(Refiles to add "of his" to headline to make plain Ballmer selling 12 percent of his stake in company)
* CEO Ballmer sells $1.3 bln in Microsoft shares
* Says sale for financial diversification and tax planning
* Says will sell more shares by year end
* Still second-largest holder behind Bill Gates (Adds details on Ballmer, Gates' share holding)
By Bill Rigby
SEATTLE, Nov 5 (Reuters) - Microsoft Corp (MSFT.O) Chief Executive Steve Ballmer sold $1.3 billion worth of shares in the company, cutting his stake by about 12 percent, but said his first stock sale in seven years should not be taken as a lack of confidence in the world's largest software firm.
Ballmer said he will sell more shares by the end of the year, in a move to diversify his investments and plan for taxes, but the company sought to allay talk that the 54-year old executive, who has been CEO since 2000, may be preparing an exit from the company.
"Even though this is a personal financial matter, I want to be clear about this to avoid any confusion," Ballmer said in a statement on the company's Website. "I am excited about our new products and the potential for our technology to change people's lives, and I remain fully committed to Microsoft and its success."
Ballmer, who was the first business manager at Microsoft when he joined in 1980, has not shown any interest in stepping down or leaving the company, despite some criticism from Wall Street over the company's lagging shares, which are trading at the same level as 2002.
According to a filing to the U.S. Securities and Exchange Commission on Friday, Ballmer sold 49.3 million Microsoft shares in the last three days, at prices just above and below $27 per share.
Ballmer said he plans to sell up to 75 million shares by the end of this year. If he does sell that many shares, that would mean a 18 percent cut in Ballmer's stake, based on the 408 million shares he held before the sales in the last few days.
As of Friday, Ballmer still holds about 359 million Microsoft shares, or 4.2 percent of the company, worth about $9.6 billion. That makes him the second largest shareholder behind Chairman and co-founder Bill Gates, according to Thomson Reuters data.
Gates, who holds about 621 million shares, or about 7.2 percent of the company, regularly sells shares in batches of 1 million or 2 million to fund his philanthropic foundation.
Microsoft shares were unchanged in after-hours trading on Friday, after closing down 1 percent at $26.85 on Nasdaq. (Reporting by Bill Rigby; Editing by Bernard Orr)