Steve Ballmer, in an annual report to the Security Exchange Commission, plans on divesting himself from 75 million shares of Microsoft stock. At approximately $26.50 per share, this would translate into $1,987 billion dollars.
At this time there are two reasons to consider how to accept this news. One is that the Microsoft CEO has no confidence in the company’s new products and future. This would seem unlikely with the recent release of the Microsoft Kinect, among other gadgets.
The possibility also exists that Steve Ballmer was considering the possible tax implications that may go into affect January 1st. According to a press release from Microsoft regarding Steve Ballmer’s plan to sell, this move is “to assist in tax planning before the end of the calendar year.”
The tax code is set to change in January unless Congress makes the Bush Tax Cuts permanent. According to a Kiplinger report, “In 2011, the maximum long-term capital gains tax rate goes back up to 20% from 15%.” If indeed this is Steve Ballmer’s true motivation, it should bring investors relief, as most see a sell-off such as this as bad news.
Additionally, if this is the true motivation, it may offer a glimpse into the mindset of some of the country’s more well to do investment holders. Perhaps it’s time for smaller investors to look at their portfolio, and see if a sell-off is in their best interest in consultation with their tax advisor.