Tuesday, August 9, 2022

MicroStrategy CEO Michael Saylor Steps Down to ‘Focus’ on Bitcoin as Chairman

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Bitcoin lawyer Michael Saylor is resigning as CEO of the software company he co-founded, MicroStrategy, and will assume the role of executive chairman instead. Saylor’s belief in Bitcoin has turned the company into a holding vehicle for the cryptocurrency. The news came as the company released its second quarter results. It posted a loss of $1.062 billion, mainly due to a $917 million impairment charge based on the value of its Bitcoin holdings, which have fallen since the price peaked in November last year.

Phong Le, the current president of MicroStrategy, will replace Saylor’s position as CEO. “I look forward to leading the organization for the long-term health and growth of our enterprise software and bitcoin acquisition strategies,” Le said in a statement to shareholders.

In 2020, MicroStrategy . acquired $250 million in Bitcoinand on June 30, 2022, MicroStrategy reports that it currently holds $1.988 billion in Bitcoin.

Digital Assets: As of June 30, 2022, the book value of MicroStrategy’s digital assets (comprising approximately 129,699 bitcoins) was $1.988 billion, reflecting cumulative impairment losses of $1.989 billion since the acquisition and an average book value per bitcoin of approximately $15,326. As of June 30, 2022, the original cost basis and market value of MicroStrategy’s bitcoin were $3.977 billion and $2.451 billion, respectively, corresponding to an average cost per bitcoin of approximately $30,664 and a market price per bitcoin of $18,895.02, respectively.

MicroStrategy’s message to investors says Saylor will “continue to oversee the company’s bitcoin acquisition strategy as head of the board’s investment committee.” It’s unclear what sparked the organizational turmoil, as Saylor has led MicroStrategy since he founded the company in 1989.

“I believe that splitting the roles of chairman and CEO will allow us to better pursue our two business strategies for acquiring and holding bitcoin and grow our business analytics software,” Saylor says. “As executive chairman, I will be able to focus more on our bitcoin acquisition strategy and related bitcoin advocacy initiatives, while Phong as CEO will be empowered to manage overall business operations.”

In April, Saylor announced that MicroStrategy would be the first company to adopt Fidelity’s Bitcoin-based 401(k) retirement plan for its employees.

The Securities and Exchange Commission opened an investigation into MicroStrategy, because it objected to the way the company accounted for its Bitcoin in one of its 2021 filings. As noticed by Bloomberg TaxMicrostrategy used non-GAAP measures to record its Bitcoin assets, which are not based on generally accepted accounting principles (GAAP). Companies typically use non-GAAP methods sparingly.

MicroStategy was also the subject of an SEC investigation into charges of civil accounting fraud in 2000. The SEC accused Saylor and his top executives of exaggerating the company’s earnings and earnings after it went public in June 1998 to March 2000. Saylor and two of his executives have reached a settlement with the agency for $11 millionnone of them “admitting or denying the Commission’s allegations”.

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