[coliveira]

I believe the main reason why MSFT is stagnant is that the biggest shareholder (Bill) is selling this stuff constantly. His must have sold tens of billions of MSFT is the last few years. It is just the inverse of a company like IBM that is actively buying shares.

[vladd]

According to http://www.google.com/finance?q=msft , 1% of Microsoft shares changes hands each day. This means that every 3 months, on average, every Microsoft share changes hands once.

Bill's selling represents less than 100% and occurred over a decade, which is a much larger time interval. Nowadays mutual/hedge funds look at the company performance (earnings) and at the stock price and effectively pour in the capital whenever the P/E ratio drops below their threshold, thereby effectively compensating the effect of those sales.

When 1% of a company's shares changes hands each day you can't really blame Ballmer for stock price fluctuations.

In regard to IBM, when a company buys back its shares it effectively reduces the number of outstanding shares on the market (and thus it increases their rarity and therefore their price), but the money used for the buy-back could have been instead paid in dividends or used for an external acquisition. It is a management decision that partially says "we didn't find anything else better to do with the money than this", but it's too complex to be analysed in a comment's paragraph. The Ballmer transaction is on the market, investor-to-investor; it doesn't change the number of outstanding shares nor does it dilute the price.

[coliveira]

> 1% of Microsoft shares changes hands each day

yes, but these are transactions that follow the pattern of the market. Usually they even out, with a few days having more sellers and on other days more buyers.

When you have a share repurchase program, you are basically giving a support for the market. It is hard for the stock to go much lower, because the company is always buying.

Bill and Ballmer, on the other hand, are selling shares. This is not good for the stock, even if spread over a long time.

[btilly]

When you have a share repurchase program, you are basically giving a support for the market. It is hard for the stock to go much lower, because the company is always buying.

This statement shows a common misunderstanding of finance.

The market cap of a company represents the market's best estimate of the value of that company. When a company does a share buy-back, the company loses money and destroys stock. The current value of the money used matches the value of the stock destroyed, and so the market cap should be reduced by the amount of stock destroyed. Therefore to first order effects, the result is that the share price should remain constant. (There are second order effects where some value is transferred from stock holders to option owners, which indicates that the share price should go down.)

[nostrademons]

The point is that lots of other people are selling shares too - by the numbers, several times more than Bill and Ballmer. Yet nobody cares much if say, Fidelity or Vanguard or Goldman Sachs is selling.

In a liquid market, somebody is always selling. And somebody else is buying. In order to have a transaction, you have to have both a buyer and a seller. As long as those balance out, the price remains stable. You only see wild swings in price when there are suddenly many more sellers than buyers, or several more buyers than sellers. That doesn't happen with these planned insider transactions, because as soon as a sale is announced, a dozen computerized arbitragers swoop in to buy up the shares they've just sold (as long as the market doesn't consider the insider sales to be a vote of no confidence in the stock).

[vl]

But to be fair, this is the only thing that makes sense for him to do: if your portfolio tilted into one company like his, you should diversify like crazy irregardless of company performance, otherwise one day you can find yourself unexpectedly and significantly poorer.