Microsoft (MSFT) disclosed in an SEC filing on Friday that it has sold its entire 7.3% stake in Comcast (CMCSA) Class A common stock. Microsoft had owned 150,935,575 shares.
In a research note this morning, Bernstein Research analyst Craig Moffett notes that Microsoft’s initial $1 billion investment in Comcast came in June 1997, triggering “a monumental cable rally, one that arguably lasted almost ten years.”
The point apparently was to boost adoption of Microsoft set top boxes in the cable TV industry. How’d that work out?
As Moffett notes, the initial investment included a commitment from Microsoft to buy set-top boxes from Microsoft. He says Comcast in 2004 “dutifully” bought 500,000 boxes, “and then reportedly left most of them to molder in a warehouse.” Comcast also licensed a Microsoft programming guide. By 2007, he adds, Microsoft’s software was deployed in just a single Comcast market – in Seattle, near Microsoft HQ in Redmond. And in May 2007, Comcast pulled the plug on even that system, switching to its own home-grown guide.
Today, Microsoft’s largest TV software client is Comcast competitor AT&T (T). “Twelve years after their initial Comcast investment, Microsoft’s vision of a Windows-based gateway to the television still hasn’t materialized,” he writes. ”
You have to know when to hold them and when to fold them and there is nothing like a recession to clarify perceptions in that regard.