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Microsoft co-founder Allen blasts Gates in book

Microsoft Corp. co-founder Paul Allen has accused his former business partner Bill Gates of plotting to dilute Allen's stake in the world's largest software company before he left in 1983, and tried to buy his share of the company on the cheap.

Allen, who now runs a Seattle-based investment firm and philanthropic foundation, makes the claim in a forthcoming book of memoirs, excerpts from which were published in Vanity Fair magazine today.

Allen, 58, says he overheard a heated conversation between Gates and now Chief Executive Steve Ballmer in December 1982.

"It was easy to get the gist of the conversation," writes Allen in the memoir as reproduced in Vanity Fair. "They were bemoaning my recent lack of production and discussing how they might dilute my Microsoft equity by issuing options to themselves and other shareholders. It was clear that they'd been thinking about this for some time."

Allen, who at that time was receiving treatment for cancer, and was scaling back his work at Microsoft, says he later received apologies from both Gates and Ballmer over the incident.

Allen, who co-founded Microsoft with Gates in 1975, eventually left Microsoft in 1983. Before he left, Allen claims Gates attempted to buy his shares from him at a bargain price.

"It's not fair that you keep your stake in the company," Allen reports Gates said, making what Allen described as a "lowball" offer for his stock of $5 US a share. Allen says he wouldn't go below $10. As a result, Allen says he kept his share.

"As it turned out, Bill's conservatism worked to my advantage. If he'd been willing to offer something close to my asking price, I would have sold way too soon," says Allen in the book.

Gates, who is in India working on his own philanthropy projects, did not directly contest Allen's account, but sought to play down friction.

"While my recollection of many of these events may differ from Paul's, I value his friendship and the important contributions he made to the world of technology and at Microsoft," Gates said in an emailed statement.

A Microsoft spokesman declined to comment.

Allen is now ranked the 57th richest person in the world with a fortune of $13 billion, according to Forbes magazine, largely due to his Microsoft holdings. Gates is ranked No. 2 with $56 billion.

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