While Microsoft Chief Executive Steve Ballmer has been under pressure for years to improve the company's performance and share price, this appears to be the first time that major shareholders are taking aim at Gates, who remains one of the most respected and influential figures in technology.
A representative for Microsoft declined to comment on Tuesday.
There is no indication that Microsoft's board will heed the wishes of the three investors, who collectively hold more than 5 percent of the company's stock, according to the sources. They requested the identity of the investors be kept anonymous because the discussions were private.
Gates owns about 4.5 percent of the $277 billion company and is its largest individual shareholder.
The three investors are concerned that Gates' role as chairman effectively blocks the adoption of new strategies and would limit the power of a new chief executive to make substantial changes. In particular, they point to Gates' role on the special committee searching for Ballmer's successor.
They are also worried that Gates - who spends most of his time on his philanthropic foundation - wields power out of proportion to his declining shareholding.
Gates, who owned 49 percent of Microsoft before it went public in 1986, sells about 80 million Microsoft shares a year under a pre-set plan, which if continued would leave him with no financial stake in the company by 2018.
He lowered his profile at Microsoft after he handed the CEO role to Ballmer in 2000, giving up his day-to-day work there in 2008 to focus on the $38 billion Bill & Melinda Gates Foundation.
In August, Ballmer said he would retire within 12 months, amid pressure from activist fund manager ValueAct Capital Management.
Microsoft is now looking for a new CEO, though its board has said Ballmer's strategy will go forward. He has focused on making devices, such as the Surface tablet and Xbox gaming console, and turning key software into services provided over the Internet. Some investors say that a new chief should not be bound by that strategy.
News that some investors were pushing for Gates to be ousted as chairman provoked mixed reactions from other shareholders.
"This is long overdue," said Todd Lowenstein, a portfolio manager at HighMark Capital Management, which owns Microsoft shares. "Replacing the old guard with some fresh eyes can provide the oxygen needed to properly evaluate their corporate strategy."
Kim Caughey Forrest, senior analyst at Fort Pitt Capital Group, suggested now was not the time for Microsoft to ditch Gates, and that he could even play a larger role.
"I've thought that the company has been missing a technology visionary," she said. "Bill (Gates) would fit the bill."
Microsoft is still one of the world's most valuable technology companies, making a net profit of $22 billion last fiscal year. But its core Windows computing operating system, and to a lesser extent the Office software suite, are under pressure from the decline in personal computers as smartphones and tablets grow more popular.
Shares of Microsoft have been essentially static for a decade, and the company has lost ground to Apple and Google in the move toward mobile computing.
One of the sources said Gates was one of the technology industry's greatest pioneers, but the investors felt he was more effective as chief executive than as chairman.
Thursday, October 3, 2013
Appeals court revives Microsoft claim against Google
A federal appeals court on Thursday instructed the U.S. International Trade Commission to reconsider a ruling that gave Google Inc a victory over Microsoft Corp in a patent dispute.
Acting on an appeal by Microsoft, the U.S. Court of Appeals for the Federal Circuit found that the ITC erred in its reasoning when it found that the Google unit Motorola Mobility did not infringe a Microsoft graphical interface patent.
After a critical discussion of the ITC judge's reasoning, the appeals court said: "This conclusion requires reversal of the 133 patent non-infringement judgment."
But it also said it agreed with the ITC that Motorola Mobility had successfully changed its smartphones so they no longer infringed the patent.
It also found the ITC was correct in ruling that Motorola Mobility, which was acquired by Google during the legal fight, did not infringe three other patents.
The dispute is one of dozens globally between various smartphone makers. Google's Android system has become the top-selling smartphone operating system, ahead of mobile systems by Apple, Microsoft, Blackberry Ltd and others.
In the original case, the ITC found in May 2012 that Motorola Mobility infringed a patent for meeting-scheduling technology but did not infringe several other Microsoft patents. An order was issued banning infringing mobile phones from the marketplace.
Motorola Mobility says it removed the infringing software from its phones. Microsoft disagrees, and has filed a lawsuit against the U.S. Customs and Border Protection, accusing the agency of failing to properly enforce the ITC order.
Microsoft said it was happy with the appeals court decision.
"We're pleased the court determined Google unfairly uses Microsoft technology," said David Howard, corporate vice president and deputy general counsel. "Google is free to license our inventions, but we're equally pleased if Google makes product adjustments to avoid using them."
A Motorola Mobility spokesman also saw good news in the appeals court decision. "Today's favorable opinion confirms our position that our products don't infringe the Microsoft patents," said spokesman Matt Kallman.
U.S. courts continue to work during the shutdown of the federal government but the ITC is largely shut down.
The case at the ITC was No. 337-744. At the Federal Circuit, the case is No. 2012-1445, -1535.
Acting on an appeal by Microsoft, the U.S. Court of Appeals for the Federal Circuit found that the ITC erred in its reasoning when it found that the Google unit Motorola Mobility did not infringe a Microsoft graphical interface patent.
After a critical discussion of the ITC judge's reasoning, the appeals court said: "This conclusion requires reversal of the 133 patent non-infringement judgment."
But it also said it agreed with the ITC that Motorola Mobility had successfully changed its smartphones so they no longer infringed the patent.
It also found the ITC was correct in ruling that Motorola Mobility, which was acquired by Google during the legal fight, did not infringe three other patents.
The dispute is one of dozens globally between various smartphone makers. Google's Android system has become the top-selling smartphone operating system, ahead of mobile systems by Apple, Microsoft, Blackberry Ltd and others.
In the original case, the ITC found in May 2012 that Motorola Mobility infringed a patent for meeting-scheduling technology but did not infringe several other Microsoft patents. An order was issued banning infringing mobile phones from the marketplace.
Motorola Mobility says it removed the infringing software from its phones. Microsoft disagrees, and has filed a lawsuit against the U.S. Customs and Border Protection, accusing the agency of failing to properly enforce the ITC order.
Microsoft said it was happy with the appeals court decision.
"We're pleased the court determined Google unfairly uses Microsoft technology," said David Howard, corporate vice president and deputy general counsel. "Google is free to license our inventions, but we're equally pleased if Google makes product adjustments to avoid using them."
A Motorola Mobility spokesman also saw good news in the appeals court decision. "Today's favorable opinion confirms our position that our products don't infringe the Microsoft patents," said spokesman Matt Kallman.
U.S. courts continue to work during the shutdown of the federal government but the ITC is largely shut down.
The case at the ITC was No. 337-744. At the Federal Circuit, the case is No. 2012-1445, -1535.
Apple Inc. (AAPL) – Nokia Licensing Terms Allegedly Misused By Samsung
A court is considering a sanction against Samsung for allowing some of its employees to view confidential documents between Apple Inc. (AAPL) and Nokia.
At least 50 employees of Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) are accused of keeping access to some confidential documents from one of the patent battles between Apple Inc. (NASDAQ:AAPL) Samsung. That’s according to a court order spotted by Florian Mueller of Foss Patents.
Apple – Nokia documents exposed
The documents explained the terms of a licensing deal between Apple and Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V). Those terms were supposed to only be disclosed to Samsung’s outside counsel. Currently Apple Inc. (NASDAQ:AAPL) is seeking sanctions against Samsung for allowing its employees to view the confidential documents.
According to the claims, Samsung executive Dr. Seungho Ahn told Nokia that he knew the terms of its deal with Apple Inc. (NASDAQ:AAPL) while negotiating with Nokia for their own licensing terms with the company. He also said referenced a statement made by Nokia’s Chief Intellectual Property Officer Paul Melin. He said Apple had disclosed the licensing deal in its legal battle with Samsung and that Samsung’s outside counsel gave his team the terms of that deal. Dr. Ahn even went so far as to recite the terms of the deal, saying that “all information leaks.”
Dr. Ahn tried to push Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) into making the same deal it did with Apple Inc. (NASDAQ:AAPL), saying that the terms between those two companies should be the same as the terms between Nokia and Samsung. Nokia now says Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) executives unfairly used knowledge of the confidential information to obtain an unfair advantage in the negotiations.
Apple pushes for a sanction against Samsung
The court is now attempting to learn more about exactly how Samsung employees received access to the confidential documents. The court wants to consider all the evidence before deciding whether sanctions should be imposed against Samsung. However, Samsung has not been cooperating with the court as it tries to determine exactly what happened. The company has chosen not to provide sworn testimony from the executives involved.
Lawyers for Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) claim that there is no need for formal discovery into the case and say that the company can’t provide evidence about who had access to the confidential information, what it was used for, and when and where it was used. The court has ordered some emails and communications to be delivered, however, in addition to depositions from Samsung employees who were able to view the documents.
At least 50 employees of Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) are accused of keeping access to some confidential documents from one of the patent battles between Apple Inc. (NASDAQ:AAPL) Samsung. That’s according to a court order spotted by Florian Mueller of Foss Patents.
Apple – Nokia documents exposed
The documents explained the terms of a licensing deal between Apple and Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V). Those terms were supposed to only be disclosed to Samsung’s outside counsel. Currently Apple Inc. (NASDAQ:AAPL) is seeking sanctions against Samsung for allowing its employees to view the confidential documents.
According to the claims, Samsung executive Dr. Seungho Ahn told Nokia that he knew the terms of its deal with Apple Inc. (NASDAQ:AAPL) while negotiating with Nokia for their own licensing terms with the company. He also said referenced a statement made by Nokia’s Chief Intellectual Property Officer Paul Melin. He said Apple had disclosed the licensing deal in its legal battle with Samsung and that Samsung’s outside counsel gave his team the terms of that deal. Dr. Ahn even went so far as to recite the terms of the deal, saying that “all information leaks.”
Dr. Ahn tried to push Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) into making the same deal it did with Apple Inc. (NASDAQ:AAPL), saying that the terms between those two companies should be the same as the terms between Nokia and Samsung. Nokia now says Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) executives unfairly used knowledge of the confidential information to obtain an unfair advantage in the negotiations.
Apple pushes for a sanction against Samsung
The court is now attempting to learn more about exactly how Samsung employees received access to the confidential documents. The court wants to consider all the evidence before deciding whether sanctions should be imposed against Samsung. However, Samsung has not been cooperating with the court as it tries to determine exactly what happened. The company has chosen not to provide sworn testimony from the executives involved.
Lawyers for Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) claim that there is no need for formal discovery into the case and say that the company can’t provide evidence about who had access to the confidential information, what it was used for, and when and where it was used. The court has ordered some emails and communications to be delivered, however, in addition to depositions from Samsung employees who were able to view the documents.
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