[Chapter 188: Microsoft Stock Volatility]
At the end of last year, Microsoft had launched Windows 3.1, which quickly gained global popularity thanks to its powerful system functions and excellent user interface.
Microsoft's stock price steadily climbed, and its market value approached $25 billion this year. Since Skycrest Capital purchased Microsoft shares, the stock had risen nearly 30%. Everything seemed great.
But then, something unexpected happened.
In the first half of the year, Bill Gates had hired Michael Larson to lead his family office and established Cascade Investments. Last week, Larson announced on behalf of Bill Gates' family office a stock reduction plan. Bill Gates, who owned more than 43% of Microsoft's shares, planned to reduce his holdings by 3% annually starting this year to diversify investments.
...
As soon as this statement was released, Microsoft's stock price plummeted, dropping the market value below $23.5 billion and showing signs of further decline.
After all, seeing the largest shareholder lack confidence and sell off shares on such a scale shook everyone. They all called Linton to discuss strategies.
But Linton, who had insight from the future, already knew Microsoft's trajectory. This sharp drop was actually the last golden buying opportunity.
By the end of the year -- though the exact month was unclear -- the U.S. government's information superhighway plan was announced, and all computer and network communication-related stocks were set to soar. Microsoft and Cisco would lead the surge.
Especially after the release of Windows 95 in 1995, their market values skyrocketed wildly, with Microsoft exceeding $600 billion by the end of 1999.
But nobody else knew this yet. Winnie and Richard were anxious and had scheduled a meeting at the charity foundation's investment office this morning to discuss countermeasures.
...
When Linton arrived, Winnie, Henry, Richard, and Goodman were waiting. After asking the assistant to wait outside, they gathered in the meeting room.
"Everyone, please share your thoughts," Linton said. Although he already knew the outcome, he wanted to hear their perspectives.
"I'm very optimistic about Microsoft's future," Winnie began. "They hold over 96% of the global market share -- a virtual monopoly. Plus, computer adoption is rapidly increasing. Their prospects look very bright."
"I agree with Winnie," Richard added. "The big question is why Bill Gates wants to sell off such a large portion of his shares. We're told it's to diversify and cash out somewhat, which is normal in the market. But the scale and continuity of his sell-off are concerning. Maybe Bill Gates discovered new technology or a company threatening Microsoft's position and is preparing an exit strategy."
"That's just conspiracy theory and paranoia," Linton waved off.
"Why do you say that?"
"Let me tell you. If you truly find the signs Richard mentioned, what would a savvy capitalist do?"
"Two options: one, acquire and control that new technology or company yourself."
"What if they refuse to be acquired?"
"Is there no third option?"
"I'm not sure."
Having acquired 7% of Cisco's shares, Richard had successfully joined Cisco's board of directors and received a comfortable monthly salary. However, as a non-executive director, he had no management role. His purpose was to protect Skycrest Capital's interests, not to steer the company.
He was familiar with Cisco's story, a classic case of financial capital taking over the founder's control. Faced with that reality, he agreed with Linton.
"Bill Gates is a powerful capitalist who shouldn't be underestimated. But why this strategy? I'm still unsure and don't know the next move."
"Henry, Goodman, any thoughts?"
"Given the uncertainties and risks, my suggestion is to reduce our holdings moderately. We currently own too many Microsoft shares, which have appreciated significantly," Henry offered from a risk-aversion point of view.
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