Microsoft's Gates, Ballmer defend stock sales

SEATTLE, USA: Microsoft Corp Chairman Bill Gates and Chief Executive Steve Ballmer defended recent stock sales on Tuesday as they faced tough questions from shareholders frustrated by the lack of growth in the company's shares over the past decade.

Gates, who co-founded the company in 1975, sells 20 million shares every quarter to help fund his philanthropic activities, while Ballmer is planning to sell 75 million shares by year end for tax planning reasons.

"Both Bill and I retain very substantial interests in the company," said Ballmer, CEO since 2000, at the company's annual shareholders meeting, which was broadcast on the Web. "If you look at the amount of shares sold by insiders it's really a very small percentage of all of the shares that sell, it's not a material factor in the stock price."

More than 50 million Microsoft shares change hands most days on Nasdaq, sometimes more than 100 million. The company has about 8.6 billion shares outstanding.

Gates is still the largest individual shareholder with about 7.2 percent of the company, followed by Ballmer with about 4 percent. Gates regularly sells shares in batches of 1 million to 4 million to fund his $33 billion Bill & Melinda Gates Foundation, which became his focus when he retired from day-to-day work at Microsoft in 2008.

Asked by a shareholder if he could somehow annul his Microsoft shares, rather than selling them, Gates defended his priorities.

"I made that decision that wealth was going to go to the Foundation and the causes of the Foundation as opposed to being some reduction in shares outstanding for Microsoft," said Gates, in one of very few public utterances at the meeting.

Microsoft shares fell about 0.5 percent to $25.90 on Nasdaq. The shares are down about 15 percent this year, compared to a 9 percent gain in the Nasdaq.

The stock has been trading around the same level as 2002. One shareholder complained that Microsoft's shares have been "wallowing" for years, to applause from the audience.

"I do understand the frustrations, we are all shareholders," replied Ballmer. "Ultimately the stock market gets it right, as long as we get it right."

The CEO praised his company's latest line-up of products, emphasizing the hot-selling Windows 7 operating system, but complained himself that investors tended to favour companies in the consumer electronics sphere.

"I don't think there's been as much appreciation for the incredible success we've had with enterprises," said Ballmer. "People relate better to the consumer market," he added. Apple Inc AAPL, which has had a string of hits with its music players, phones and tablet devices, has seen its stock rise 25-fold in the last eight years.

Ballmer and Gates rejected one shareholder's appeal to consider breaking up Microsoft into smaller parts, in order to focus on individual businesses.

"I don't think it would be useful," said Ballmer, explaining that such a move would throw away the advantage of having different parts of its business working together