Microsoft Corp. chairman Bill Gates has quietly bought a $500 million stake in Cox Communications Inc. through two private investment vehicles.
According to Securities and Exchange Commission documents, Gates — through Cascade Investments, his private-investment company, and the Bill & Melinda Gates Foundation — purchased 13.5 million shares of the MSO in October.
Given Cox's share price of $37.40 last Thursday, the two stakes are worth about $505 million. About 3 percent of outstanding Cox Communications stock is involved.
In June 1997, Microsoft bought $1 billion of Comcast Corp. stock, a move that energized all cable stocks. (News of his Cox buy broke late Thursday, and didn't have a galvanizing impact: In early trading Friday, Cox was down 20 cents, to $37.20.)
In 1999, Microsoft agreed to buy $5 billion in convertible preferred stock in AT&T Corp. Microsoft later agreed to convert its preferred stake into 115 million shares of the combined AT&T Comcast Corp.
Analysts cautioned against reading too much into Gates's latest moves.
The deals appear to merely be a personal investment by Gates, said Banc of America Securities LLC cable analyst Doug Shapiro.
"Microsoft and Bill Gates, are they very much interested in having some control of distribution? Very much so," Shapiro said. "Microsoft is trying in many ways to transition toward a service model. In that context, having control over distribution is going to be vital."
But had Gates intended to gain a controlling stake in Cox, he wouldn't make the buy through his own personal investment vehicles, Shapiro said.
"If that was the intention, it would have been an investment made by Microsoft."