It was 20 years ago this week that Microsoft made its initial public offering, as CEO Steve Ballmer pointed out during his comments to reporters today in New York. If you're in the mood for a little time warp, here's the original story published in the P-I the day after the company went public:
MICROSOFT STOCK IS RED HOT ON FIRST TRADING DAY
FRIDAY, March 14, 1986
Page: B9 By Carol Smith Monkman P-I Reporter
Microsoft Corp.'s stock blazed upwards to trade at more than $8 higher than its opening price in its first day of fevered trading yesterday.
The stock, which eventually closed at $27.75 a share, peaked at $29.25 a share shortly after the opening.
The stock hit the top ''almost instantaneously,'' said Ron Dunlap, manager of Dain Bosworth's Bellevue office. The stock was priced at $21 a share to open, but the first trade took place at $25.50 a share, an indication of the fierce demand for the stock.
Even more telling was that 3.58 million shares traded hands, more than the entire offering of 3.095 million shares. The original offering was for 2.5 million shares, but was raised just before the offering because of demand.
''I've never received as many phone calls about a new offering as I have over the last month (with Microsoft),'' said Ron McCollum, broker with Paine Webber in Seattle. Paine Webber had a paltry 100 shares to allocate to customers before the offering began, nowhere near enough to satisfy the intense demand. Even brokerage houses, such as Cable Howse & Ragen, which received more shares, couldn't satisfy the demand.
Those investors lucky enough to have received some stock at its preopening price of $21 a share could have made a 40 percent return in one afternoon if they sold at the peak, said Dunlap.
And the high turnover of stock indicates that some investors probably did just that. Indeed some stock probably changed hands several times in the space of a few hours, said Dunlap.
The fervor of the trading surprised even those close to the underwriting effort. It's unusual for a new stock to do as much volume in one day as did Microsoft's.
Microsoft's two founders - Bill Gates and Paul Allen - were made instant millionaires by the offering, but they didn't seem fazed by all the hoopla. Allen went to work as usual at Asymetrix, the company he founded last year in Bellevue. Gates was in Australia on business.
''I'm pretty happy,'' said Allen. ''Everybody involved with Microsoft since the beginning has been looking forward to this day.''
Allen said he might go out for some champagne to celebrate, but that the offering wouldn't otherwise change his life.
Both Gates and Allen still have the vast majority of their shares tied up in Microsoft. Gates still owns 45 percent of the company's 24.7 million outstanding shares. Allen still owns roughly 25 percent of the shares.
Stock brokers and analysts said the typical trading pattern for a hot stock such as Microsoft is to run up, peak, settle back and then resume a more sustainable growth pattern.
''There are always exceptions to that of course,'' said Dunlap. ''That's what makes a horse race.''
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