Bill Gates is a giver

Discussion in 'Current Events' started by 1macker1, Nov 22, 2003.

  1. Frisco macrumors 68020

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    #2
    Give me billions of dollars and I'll give like crazy too.

    1) Don't forget about tax right offs from giving to charity.

    2) It's all about Public Relations.

    Sorry I can't consider him a generous person. His giving to charity is a by-product of his economic situation, not some innate altruistic characteristic in him.

    PS: This shouldn't be in the Panther Forum.
     
  2. oldschool macrumors 65816

    oldschool

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    #3
    He gave away fifty percent of his net worth. Thats pretty good. Now i know he's got plenty left over, but its still pretty good.
     
  3. iTron macrumors newbie

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    #4
     
  4. FightTheFuture macrumors 6502a

    FightTheFuture

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    #5
    philanthropy

    he's been a philanthropist for quite sometime. i remember applying to a few of his scholarships a few years ago. irregardless of how much he will contribute vs. how much he is worth isn't really an issue if you think of it. look at sean (p-diddy) combs. he raised a-measly to him- 2 million for running the marathon. he could've saved alot of time and newspapar ink by just handing it out.

    i don't hate hate bill gates. like many people, i just hate his software.
     
  5. tazo macrumors 68040

    tazo

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    #6
    Next time you give away a billion dollars you let me know :rolleyes:
     
  6. yamabushi macrumors 65816

    yamabushi

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    #7
    I still say Gates is a swindler. Microsoft has a huge amount of cash. This is generally considered a bad thing in the eyes of investment analysts. This is because cash does not create wealth for investors through investment in new opportunities for growth. A company with a large amount of cash should be a warning sign of serious trouble for investors, since unused cash should have been returned to the investors through dividends. But this is just the tip of the iceberg. Micosoft has had an ongoing strategy of throwing away money on poor investments. Some of these may someday turn a profit and in the meantime competitors have a hard time competing. But the real reason for these ventures is to help manage earnings in such a way as to leave room for steady future growth. This practice should also be a clear warning to investors. The bottom line is that the current stock price is much too high since it reflects an overly optimistic forecast of future profitablity. Not much worry for the early investors(such as Gates) though since they have already sold billions of dollars in stock at these high prices.

    Consumers have been swindled, too. Microsoft continues to benefit from monopolies in operating systems and office software. The fact that competitors have trouble competing selling similar software at a fraction of the price or even for free should be sufficient evidence to demonstrate that free competitive markets do not exist for these products. Consumers are being overcharged for products that have become the de facto standard. That is why Microsoft has been so enormously profitable. The sheer magnitude of their profit has been so large that they have gone to great pains to hide, defer, or eliminate much of it.

    Gates has been responsible for and has benefited from the various quetionable business practices at Microsoft. That is why he is a swindler. He swindled both consumers and investors and now gives that same money away to charities.
     
  7. rt_brained macrumors 6502a

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    #8
  8. 1macker1 thread starter macrumors 65816

    1macker1

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    #9
    Yeah reguardless of how he makes his money, he doesn't have to give away billions, yeah its's good for tax write offs, but still.
     
  9. Les Kern macrumors 68040

    Les Kern

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    #10
    It's the age-old question of wether giving to charity makes YOU feel good, or you want to truly help. I believe that Gates wants to help, and I admire him for it. I do find it odd that he sides with the republicans on major issues though, and some of the GOP laws make it easy for Microsoft to pay NO taxes. But seperate the two and in the end you have billions going to worthy causes, period.
     
  10. guiverunit macrumors newbie

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    #11
    I don't think they should have done it by how much they gave, rather the percentage.
    Yeah he gave away 23bn but he kept the other half for himself. If i had that kind off money I would have given away a lot more, for it is easier for a camel to fit through the eye of a needle then it is for a rich man to get into the kingdom of heaven, though with that kind of money he's probably got people working on that (thats a weird mental image)
     
  11. jxyama macrumors 68040

    jxyama

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    #12
    i understand many of us aren't exactly the fan of gates, but that's an amazing amount of money he donated, both in numbers and percentages of net worth. i certainly couldn't afford to give over 50% of my net worth.

    yeah, it's a publicity. but it's not gates that's advertizing his charity - it's the cnn/money which decided to do a story on this...

    yamabushi - just to clarify, M$ cash reserve doesn't belong to gates. it's not his money to give away. i got your point on investment, cash reserver, etc., but his charity didn't come from M$ cash reserve. also, what you said about having a large cash generally being a bad practice is true, but no investor would complain about M$'s cash reserve when they were able to significantly grow during the 90's. these days, it's a different matter, perhaps.
     
  12. jxyama macrumors 68040

    jxyama

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    #13
     
  13. 1macker1 thread starter macrumors 65816

    1macker1

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    #14
    Yeah, i don't think people are not seeing the difference..NET WORTH. That's a lot of greenbacks.
     
  14. yamabushi macrumors 65816

    yamabushi

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    #15
    I never said the cash reserve of Microsoft belonged to Bill Gates. The majority of the cash assets of Bill Gates came from the sale of Microsoft stock. The majority of the total assets of Bill Gates is in the form of Microsoft stock. This means that there is a very strong incentive on the part of Bill Gates to keep the stock price of Microsoft as high as possible. Also, it is quite probable that much of what was donated to various charities was Microsoft stock. Stock donations are quite common for the ultrarich since it maximizes the value of the donation without adversely affecting the stock price.
     
  15. themadchemist macrumors 68030

    themadchemist

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    #16
    To Frisco's credit, it is much more difficult for those of us with limited means to give away over 50% of our net worth. This is because we use more than that amount to maintain a comfortable life (even if it is above the necessary standard of living for survival). The Gates family's lifestyle is *not* affected by the donation of even this large sum of money. Why? Because the other 23 billion dollars is many times more than he could possibly spend to bring his family to whatever it selects as a satisfactory lifestyle.

    Moreover, I don't like this talk of percentages of net worth of people whose income is tied up in stock. Stock prices fluctuate. A lot. In a better economy, Bill Gates' stock would be worth 60 or 70 billion. He knows that. The wealth of a stock tycoon is too variable and amorphous to use it as a measure of anything.

    Furthermore, Bill Gates has not reached his ceiling of wealth. In fact, I am sure he anticipates a significant augmentation of his wealth over the next decade.

    However, you're right in your general message. Bill Gates is a very generous man who has more than made up, through his charity, for his disgusting operating system and unfair business practices. I hate his software, I hate many aspects of his personality and personage, but I greatly respect and admire his willingness to give away so much of his wealth (even though I still hate that whole percentage nonsense). Let's not try to take him down from trying to do something good. There are far cheaper publicity stunts than a sustained habit of widespread and generous philanthropy.


    You're absolutely correct.

    You're still making the mistake of confusing Bill Gates' assets with Microsoft's assets. There is no direct correlative between the percentage of assets in cash of a corporation and that of its Chairman. Therefore, I don't quite follow your reasoning.

    Yeah, another big incentive is keeping shareholders happy...That's sort of absolutely critical to a publicly traded corporation.

    If Microsoft ISSUED stock as a donation, then it would constitute a donation by Microsoft. It would also hurt the stock price. If Bill Gates gave shares in his personal holding, it is still transferring wealth from him to another party. If Microsoft issued Bill Gates stock for the sole purpose of donation, just so Gates would get the tax break, that would be foolish, short-sighted, corrupt, and probably illegal in one way or another. I have a feeling that's not what's going on.

    As to hurting the stock in general. Issuance of stock, I imagine, would have a negative effect on the stock price, because each share would be a smaller piece of the company. I think we can assume that at some point, the company issued stock, and said issuance had a negative effect on its stock price. Some of that stock fell into the hands of Bill Gates. In fact, that would probably constitute the vast majority of his Microsoft holdings. Even if he bought the stock from someone else, the stock was issued at some point and that hurt the share price. That fact remains with the stock forever. Each new share DID hurt the share price to some degree. Thus, when Bill Gates transfers the stock, he also transfers the stock's history of hurting the company's price per share. Therefore, although transferring pre-existing stock to a charity does not hurt the company's stock price in the present, it did hurt it at some point.

    Of course, it can be argued that the sale of the stock would constitute a SECOND detrimental effect on the stock. That I'll concede. It could be probably also be argued that the sale of stock by a major shareholder has a greater detrimental effect than the issuance of new stock. And that's probably all very significant point, come to think of it. But who's stopping the charity from dumping its own stock? Sure, Bill Gates might be averting some short term dip in stock price if he were to donate stock instead of liquidating it to donate cash. But I think that's a side point that's moot--he's still donating something of market value and the stock actually could increase in market value in a way that deflation would never increase the value of the dollar.

    So, I guess my point is that Bill Gates was great to donate a lot of money. Don't give him a hard time, but also don't rely on the argument that the "rest of us" aren't as good, because there's no way we could be, with the essentially limiting cash flow that we must use to pay for absolute costs that do not depend on a person's personal wealth.
     
  16. yamabushi macrumors 65816

    yamabushi

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    #17
    Sorry, I honestly don't know how to explain it any simpler than I already have. My discussions of Microsoft cash assets and the wealth of Bill Gates are completely seperate and are not directly related to each other.

    You missed the point. The point is that Gates has the knowledge, means, and motivation to artificially manipulate the stock price. Making shareholders happy is great when it is based on accurate information. Too often, though even expert analysts are fooled because they fail to dig deep into a company's financial statements and management activities. Enron and Worldcom are just a couple of famous examples. In both cases sufficient public data existed that should have triggered alarms for analysts long before stock prices collapsed but somehow the data was ignored.
    Stock issuance is completely irrelevant to the discussion at hand.
    Well here finally is something relevant. If Gates were to try to quickly sell several billion dollars worth of stock in a single company that he happens to be chairman, the stock price of that company would first begin to drop normally for such sales. Then the price would begin to plummet as soon as traders realised how much was being sold and who was selling it. By association many other tech sector companies would also have serious price drops. Before the end of the day the exchange would probably halt trading on the stock entirely. Then the SEC would investigate and hold Gates responsible. Shareholders would file a class action lawsuit against Gates and win. This is why it really isn't possible for Gates to unload a large amount of Microsoft stock at one time. Even a much smaller sale could still elicit shock from shareholders. If the chairman doesn't believe that MS stock is the best place to keep his money, why should they have any confidence in the stock themselves?
    The value and the price are two slightly different concepts, but anyways the perceived value of a stock helps to determine its price. The charity that receives stock from Gates will have finance professionals to help them that would wisely advise them to sell the stock very slowly over many years time or just sit on it and collect the dividends. A stock is really only worth what you can sell it for which is largely based on the present value of future expected earnings. I don't want to get too technical but take my word for it that this is a very subjective figure. Stock prices are very difficult to predict and can go both up and down. There is very little to stop an investor from losing all of the money they invested since there are no gaurantees such as you might get from a savings account at a bank. I believe that there are some hidden weaknesses in the value of Microsoft stock (such as high cash reserves, etc.). If Microsoft were to suddenly lose value due to these weaknesses becoming publicly recognized, then the price of MS stock everywhere would drop significantly. Hopefully this would not be as severe as Enron was, but it could potentially be much worse. So the true amount of the charity donation could vary dramatically up or down over time.

    But the real question is how much value is Gates giving up? Well, since he can easily satisfy all of his family's desires from a fraction of his fortune, any extra wealth that he can not gain any benefit from is worthless to him. So it gives him much more benefit by making him feel good to give it away than to keep it, with the nice side benefit of making him look good as well. It doesn't have any adverse affect on him and it helps others. Great. But isn't that an obscene amount of wealth to have accumulated in the first place? And isn't the way in which he gained that wealth relevant? It may be a rather severe comparison but Al Capone was also known for giving away a large amount to charity.
     
  17. radhak macrumors regular

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    #18
    and you have not even mentioned that bill gates is the personification of the devil, or that he has a special relationship to the number 666, and so on...

    i look at the fact that all my net worth would not amount to $20,000 (counting my iMac in ;) ), even a fraction of which i am not in a position to donate anywhere.

    and that so many others who are in such a position choose not to.

    and that gates' donations are actually making some difference to the people who are dying of hunger or Aids or brutality or whatever.

    then i am happy that his stocks are flourishing, and that he wants to feel good about himself, that he wants to prepare himself in such a convoluted way for an Enron like implosion.

    all that is worth giving thanks for.

    and i won't even comment on that capone crack. you sound like that lawyer for OJ Simpson comparing the LAPD to Hitler just because of a botched investigation.
     
  18. G3-Pwnz-G4 macrumors regular

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    #19
    you know what? your right. i give bill gates credit for creating one of the worst computer operating systems ever. happy thxgivin, you nerd you!:D
     
  19. themadchemist macrumors 68030

    themadchemist

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    #20
    It is relevant: There is a difference between issuing stock and transferring already issued stock, as far as the financial ramifications of the acts. Therefore, the distinction important.

    Whoa, whoa, whoa! Slow down there! This is assuming that Bill Gates would donate billions of dollars in cash at a time. A good amount of his "donations" are in pledges, and the rest of the donations come from gradual giving. We're not talking dumping 23 billion dollars of stock in a day. In the amounts that he WOULD liquidate to donate at a time, the ramifications would be much less significant. The situation you mentioned is not even within the realm of possibility.

    But if we want to talk about averting massive disaster in the tech sector, then I don't see how DONATING a massive amount of stock would be any more helpful than selling it. If Bill Gates were to donate billions of dollars of stock a time, it would demonstrate the same degree of diffidence about the stock and large portions of the tech sector would collapse. Your doomsday scenario above would probably occur through stock donation, as well. Thus, there is no real gain for Bill Gates to donate stock as opposed to cash (an argument that you forwarded earlier).

    Moreover, this demonstrates the significance of issuance vs. donation. Actually, this new perspective switches up my argument. Before, I said that donation would be far less detrimental to a stock than new issuance. This is true under situations of small stock donation.

    However, if we want to approach an extreme: Issuing a *large* amount a new stock for donation would hurt stock price and stock value. However, donation of an equal portion of stock, in that it suggests a lack of confidence, would be far worse coming from Bill Gates, Chairman of the Microsoft Board of Directors.

    Yes, value and price are different concepts. But the market's mean perceived value translates into a stock price--In tangible terms, that is all that really matters at any given moment. A projected "value" of a stock is speculation and estimation. The price of a stock is reality: That is what traders are willing to pay. Gumballs might have a theoretical "value" of only 5 cents, but if customers are willing to go to the gumball machine and buy a gumball for 25 cents, then a gumball has a 25 cent value for all practical purposes. But you're right--It's a subjective game and it's a gamble.

    Mismanagement of stocks can certainly lead an investor into financial shambles. There are, of course, no real guarantees in this speculative arena. However, there are no real guarantees from FDIC for savings account balances over $100,000. On the other hand, banks tend to be more stable and diversified, riding through markets much better than single investors (including incorporated investors like charities). But it's all a matter of the right portfolio at the right time over the right period of investing.

    My point, though, was that stock donations are not insidious in any matter. Let's say Bill Gates gave the Poor Apple Users (PAU) charity $1 billion worth of MS stock (based on prices as of today). Assuming negligible changes in stock price, PAU could turn around tomorrow and dump the stock, which would yield similar monetary results as if Bill Gates had just given a cash donation. However, the psychological results would be far different. PAU does not have the vested interest in Microsoft that Bill Gates has: There liquidation of stock would have a negative effect on Microsoft, but not nearly the same that Bill Gates' liquidation of stock would have. Nevertheless, the effect to the charity would be the same either way (assuming that it did not simultaneously hold stock in related sectors, which would be affected differently by sale of stock by different parties) and thus there is nothing particularly "evil" or "unfair" about this method of donation. In fact, there is always the opportunity that the stock might go up in sale price (as there is the opportunity that it could go down).

    I disagree somewhat with your appraisal of Microsoft's stock. I think that high cash reserves can be a very positive thing. One of the reasons that banks are stable is their high cash reserves. Liquid holdings, especially of a stable currency like the USD, can help a company weather tough markets. Cash acts as a stabilizing and balancing force that preserves the company when more variable assets lower in value.

    Yes, the Al Capone reference is rather severe. It is, in fact, not fair at all. In the end, the pragmatist in me likes to look at end results. Microsoft is definitely a company with low-grade products that have all too strong a hold over world technology. HOWEVER, Bill Gates' donations, whether they are for psychological satisfaction or out of true altruism, are helpful to thousands, perhaps millions, of people worldwide. His charitability has positive end results. If a person with a lesser inclination for donation had been in his place, many of the negative effects of Microsoft would not be counter-balanced by the overwhelmingly positive effects of Bill Gates' generosity.

    So let's give credit where it's due:
    His company makes terrible software and he makes wonderful donations.
     
  20. yamabushi macrumors 65816

    yamabushi

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    #21
    Stock is never issued as a donation. Stock is issued to raise cash for new investments by a company. The issuance is very rarely made by the company itself. The issuance is made by a banker or brokerage on behalf of the company. The stock is issued and sold to the public or held in reserve. In theory, reserve stock could be given away by a company but this would rarely be in the best interest of shareholders. I repeat: issuing new stock raises money for a company when first sold. The sale of stock on the secondary maket does not. That is why stock issuance is irrelevant since we have been primarily talking about stock ownership and transfer by shareholders.

    Donating non-voting common stock from one shareholder to another makes no difference to the company itself. The dividend checks just get sent to whoever is listed as the current owner (often via a broker). It doesn't matter whether the stock is owned by Mr. Gates, Ms. Johnson, or Red Cross International.

    My previous hypothetical scenario should help illustrate the difficulty of selling large amounts of stock by corporate management. Large sales of stock by other owners would be less controversial but would be possible with the assistance of a market maker in large blocks of shares. The amount of money received from liquidating the stock would be much less than the listed stock price multiplied by the number of shares sold.

    A pledge is not a donation; it is the promise to make a donation. The donation itself can be made in cash or stock. A stock donation is given a value based upon the current market price. This value is used for tax reporting purposes by the donator. The donator may or may not receive some tax benefit from the doantion. This reported value is higher than what the charity would gain in cash from a rapid liquidation of the stock.

    Charities receiving large sums of money is a very good thing to see. The fact that Bill Gates is giving away large sums of money is a good thing. However I can not give him any credit for generousity on his part. True generosity implies some form of sacrifice by the giver. Gates could be merely trying to protect his reputation, tax liability, legal liabilty, etc...only he knows.
     
  21. yamabushi macrumors 65816

    yamabushi

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    #22
    The man with the magic pockets

    Imagine an indredibly rich man has so much money that he has no where to put it and nothing to spend it on since he owns everything he wants. His pockets are always overflowing with gold and coins are falling out unto the street. The people around him each pick up a coin and are amazed at their luck but the man doesn't even notice the coins are missing. The man passes by a church and begins to worry about the afterlife so decides to make a donation. He reaches in and pours out money from his pockets and moves on. However the money in his pockets multiplies on its own and the coins quickly begin falling out unto the street again. The man actually gets annoyed by the weight, jingling sound, and odd stares he gets from the people around him so he tries to dump out his pockets whenever he stops to catch his breath. People around him tell him what a great and generous man he is which makes him feel good since he was beginning to feel a bit guilty with his enormous wealth. But in truth the rich man is hardly generous since he has lost nothing of value to him, just some worthless bits of metal that weigh down his pockets.
     

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