This Day in the Law
March 13

Microsoft Makes Initial Public Offering (1986)

On March 13, 1986, Microsoft Corporation went "public" with its initial public offering (IPO) starting at $21.00/share. Microsoft founders Bill Gates and Paul Allen became millionaires overnight and eventually billionaires. Over time, Microsoft has made over 12,000 individuals millionaires.

So, how did Gates and Allen do this? Well, Bill Gates dropped out of Harvard University in 1973 to join his friend Paul Allen to launch a computer company. Gates and Allen realized that computers would be the wave of the future and saw a golden opportunity in creating software for home personal computers (i.e. PCs).

Gates and Allen worked diligently in creating their own software and made one of the first sales of their software to Altair manufacturers before they formed Microsoft. After selling their initial software program to Altair, they realized they could create and sell software programs for a living.

Gates and Allen moved to Albuquerque, New Mexico where the developers of the new microcomputer, Micro Instrumentation and Telemetry Systems (MITS), were located. Gates and Allen worked to develop a programming language for MITS. Gates and Allen then formed Microsoft in 1975 and subsequently relocated Microsoft to Redmond, Washington.

On March 13, 1986, Microsoft made the decision to "go public" with its IPO with a stock price of $21.00/share. After the first trading day, Microsoft’s stock rose $7.00 to $28.00 and continued to rise in price though the 1990s, making many millionaires.

A company goes "public" when it offers its own stock to the general public. In effect, purchasers of the stock become owners of the company (even though they are usually just very small owners). Gates and Allen already owned millions of shares of Microsoft prior to going public – which they bought for a very small price – and they became very wealthy once the general public began buying shares of their company. In exchange, Gates and Allen gave up a percentage of ownership in their company Microsoft to the general public.

Today, Microsoft Corporation is a multinational computer technology company that creates and manufactures a large range of computer software products such as the Microsoft Windows Operating System and the Microsoft Office Suite (which includes Microsoft Word, Microsoft Excel, Microsoft Access, etc.).

As of 2009, Microsoft has total assets of over $77 billion and employs over 93,000 people in over 100 countries!