March 13, 2015

“On March 13, 1986, Microsoft had a highly successful initial public offering (IPO) at an offer price of $21. By the end of the day, the stock price had risen to $35.50, and Bill Gates made the headlines as the wealthy owner of 45 percent of the corporation’s stock.”

— “Going Public — Microsoft, 1986
By Hassan Shirvani and Thomas Barry Wilbratte

When Microsoft produced a video about its history, they of course mentioned the 1986 public stock offering:

The video also describes Fortune’s 1986 story about Bill Gates and his stock. The article was recently posted online:

“Going public is one of capitalism’s major sacraments, conferring instant superwealth on a few talented and lucky entrepreneurs. Of the more than 1,500 companies that have undergone this rite of passage in the past five years, few have enjoyed a more frenzied welcome from investors than Microsoft, the Seattle-based maker of software for personal computers. Its shares, offered at $21 on March 13, zoomed to $35.50 on the over-the-counter market before settling back to a recent $31.25. Microsoft and its shareholders raised $61 million. The biggest winner was William H. Gates III, the company’s co-founder and chairman. He got only $1.6 million for the shares he sold, but going public put a market value of $350 million on the 45% stake he retains. A software prodigy who helped start Microsoft while still in his teens, Gates, at 30, is probably one of the 100 richest Americans….”

Screenshot from Microsoft history video

Screenshot from Microsoft history video

The Seattle Post Intelligencer also posted their 1986 Microsoft story online:

“Those investors lucky enough to have received some stock at its preopening price of $21 a share could have made a 40 percent return in one afternoon if they sold at the peak, said Dunlap.

And the high turnover of stock indicates that some investors probably did just that. Indeed some stock probably changed hands several times in the space of a few hours, said Dunlap.

The fervor of the trading surprised even those close to the underwriting effort. It’s unusual for a new stock to do as much volume in one day as did Microsoft’s.

Microsoft’s two founders — Bill Gates and Paul Allen — were made instant millionaires by the offering, but they didn’t seem fazed by all the hoopla. Allen went to work as usual at Asymetrix, the company he founded last year in Bellevue. Gates was in Australia on business.

‘I’m pretty happy,’ said Allen. ‘Everybody involved with Microsoft since the beginning has been looking forward to this day.'”

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