In 1975, when Bill Gates and Paul Allen founded Microsoft Corporation MSFT, they dreamed of putting a computer in every home. Today, the company has a market capital of $2.8 trillion and is second only behind rival Apple, which has a market cap of $2.9 trillion at the time of writing.
In its almost 48 years of journey, Microsoft has had three different CEOs, starting with Gates, then Steve Ballmer, and Satya Nadella.
During the tenure of all three leaders, the company went through several changes, developments, and improvements – some worked, some didn’t. Moreover, the way rivals fared during that period also impacted how Microsoft’s stock price reacted.
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For instance, when Gates resigned from the CEO post, and Ballmer took over, he had a difficult task ahead as the company struggled to adjust to the modern landscape.
Moreover, Microsoft was somewhat left behind as new rivals like Google and Apple started making the most of the technological trends between 2000 and 2010.
This was the same time Apple launched its first-ever iPhone — the product that has today completely dominated the smartphone world, although Ballmer was sure that it would be a dud.
He infamously mocked the iPhone, saying, “$500? Fully subsidized? With a plan? I said that is the most expensive phone in the world.”
“And it doesn’t appeal to business customers because it doesn’t have a keyboard. Which makes it not a very good email machine,” he said at the time, laughing at the product. Suffice it to say, as the history goes, the joke was on Ballmer.
Now, if an investor had bought $1000 of MSFT stock on Jan.13, 2000 (the day Ballmer took over as CEO), how would they have fared?
Microsoft Stock’s Price Trajectory During The Tenure Of Steve Ballmer As CEO.
How A $1,000 Investment In Microsoft Compared With Returns From S&P500 and Nasdaq During Steve Ballmer’s Term.
At the end of Ballmer’s tenure as CEO, the $1000 investment would have resulted in a loss, with the person only leaving with around $700. In fact, in comparison, the Nasdaq would have returned $1,037 in a similar period and the S&P 500 $1,229.64.
Microsoft started embracing cloud services around 2008 when it introduced Azure. In 2011, the company introduced Office 365, which has since been renamed Microsoft 365. This was the moment when Redmond started getting some of its initial success trajectories back.
However, despite Ballmer being at the helm, it was Nadella, the senior vice president of Research and Development for the Online Services Division at the time, who was credited with Microsoft’s cloud success. He stayed in the position till 2014, during which time he was appointed as the CEO.
Now, if a person had purchased MSFT stock worth $1000 on Feb. 4, 2014 (when Nadella became Microsoft’s CEO), how much would they have gained today, given that Nadella continues to be in his position?
The trajectory of Microsoft’s stock price during Satya Nadella’s tenure as CEO.
How A $1,000 Investment In Microsoft Compared With Returns From S&P500 and Nasdaq During Satya Nadella’s Leadership.
Currently, the $1000 investment would have resulted in ten times the growth, as the person would end up with $10,263.27. On the other hand, a similar investment tracking the Nasdaq would have netted $3,522.24, and if it mirrored the S&P 500, it would have amounted to $2,585.57.
What Was Different Under Nadella’s Leadership?
Under Nadella’s leadership, Microsoft embraced a “cloud-first, mobile-first” vision. By 2020, the company had become one of the few big techs in the world to reach a market of $1 trillion.
Microsoft also acquired LinkedIn under Nadella’s leadership in 2016. Last month, Nadella told shareholders that LinkedIn surpassed $15 billion in revenue for the first time this fiscal year.
Moreover, in 2019, Microsoft started investing in ChatGPT-parent OpenAI, because of which, after decades of struggle against Google, Nadella’s company was finally able to shake up the industry.
Photo by Volodymyr Kyrylyuk on Shutterstock
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