Had Microsoft not sold its $150 million in Apple stock, it’d be worth over $120 billion today

Nearly 20 years ago, Microsoft sold its Apple stock for $550 million, leaving some $120 billion on the table.

Steve Jobs (left) and Bill Gates.
Steve Jobs (left) and Bill Gates.

Jeff Haden for Inc.:

In 1997, Steve Jobs famously returned to a struggling Apple. Apple company’s stock was at a 12-year low. The company was hemorrhaging cash. According to Jobs, “We were 90 days from going bankrupt.”

One of his first goals was to convince Microsoft to keep building new versions of Office for the Mac… Fortunately for Jobs, he did have a couple of cards to play. Apple and Microsoft were embroiled in a patent lawsuit that alleged Windows had infringed on Apple’s intellectual property by replicating elements of the Mac’s graphical user interface. Patent cross-licensing would make the suit irrelevant.

Plus, Gates knew that without Apple, Microsoft might seem like even more of a monopoly; keeping Apple afloat would indicate to regulators, and the market, that healthy competition existed.

For his part, Jobs asked for two things:
• a 5-year commitment from Microsoft to provide Office for the Mac, and
• for Microsoft to purchase $150 million shares (just slightly under 5 percent of the company) of non-voting Apple stock

Why the stock purchase? Apple could certainly use, but didn’t absolutely need, the money: It still had approximately $1 billion — however rapidly dwindling — in cash assets…

Did the deal save Apple? No; ultimately, the iMac and resulting products saved Apple.

As part of the agreement, Gates agreed not to sell the Apple stock for three years. (Skin is only skin if it stays in the game.) In 2003, Microsoft sold its entire stake for $550 million… Had Microsoft held on to its Apple stock, today those shares would be worth over $120 billion.

MacDailyNews Take: Obviously, foresight is not Microsoft’s strength.

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