Gates' Departure Could Boost, Not Bust Microsoft

June 16, 2006 — -- The 50-year-old Harvard dropout who started the biggest software company in the world and became the richest man in the world is leaving his day job.

Microsoft Corp. announced Thursday that Bill Gates planned to step back from his regular duties in July 2008 in order to focus on his philanthropic work. He will continue to be chairman of the company he co-founded.

"Obviously this decision was a hard one for me to make," Gates said in announcing the move.

After founding Microsoft in 1975, Gates introduced Microsoft Windows in the 1980s, setting the stage for the personal computing revolution and the Internet.

His software is now on 95 percent of the world's computers.

"It's not an overstatement at all. He's transformed the world," said Owen Thomas, online editor for Business 2.0.

One of the key people taking on Gates' responsibilities will be Ray Ozzie, who worked on the first electronic spreadsheet, VisiCalc, in 1980.

Ozzie, 50, joined Lotus Development Corp. -- Microsoft's archrival at the time -- in 1983 and later founded Groove Networks, where he developed Groove Virtual Office. Microsoft acquired Groove Networks in April 2005 and named Ozzie chief technical officer.

Financial Effects of the Transition

The market wasn't shaken by the news at the world's largest software company.

Gates' announcement came after financial markets had closed, but earlier on Thursday Microsoft shares rose 19 cents to close at $22.07 on the NASDAQ stock exchange. Big drops are not expected.

"I think he's been signaling very clearly that he was going to have an orderly transition from leadership of the company after he made Steve Baumer CEO," said ABC News' personal finance expert Mellody Hobson.

Hobson, who is also president of Ariel Capital Management in Chicago, said that Gates' transition should not adversely affect stock prices, and advised those holding stock not to sell.

"I think they have a phenomenal bench," Hobson said. "They have brought in great talent, and they really have the best technological minds in the world working at Microsoft, besides the fact that they have incredible resources."

"The company has $50 billion in cash on its balance sheet. That can be used to make acquisitions, to hire other great people, and so I would expect to continue to see great innovation at Microsoft," she said.

Some say Gates may have been holding Microsoft back in recent years.

"Sometimes the guy who makes the last big thing is not the guy who's going to give you the next big thing," Thomas said. "And I think Bill Gates realizes that himself, and that's why he's making his move."

Shift in Priorities

Gates says he will now focus on leading the Bill and Melinda Gates Foundation to improve the lives of millions across the globe.

Gates and his wife, Melinda, created their foundation six years ago, and the charity is now the largest in the world with total assets of $29.1 billion.

"The greatest inequity in the world is that children are dying whose lives could be saved for a few hundred dollars, and that should be changed," Gates said on "This Week."

The foundation has made global health its top priority, contributing $5.8 billion to the fight against AIDS, malaria and child vaccinations.

"The Bill and Melinda Gates Foundation has a mission to really look at the forgotten people and the forgotten diseases," said Alice Park, senior writer at Time magazine. "Their ability to sink millions of dollars at a time into a program have really changed the face of global health."

In the United States, the foundation's focus is education, having spent $2.6 billion to bring technology to schools across the country.

"They really focus on results," Park said. "They're not there to fund programs and have programs just for the sake of having a program. They really want to see the effect that program has on the lives of people."

The foundation's staff of 250 employees may soon double, and construction on a headquarters designed to put the organization on the map for decades to come will begin in Seattle shortly.