Microsoft Made $18 Billion Off of AAPL

I believe Microsoft already sold those shares, and did so long ago. I have read this several times over the years. Did you check into this at all? What’s your source for the fact that Microsoft is still holding these assets?

This definitely makes me wish I had been into buying stocks back then…..or had at least been able to see the future.

Microsoft stock split in 98, 99, and 2003. $150 M in MS stock in 1997 would bring you a little over $1.8B today.

If I am not mistaken, MSFT sold/divested itself of this quite a while ago. I can’t find any solid sources of info from the net. The best I can give you is wiki, but that sadly is also unsourced.

“At the 1997 Macworld Expo, Steve Jobs announced that Apple would be entering into partnership with Microsoft. Settlement discussions regarding Apple’s “Look and Feel” lawsuit and the “QuickTime piracy” lawsuit resulted in a five-year commitment from Microsoft to release Microsoft Office for Macintosh as well as a US$150 million investment in non-voting Apple stock. (This event is often inaccurately described as a “bailout” of Apple by Microsoft. At the time Apple had a little over US$1 billion in cash and cash equivalents according to their 10-Q statement.[29] Microsoft later sold its shares for a tidy profit.)”

Yes, sold – sold during Apple’s first mini run and stock split. They did turn a profit but also keep in mind after the split, Apple’s stock was steady growth but not spectacular until the last 2 years.

Microsoft did not keep those shares more than a few months – maybe 1.5 years at the most.

Pretty sure the math is wrong for these figures (MS split at least as many times as Apple in that time period, but the article only seems to count the Apple splits), but it is likely true that an investor would have made alot more money if they had invested that much and hung on to it.

- James

Wait, I don’t understand. MSFT invests $150 million into Apple. Apple then trades at $5.43/share. Since then Apple’s share price has increased by around 2,000%. 150 million increased by 2,000% is about 3 billion. Not 18 billion. What am I missing?

Microsoft investment was actually in the form $150 million worth of convertible preferred shares which automatically converted to common stock at a conversion price of $8.25 per share upon sale. Microsoft sold the shares in two blocks, one in September 2000, and the other in the first quarter of 2001, converting their preferred shares to a total of 17.8 million shares of Apple’s common stock.

One two-for-one split of Apple shares has occurred since that time, so if Microsoft still owned their original preferred shares, they would convert today to 35.6 million shares. At $127.57 per share (the price of AAPL at yesterday’s close), that would amount to $4.54 billion, or 30 times the original amount invested.

Is it just me or is your headline off? Based on the story, I think it should read: “Microsoft dumped Apple stock which is now worth $18 billion” or whatever the true value is. I don’t see any way that MS could have MADE huge sums off this deal.