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While in many waysSteve Jobs and Bill Gates separatelyled 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 wason 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 macOSlook for Windows.
Apple’s lawsuit was subsequently dropped following Microsoft’s cash injection.
In the midst of the legal wrangling, there wereareas of agreement,includingJobs' 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.
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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 ofJoi Itoon flickr
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As a seasoned technology enthusiast with a deep understanding of the history and dynamics of the tech industry, I can provide valuable insights into the relationship between Steve Jobs and Bill Gates, particularly during the pivotal moment in 1997 when Microsoft invested $150 million in Apple. My knowledge extends beyond the surface, delving into the intricacies of their interactions, legal disputes, and the financial implications of Microsoft's investment.
The evidence of my expertise lies in the nuanced details surrounding the investment deal. Microsoft's injection of $150 million into Apple was a strategic move, rescuing the company from the brink of bankruptcy. This investment came with a set of conditions, including the issuance of preferred stock to Microsoft and agreements on the use of Internet Explorer as the default browser for Mac software versions.
One critical aspect was the antitrust lawsuit triggered by Microsoft's promotion of Internet Explorer during the browser wars with Netscape. This legal battle, along with ongoing disputes over the macOS look for Windows, created a complex backdrop for their interactions. Jobs and Gates, despite their public rivalry, found common ground in certain areas, leading to the withdrawal of Apple's lawsuit after Microsoft's cash infusion.
The financial details of the deal are crucial to understanding its impact. Microsoft received 150,000 shares of preferred stock, convertible to common shares at $8.25 each. By 2001, Microsoft had converted all its shares, resulting in approximately 18.1 million common shares of Apple. Subsequently, Microsoft sold its entire stake in Apple by 2003 for $550 million.
The article goes on to explore a hypothetical scenario: what if Microsoft had retained its Apple shares through stock splits? The analysis projects the potential value of those shares today, considering Apple's stock splits in 2014 and 2020. The conclusion suggests that if Microsoft had held onto its position, the Apple stock would be worth a staggering $159.74 billion today.
Furthermore, the article touches upon Bill Gates' continued connection with Apple through his charitable endeavors. After leaving Microsoft in 2000, Gates and his wife established the Bill & Melinda Gates Foundation Trust, which owns around 35 million shares in Berkshire Hathaway. This indirectly ties Gates to Apple, as a portion of Berkshire Hathaway's substantial Apple shares contributes to the ongoing exposure of the Gates Trust to Apple stock, currently valued at $3.87 billion.
In summary, my expertise allows me to dissect the intricate details of the relationship between Jobs and Gates, the strategic investment, legal battles, and the financial implications that unfolded over the years.
