What will P. Allen do with his cash?
Now what's he up to? Allen sells off 35 million of his
Microsoft shares
What the secretive multibillionaire will do with the proceeds fuels conjecture
Friday, November 3, 2000
By DAN RICHMAN
SEATTLE POST-INTELLIGENCER REPORTER
Microsoft co-founder Paul Allen last month sold 35 million shares in that
company -- nearly 20 percent of his stake -- according to federal documents
released this week.
The $2.1 billion sell-off, which is much larger than those Allen frequently
makes, has some onlookers wondering what the secretive multibillionaire is up
to.
Allen, a venture capitalist distinguished by the massive size and scope of his
investments, regularly sells Microsoft shares, each time explaining through
spokeswoman Susan Pierson Brown that he is only "diversifying his portfolio."
But past sell-offs have been smaller. In September, he sold 2.9 million shares;
in August, 13 million.
For most people, it's hard to grasp what Allen's newly realized $2.1 billion in
cash would buy: 79 radio stations, four Safeco fields or everything Washington
exported to China last year.
It's also hard to get a grasp on what Allen will use his money for.
In a prepared statement, his spokeswoman said, "Given the current volatility in
the equity markets, and Microsoft's recent stock rebound, we felt it prudent to
sell a larger-than-usual stake this quarter and increase our cash position."
But, as usual, Allen and his staff declined to say how the cash would be spent.
There is conjecture aplenty, though.
"There's been huge speculation about what he'll do with his money," said a
Seattle investment banker who is familiar with Allen and his investment arm,
Vulcan Ventures. "They're kind of weird. They make everyone stay totally
quiet when it seems unnecessary to keep things quiet."
Among the possibilities:
Allen could be just be bailing out of Microsoft. After increasingly
distancing himself from the company over the last 25 years, Allen in late
September said he will leave its board of directors. The sell-off may
reflect a further withdrawal.
He could be planning to repay a major loan he took against shares of
Charter Communications, a St. Louis-based cable company that Allen
owns.
He may be planning a major investment. Rumors have been circulating
for months that Allen is considering building a new natural history or
science museum in Seattle.
The investment banker also suggested Allen could be planning an experiment
in charter schools, following his founding of online-education company Apex
Learning in 1997. Or, the banker said, Allen might be planning to take over
Metricom Inc., a Los Gatos, Calif., wireless data company in which he now
holds a minor investment.
Last time Allen left Microsoft, in 1983, it was because he had been diagnosed
with Hodgkin's disease, which later went into remission. In September, when
he announced he would leave the board, he denied he was sick. Brown denied
it again yesterday.
But obviously, the correct answer to Allen's current investment plan may be
none of the above.
"When you've got that much money, you can have fun and not worry that
much" about what you're spending money on, the banker said. "Who cares?"
Just how much money he even has is difficult to pin down. The value of
technology stocks, like Microsoft, has fluctuated greatly this year.
What's more, much of Allen's investment is in startups and privately held
companies, which don't have to disclose their assets, sales or worth.
But Forbes Magazine's listing of the world's richest people this year said the
Mercer Island resident, at 47, is worth about $28 billion, ranking him at the
time of publication the third-richest person in the world, behind Microsoft
co-founder Bill Gates and Oracle Chief Executive Larry Ellison.
Allen owns the Seattle Seahawks, the Portland Trailblazers, the Experience
Music Project, and the Cinerama Theatre, and he holds a stake in scores of
technology companies related to his broad but amorphous concept of a
"Wired World."
Allen's October stock sales came to light when the Securities and Exchange
Commission this week made public three "Form 144s" filings, which taken
together disclosed Allen intended to sell 35 million shares. Federal law
requires company officers and board members to file such documents with the
Securities and Exchange Commission before selling shares and again after the
sale is executed.
The dates by which Allen said he planned to sell the shares had already
passed. A source familiar with Allen's SEC filings said he consistently sells all
the shares he registers to sell. But Allen's office couldn't confirm the sales, and
SEC filings that do so won't be out until later this month.
As of Sept. 28, Allen held 184.2 million Microsoft shares, or 3.4 percent of
the company, Brown said. If that number has held steady, Allen just sold 19
percent of his stake in Microsoft.
To give some context to Allen's new cash stash, Westinghouse, the parent
company of CBS Radio, bought 98 stations from American Radio Systems in
Sept. 1997 for $2.6 billion. Safeco Field cost $517 million. Our state
exported $1.8 billion in transportation equipment, $70 million in paper
products, and $37 million in metals to China last year, among other things. |
