A Reverse Midas Touch: Paul Allen Won with Microsoft, but His Current Bets Are Losers

By Stone, Brad | Newsweek, February 3, 2003 | Go to article overview

A Reverse Midas Touch: Paul Allen Won with Microsoft, but His Current Bets Are Losers


Stone, Brad, Newsweek


Byline: Brad Stone

Paul Allen throws great parties. At least once a year, the cofounder of Microsoft and fourth wealthiest citizen on the planet--with a fortune that Forbes estimates at $21 billion--invites friends, family and luminaries of entertainment and technology to one of his several multimillion-dollar yachts. While cruising to destinations like Bali and Baja, guests are treated to Allen holding his own on guitar with famous musicians he's invited, like Peter Gabriel. One song that Allen wrote himself, called "Time Bomb," features this refrain: "Everything I do may seem wrong, but my heart, my heart beats strong."

Given his recent track record, Allen may be singing about his business decisions. The man who helped build Microsoft, then bailed from Bill Gates's side in the early '80s (and kept his Microsoft stock) is showing a remarkable reverse Midas touch: many of his companies are doing horribly. Charter Communications, a cable company based in St. Louis, sits at the center of Allen's vision for a wired world, with broadband carrying interactive entertainment into our living rooms. In the past year Charter's stock has plunged 90 percent under the weight of a $20 billion debt load, taking Allen's $7 billion investment down to $420 million. (The company is reportedly talking to private equity firms about a sale to avoid bankruptcy. A spokesman would not comment.) Federal prosecutors are also investigating Charter for accounting improprieties. Add to that failures of dot-coms like Mercata and Metricom, and a swooning stock at another broadband asset, RCN, and here's the bottom line: since the height of the tech boom, Allen has lost an incredible $20 billion on paper.

A beleaguered billionaire can always take comfort in his sports teams, right? Not these days. Allen's Seattle Seahawks limped off the field after missing the playoffs again. And the Portland Trail Blazers' most impressive record is not on the court but in court--players have been cited for smoking pot, domestic abuse and fighting during games. Last week the NBA suspended forward Rasheed Wallace for allegedly threatening a referee. Local fans have dubbed the team the "Jail Blazers" and accuse Allen of pampering his unruly stars. …

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