Software giant Microsoft Corp has exited Comcast going by its Securities and Exchange Commission filing after market close on Friday. The company sold more than 150 million shares of the cable operator's stock over the past 12 months.

In a 13G filing Microsoft disclosed that it did not own any shares of Comcast. According to its filing made Jan 15, 2008, the software giant said it held 150 million shares of Comcast stock, around 7.3 per cent of the cable operator's outstanding shares.

Comcast stock has been hammered along with the rest of the market over the past year, but has done comparatively better than the rest. Its shares were down about 7 per cent in 2008, while that of its rivals were down a collective 22 per cent in 2008.

Microsoft had owned a little more than 150.9 million, or 7.26 per cent, of Comcast's Class A common shares, according to an SEC filing it made at the end of 2007. The company also owned 21.6 million shares of Comcast's Special Class A shares, which carry no voting rights outside of special circumstances.

Microsoft came by both its Class A shares and Special Class A shares in 2002 when Comcast purchased AT&T Broadband from AT&T. Microsoft had an interest in AT&T at the time, which led to its acquisition of the Comcast shares.

Because Microsoft did not own more than 5 per cent of these Special Class A shares, it was not required to report its holdings. However, because it had held its position in the Class A shares for a number of years, it is assumed that it had done the same with the Special Class A shares.

Likewise, owing to the sale of its much larger holding of common shares, Microsoft probably sold its special shares as well, leaving it with no stake at all in Comcast.

Microsoft invested $1 billion in June 1997, when Philadelphia-based Comcast was a sizable player in cable television, but nowhere near the cable-TV, internet, phone and media giant it is today. Although Microsoft considered the investment to be strategic, its efforts to team with Comcast on video delivery never panned out.

Comcast also got a license to use an interactive programming guide developed by Microsoft in up to 5 million homes, but by 2007 was only using it in the Seattle area.

There are many possible reasons why Microsoft sold out of its Comcast stake. The company could have sold the stake to fund its highly publicized bid for Yahoo! early in the year (and, months later, the possibility for a second bid. Or it could have used the cash to offset losses in other investments in the past year, like mortgage-backed securities. The Comcast sale could have also garnered Microsoft a tax loss.

The revelation of Microsoft exit may come as a psychological reverse in view of the fact that the cable rally of the late 1990's was fuelled by Microsoft's $1-billion investment in Comcast at the time. Microsoft's investment in cable then boosted Wall Street sentiment for cable at the time and forge what was a cordial relationship between the two companies.

But the relationship between the companies failed to live up to the initial promise built around the world's largest software company's move into into cable set top boxes. The initial investment by Microsoft required Comcast to buy 500, 000 set-top boxes which it did by 2004. However, it never used most of them leaving them to gather dust in warehouses.

By 2007, Microsoft's position in Comcast's network shriveled to just one market – Seattle. Later that year, Comcast replaced Microsoft's internet programming guide in the market with its own IPG.

According to a leading industry analyst Microsoft's investment had become more of an overhang on the stock which most investors anticipated would be liquidated by Microsoft. Microsoft's move has come as anticipated; the liquidation has also put paid to speculations of Microsoft inheriting TV.