It Wasn't Supposed to Be Like This for Bill Gates

NEW YORK (TheStreet) -- It's kind of shocking to me that activist investor ValueAct and two other large Microsoft (MSFT) investors are pushing for Bill Gates to step down from the board, according to a Reuters report.

This is the guy who started Microsoft. He's the richest man in the world.

On the one hand, Wall Street has long believed that Microsoft is bloated and due for a major restructuring. It has pleaded its case in vain to Steve Ballmer for years.

Microsoft has underperformed the Nasdaq for 15 years now. Over that time, the Nasdaq is up 133% while Microsoft is up 28%.

That's frustrating for many investors, especially when you consider that IBM (IBM) is up more than 170% over the same period.

At long last, activists have the upper hand with Microsoft. They've already forced out Steve Ballmer, which the board preferred to facing a proxy battle. And, now, they are going after Gates.

I expect Gates to stand firm and tell them to go pound sand. And this will probably be enough to stave them off.

That said, Gates has only himself to blame for the Microsoft's current mess.

Arguably, he left too soon in his career, vacating the top post so that Ballmer could take it.

And he really left, throwing himself into his philanthropic work. There were no founder issues with Gates tinkering too much. In fact, he didn't tinker enough.

Gates left everything to Ballmer. Every complaint that any investor has had with Microsoft over the past 15 years relating to Steve Ballmer can land squarely at Gates' feet as he's always given Ballmer his tacit support.

The amorphous business units. The being late to mobile. The slowness in responding to competitive threats. The fighting too many battles on too many fronts. The one-time special dividend that was a great payout for Gates but not other shareholders.

But there was one more statistic that really shocked me the other day tweeted out by CNBC's tech correspondent Jon Fortt:

"Bill Gates's stake in $MSFT 13 years ago: 13.7%. Today: 4.5%. Steve Ballmer's stake in 2000: 4.5%. Today: 3.95%"

Here's another interesting tweet from Fortt:

"If Gates keeps selling $MSFT stake at this rate & Ballmer doesn't start, Ballmer may be the biggest individual shareholder by 2015"

That's shocking to me. At just the time when Gates needs his founder status to brush off the arguments of activist investors and the ability to say he has "skin in the game," it looks like he can't wait to cash out his entire stake..

Steve Ballmer, looks like a guy who -- whether or not you believed in his strategic vision for the company -- was all in with his personal wealth at risk.

Gates should still be able to fend off these activists. And the activists are likely just using this as a negotiating tactic to get more change from Microsoft than they otherwise would.

But this should be a huge wake-up call to Bill Gates.

You're either in the boat to save the company you founded or you're not. If not, that's great. You're spending your billions to save the world, and that's a great thing. But if that's what you want to do mostly, you're getting in the way of change at Microsoft.

If Gates truly cares about this company, he should not sell another share and really double down here on bringing this company back. That means a much more active job in Redmond -- maybe even the CEO spot.

At the time of publication, Jackson had no positions in securities mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Eric Jackson is founder and Managing Member of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. In January 2007, Jackson started the world's first Internet-based campaign to increase shareholder value at Yahoo!, leading to a change in CEOs in 2007. He also spoke out in favor of Yahoo!'s accepting Microsoft's buyout offer in 2008. Global Proxy Watch named Jackson as one of its 10 "Stars" who positively influenced international corporate governance and shareowner value in 2007.

Prior to founding Ironfire Capital, Jackson was President and CEO of Jackson Leadership Systems, Inc., a leadership, strategy, and governance consulting firm. He completed his Ph.D. in the Management Department at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management and Corporate Governance, and holds a B.A. from McGill University.

He was previously Vice President of Strategy and Business Development at VoiceGenie Technologies, a software firm now owned by Alcatel-Lucent. In 2004, Jackson founded the Young Patrons' Circle at the Royal Ontario Museum in Toronto, which is now the second-largest social and philanthropic group of its kind in North America, raising $500,000 annually for the museum. You can follow Jackson on Twitter at www.twitter.com/ericjackson or @ericjackson.

You can contact Eric by emailing him at Dr.eric.jackson@me.com.

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