Big Regret: How Bill Gates' Microsoft Missed Out On $159B By Selling Apple Stock WAY Too Early

Zinger Key Points
  • Microsoft received 150,000 shares of preferred stock in exchange for its $150 million investment.
  • What if Microsoft held on to its Apple shares? How much would they be worth today?
Big Regret: How Bill Gates' Microsoft Missed Out On $159B By Selling Apple Stock WAY Too Early

While in many ways Steve Jobs and Bill Gates separately led the paradigm-shifting boom of personal computers, the pair also had a personal relationship.

Their paths directly crossed on Aug. 6 1997 when Gates' Microsoft Corporation MSFT invested $150 million in Apple Inc. AAPL, in exchange for shares in the company, which was on the edge of bankruptcy.

The two were well known for publicly ridiculing and reprimanding one another, and they even had a string of continuing legal disputes along the way.

During the height of the browser wars with Netscape, Microsoft promoted Internet Explorer, triggering an antitrust lawsuit by the Justice Department. The Gates-led company was also embroiled in an ongoing legal dispute with Apple over claims that Microsoft stole the macOS look for Windows.

Apple’s lawsuit was subsequently dropped following Microsoft’s cash injection.

In the midst of the legal wrangling, there were areas of agreement, including Jobs' promise to make Internet Explorer the default browser and include it in the next Mac software versions. Gates, meanwhile, promised not to sell Microsoft's non-voting Apple shares for three years.

Read also: If You Invested $1000 In This Stock 5 Years Ago, You Would Have $2,600 Today

The Numbers:

Microsoft received 150,000 shares of preferred stock in exchange for its $150 million investment. These shares could be converted into common shares of Apple stock at a price of $8.25 and were redeemable after three years.

Microsoft converted all of its shares into common stock by 2001, giving the Gates-led company roughly 18.1 million shares of Apple.

By 2003, Microsoft had sold its entire stake in Apple for $550 million.

What if Microsoft held on to its Apple shares? How much would they be worth today?

Well, Apple stock split on a 2-for-1 basis once since the lock-up period ended, a 7-for-1 split in 2014, and a 4-for-1 split in 2020.

The first split would have given the company 36.2 million shares.

The second would’ve netted 253.4 million shares.

The third, 1.031 billion shares.

Apple stock is trading at $157.56 right now — if Microsoft held its position until today, it would be worth $159.74 billion.

Gates’ relationship with Apple isn’t over, here's how the billionaire remains exposed to the stock.

In order to pursue their charitable goals when Gates left his position as CEO of Microsoft in early 2000, he and his wife Melinda established the Bill & Melinda Gates Foundation and the Bill & Melinda Gates Foundation Trust.

The Trust owns around 35 million shares in Berkshire Hathaway — or 2.69% of the total company.

If 2.69% of the nearly $144 billion in Apple shares owned by Berkshire Hathaway are owned by the Gates Trust, the pair still owns $3.87 billion of Apple stock.

Photo: Coutesy of Joi Ito on flickr

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