Tech spin-offs boost billionaires' fortunes
As large tech companies spin off some of their subsidiaries in the public market, their major holders reap additional riches.
Julie Packard, an heir and board member of computer giant Hewlett-Packard; Larry Ellison, founder and CEO of Oracle; and Microsoft co-founders Bill Gates and Paul Allen are members of the billionaires club who stand to gain greater riches, directly or indirectly, from their companies' recent spin-offs.
Packard, for example, holds a 12.7 percent stake in HP that is worth about $9.7 billion. And although the company's stock has tumbled about 35 percent since September, Packard may find some comfort in potentially adding another billion dollars to her wealth with the pending initial public offering this week of HP spin-off Agilent Technologies.
After the IPO, HP will own 87 percent of the new company, which has a pricing range of $19 to $22 a share. Based on a selling price of $22, Packard's slice of Agilent would be valued at $1 billion. If Agilent stock soars in public trading, as many recent IPOs have, her stake would also rise in value.
HP has said it plans to distribute its Agilent stake to its investors, but it noted that those plans could change and that the details have not been worked out.
Meanwhile, Oracle's Ellison is up a cool half-billion dollars as a result of the recent success of Oracle spin-off Liberate.
Founded in 1996, Liberate was formerly known as Network Computing and was created as an Oracle subsidiary to promote Ellison's vision of network computers supplanting PCs in the corporate environment. Liberate has made waves as a provider of software for interactive-TV services.
Liberate's stock began public trading last August around 20. Earlier this
month the shares soared to 118, and they are currently trading around 100.
According to regulatory filings, Oracle owns about 20 million Liberate shares worth about $2 billion at the current price. That makes Ellison's stake worth about $500 million, based on his 24 percent share in Oracle.
To most people, that kind of change would cap a remarkably successful career. Ellison, however, is not like most people.
At its current price of about 65, Oracle has a market capitalization of $93 billion. Ellison's stake: $22.3 billion. During the past year alone, the value of Ellison's Oracle holdings has tripled along with Oracle's stock, making the Liberate success almost insignificant.
Then there are the billionaires up in Redmond, Wash. Microsoft's spin-off of travel Web site Expedia last week added to Gates' and Allen's treasure troves.
Expedia's successful IPO landed Microsoft some good news in an otherwise tough month marked by a federal judge's harsh determination that the software giant has a monopoly and uses that advantage to bully other companies. Microsoft holds an 86.4 percent stake in Expedia, which marked the software giant's first spin-off effort.
Gates, who holds a 15.3 percent stake in Microsoft, had an Expedia stake worth about $237 million in morning trading. It's a mere pittance compared to his Microsoft stake, but it's more than what he held indirectly two weeks ago.
Allen, who found himself substantially richer last week when his Charter Communications hit the public markets, picked up another $79 million with Expedia.
Allen, who takes stakes in companies through his investment group Vulcan Ventures--which is an investor in CNET, publisher of News.com--found his Charter investment lucrative. The cable company--which will soon be the fourth largest in the nation following its pending acquisitions--is worth $3.9 billion. And Allen's 54.2 percent stake gives his portion a value of $2.12 billion.
Other investments include InterNAP Network Services, which carried a $511 million value for Allen's 7.9 percent stake; Stamps.com, in which Allen's 6.8 percent stake is valued at $126.7 million; Net Perceptions, which has an $84.9 million value based on his 11 percent stake; and Edison Schools, in which Allen holds a 5.8 percent stake that is valued at $44.2 million.