A NEW HARD DRIVE
GATES WANTS TO PUT YOU IN A PRE-OWNED BEAUTY
By PAUL THARP
Last updated: 8:07 am
July 24, 2008
Posted: 3:46 am
July 24, 2008
Less than a month after Bill Gates stepped down as chairman of software giant Microsoft, it looks as if he's found his new career: used car salesman.
The billionaire and his $30 billion charitable foundation, which has poured millions into making the planet greener and cleaner, are investing in AutoNation, the nation's biggest car dealer chain, comprised of 244 retail outlets that sell both used and new cars.
Just six days after they bought the 5.5 percent stake, shares surged 24 percent, producing a quick $18 million gain on Gates' latest bottom-fishing investment in the stumbling economy. Gates' purchase makes him and his foundation the company's third-biggest shareholder.
Gates bought AutoNation shares at their all-time low last week of around $7.57 a share - down sharply from a 52-week high of $21.29 last July.
Surging energy prices and gas-hog vehicles, such as SUVs and pickups, have clobbered the car-lot business and Detroit. AutoNation shares closed at $9.39, up 22 cents. In after-hours trading, it rose 26 cents to $9.65.
Consumers can't afford to fill tanks with overpriced gas approaching $5 a gallon, and many are canceling leases, which has caused a backlog of unwanted, used vehicles at dealerships.
Prices of used gas-guzzlers on car lots have dropped by as much as half recently in New York and other places.
While Gates celebrated a fast return on his auto investment, another billionaire has taken a painful $781 million loss in one year on his big stake in the chain - Eddie Lampert.
Lampert's 49.7 percent, or 65.6 million shares, have lost 56 percent of their value in the slowing economy, which hit its hardest where AutoNation has the bulk of its car lots - in California and Florida.
Lampert once had big hopes for his automotive bets - becoming the largest shareholder in both AutoNation as well as parts chain AutoZone, reasoning that used-car buyers from his car lots could also buy parts and services at AutoZone to keep them running.
Lampert's 36.2 percent in AutoZone has lost 24 percent of its value in the past year. Sales have picked up in recent months, however, as more do-it-yourself mechanics have sprung up to save on car-repair costs.
Meanwhile, the Bill and Melinda Gates Foundation continues to award numerous grants to make the environment greener, while solving energy problems.
Those developing countries also might be a good place to unload some of the unwanted gas-guzzlers from AutoNation's unsold inventories. Some developing countries, such as Nigeria, subsidize their gasoline for citizens.
