The outrage story du jour is emanating from Redmond, Washington today, where Reuters is reporting that three of Microsoft's (MSFT) biggest shareholders are secretly pushing to oust chairman Bill Gates from the company he founded 38 years ago.
If true, or successful, it would mark a total management makeover for the lumbering software giant, as the report comes only a few weeks after long-time CEO Steve Ballmer announced he was stepping down.
As we discuss in the attached video, Zor Capital's Joe Fahmy, who was on Breakout the day the Ballmer news broke and correctly said not to buy the Ballmer-bounce, is again downplaying the news and avoiding the stock.
In fact, Fahmy says, there's really only one thing that would make this trader take a look at a slow-growing, mega-cap like Microsoft: breaking it up.
"That might do it," Fahmy concedes, "if you take some of their smaller, more aggressively growing divisions and you break it up, that's a possibility for it to grow."
Of course the catalyst for this sudden surge in shake-up news is the simple fact that, as Fahmy says, "the stock has been dead money for 13 years." Clearly, investors are getting annoyed and hurt by the underperformance of this $280 billion behemoth, the fifth largest stock in the S&P 500.
Technically, Bill Gates is still the largest shareholder in Microsoft, with some 377 million shares or about a 4.5% stake. But the brilliant billionaire is also in the process of divesting himself to fund his charitable trust, and is automatically selling 80 million shares a year, and therefore will be entirely out by 2018.
Even so, Fahmy says what Wall Street ultimately wants to see is growth, but points out that that is going to be a challenge for Microsoft.
"When you get to $60 billion in sales, where is the growth going to come from?" he says, adding "I don't think it matters who is at the top."
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