Does Microsoft still own 7% of Apple?

Does Microsoft Still Own Apple? 0% Stake vs 7% History

Many investors wonder does microsoft still own 7 percent of apple after the famous 1997 partnership. While the capital infusion proved vital for survival during a financial crisis, the current ownership status shifted significantly years ago. Understanding this exit helps clarify the modern relationship between these tech giants and avoids common misconceptions about their financial ties.

Does Microsoft Still Own 7 Percent of Apple?

No, Microsoft does not own any portion of Apple today. While many remember the historic $150 million investment made in 1997 - which represented roughly 7% of Apple at the time - Microsoft completely divested its holdings by mid-2003. The interpretation of this ownership often depends on whether you are looking at the initial survival deal or the eventual stock conversion.

This question persists because the 1997 deal was arguably the most significant moment in tech history, effectively ending the desktop wars. However, Microsofts role was that of a temporary life raft, not a long-term institutional shareholder. By 2003, every single share obtained during that rescue mission had been sold back into the open market.

The 1997 Rescue: Why Microsoft Invested $150 Million

In August 1997, Apple was in dire financial straits, reportedly having less than 90 days of cash left in the bank. Steve Jobs, recently returned to the company, struck a deal with Bill Gates that saw Microsoft invest $150 million in non-voting preferred stock. This gave Microsoft a roughly 7% stake in their fiercest rival. ^[1]

The deal was more about optics and legal settlements than a desire for ownership. As part of the agreement, Apple dropped its long-standing Look and Feel lawsuit against Microsoft, while Microsoft committed to supporting Office for Mac for five years. I remember watching the Macworld keynote where Bill Gates appeared on a giant screen above Steve Jobs - the audience booed, but that $150 million was the literal oxygen Apple needed to survive.

From Preferred Shares to Common Stock

The transition from being a rescuer to an investor happened in 2001. At that point, Microsoft converted its preferred shares into approximately 18.1 million shares of common stock. It was a calculated financial move, signaling that the initial five-year commitment period was nearing its end. But Microsoft had no intention of holding onto those shares as Apple began its meteoric rise with the iPod.

When Did Microsoft Sell Its Apple Stock?

Microsoft began selling its Apple shares in 2002 and finished the liquidation process by mid-2003. ^[2] This exit was quiet compared to the loud announcement of the investment. By the time the sale was complete, Microsoft had likely made a respectable profit, but they missed out on the trillion-dollar growth that followed.

In my experience analyzing corporate exits, companies usually sell rival stock to avoid antitrust scrutiny or to reallocate capital into their own R&D. Microsoft was facing its own massive antitrust trial at the time, and owning a significant piece of its only real competitor in the OS space was a legal liability. They cashed out just as Apple was transforming from a computer company into a mobile powerhouse.

The Billion Dollar Mistake? What Those Shares Would Be Worth Today

If Microsoft had held onto those 18.1 million shares from 2001, the value today would be staggering. Due to Apples stock splits - specifically the 2-for-1 splits in 2000 and 2005, a 7-for-1 split in 2014, and a 4-for-1 split in 2020 - those original shares would have multiplied significantly. Specifically, 1 share in 1997 would have become 112 shares by late 2020. ^[3]

Based on current market data, that original 7% stake would be worth over $100 billion today. To put that in perspective, Microsofts total net income for the entire fiscal year of 2024 was roughly $88 billion. ^[4] Essentially, holding that Apple stock would have yielded a single asset worth more than an entire year of Microsofts global profits. It sounds like a massive blunder. But wait for it. At the time, Microsoft needed that capital to defend its Windows monopoly, which was their primary cash cow.

Ive often wondered if Steve Jobs would have been able to innovate so aggressively if he knew his greatest rival was profiting from every iPhone sold. Probably not. The sale allowed both companies to diverge and compete on more even ground.

The 1997 Deal vs. Current Reality

1997 Investment Era

- Approximately 7% through preferred non-voting shares

- Seen as a surrender by Apple fans and a bailout by the media

- Emergency liquidity for Apple and lawsuit settlement for Microsoft

Modern Relationship (Post-2003)

- 0% - Completely divested by the middle of 2003

- Collaborative competitors (Office on iPad, Azure vs. iCloud)

- Cross-platform software availability and cloud service competition

The Day the 'War' Ended at Macworld

In 1997, Apple was bleeding cash and trading at a split-adjusted price of less than 20 cents per share. Steve Jobs returned to a company that was widely expected to file for bankruptcy within months. He needed a miracle to convince developers and investors that Apple had a future.

Jobs called Bill Gates directly. The 'Look and Feel' lawsuit was a major friction point, with Apple claiming Windows stole Mac's visual interface. Gates was hesitant to invest in a failing rival, but the threat of ongoing litigation and the desire to keep Office on Macs as a standard gave Jobs leverage.

The breakthrough came when Jobs realized that if Microsoft invested, the market would see it as a vote of confidence from the world's most successful tech company. He convinced Gates to buy $150 million in preferred stock, which required zero voting rights, meaning Jobs kept total control.

The announcement caused Apple stock to jump 33% in a single day. While the booing crowd saw a betrayal, the deal provided the stability for Apple to develop the iMac and eventually the iPod. Microsoft walked away with a clean legal slate and a profit when they sold in 2003.