Warren Buffett and Bill Gates on Technology Investing - IBM, Intel, Microsoft, and Facebook

After 47 years, Buffett finally invested in technology stocks - IBM and Intel. Intel was actually Todd Combs' idea, one of Buffett's investment managers. Buffett explains he can't buy Microsoft because Bill Gates is on his board: 'If we bought Microsoft, our buying takes place month after month. If something favorable happened at Microsoft, people would say I had inside information.' Claman jokes 'maybe he'll give me some insider' and Gates walks on set.

Gates praises Todd getting full investment universe and doing good job. Explains most tech companies you can't predict 10-20 years out. IBM is 'somewhat of an exception' due to service revenue base. 'Most tech stocks play a very high variance game which makes it the most interesting industry in the world but not for an investor who wants any degree of downside protection.' Buffett notes key advantage: Todd can change positions far easier in weeks vs Buffett being locked into big positions long-term.

When asked if he can see where Facebook will be in 10-20 years: 'No, I can't. It's an enormously impressive accomplishment and my guess is it has a big future of some sort, but I have no idea. I didn't even know what it was six or seven years ago and I'm still not on it.' Gates confirms he's on Facebook and Twitter. Claman: 'He's in a different world, always has been.' They joke Buffett's heavy tech use is online bridge, making him 'top 1% of internet addicts.' Buffett: 'I learned how to turn on the switch and as far as I'm concerned there's some guy inside that thing playing the hand for me.'

Facebook's road show beginning as they discuss whether Zuckerberg should attend. Gates recalls Microsoft's IPO: 'I minimized the time - offered three days, told them no limousines, took a biology book I was reading during breaks. I tried not to have it take too much time away from the business. You got to focus on what's important and making sure your product for end users is great is number one.' Buffett recalls Gates negotiated down from spending more than an hour when his mother Mary arranged first meeting with Buffett. Gates: 'I wasn't sure we'd have much to talk about. I was 100% wrong. I stayed the whole day, disappointed when Warren was leaving. I found somebody for a lifelong conversation.' On road show: 'I wouldn't worry about it too much. That offering is going to be big, going to get all the attention in the world. People know what Facebook is - not a mystery that has to be explained, except to me.'

On whether Facebook can sustain $100B valuation: Gates says 'Just need advertising revenue that makes that earnings stream properly discounted be greater than $100 billion. It's right there in the Intelligent Investor. They have a lot of traffic and ability to monetize that traffic over time - fascinating to see if they can push well beyond the earnings needed or not. Phenomenally impressive company.' Discussion shifts to Microsoft succession and Windows 8. Gates: 'Very exciting Windows 8 coming out, very big deal. Steve and team doing great job. Creates new category of machines with good things about tablets and good things about PCs.' On tablets: 'Tablet space going to grow but you really want something with pen or keyboard and productivity applications - best of both worlds. This fall people will understand there's room for big improvement.' Buffett jokes he has HP from furniture market guys, Gates uses Samsung tablet primarily with various devices. Barnes & Noble $300M deal: 'They're going to take their reading experience and books and make them look super good on these new devices. You want to run Office to create documents but consume books and video in new ways - that merger.'