Suite, including both current and former executives, that are the most interesting.

  • Bill Gates. Being the philanthropist that he is, Gates has donated billions of dollars’ worth of shares to charities. His stake has been slashed from nearly one-quarter of the company in the mid-1990s to slightly more than 1% on account of his charitable endeavors. He owns about 103 million shares of MSFT, down from 1.1 billion 15 years ago. His Microsoft shares alone are worth more than $13 billion today. His MSFT portfolio tacked on a cool $1 billion since March.
  • Steve Ballmer.  The former Microsoft CEO is still in MSFT stock, holding onto 330 million shares. His Microsoft stock is worth approximately $42.5 billion today. That’s up from $30 billion a little over a year ago.
  • Satya Nadella. Microsoft’s value ballooned to $1 trillion during Nadella’s watch. At last check, the current Microsoft CEO boasted a war chest of 778,596 MSFT common shares, which is worth $100 million today. Nadella may be kicking himself for offloading 30% of his shares last year. He reportedly also owns another 2 million or so of various types of MSFT shares.
Microsoft, Microsoft stock

Microsoft’s stock over the decades. | Source: Yahoo Finance

$1,000 Then Would Be Worth About $2 Million Today

Microsoft has experienced nine stock splits since the stock went public, the most recent of which was in 2003. If they hadn’t, Microsoft’s stock would have become too rich for the blood of many investors, placing it in the company of Warren Buffett’s Berkshire Hathaway.

Hindsight is 20/20, but if you or your parents had been astute enough to pour $1,000 into the Microsoft IPO, you’d be sitting pretty right about now. Accounting for “price appreciation and dividends,” the size of your portfolio would have been $1.6 million in November 2018 when Microsoft’s stock was trading at about $104. With shares now hovering at $130, you’d be raking in even more.

Microsoft is a tech giant that despite its massive size has remained nimble enough to change with the times. Its move to the cloud is a prime example of this, proving that the decades-old company can still expand into new markets and capture key market share in the interim. While companies like Microsoft come along as frequently as once in a long while, you might still have a shot at capitalizing on the next trillion-dollar mark.