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12.23.07

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Posted in Novell at 10:32 pm by Dr. Roy Schestowitz

Novell's Google Trends chart

Is Novell’s Pal Cooking the Books as Well? (Microsoft)

Posted in Bill Gates, Deception, Finance, Fraud, Microsoft, Novell, Vista, Windows at 6:50 pm by Dr. Roy Schestowitz

Microsoft’s taxation loopholes and system abuse; financial woes

A couple of weeks ago we pointed out that Novell is cooking the books, i.e. it moves money between buckets in order to embellish its results. It didn't work out too well.

There are rarely truths and more often we are blinded spin when it comes to big corporations. Microsoft is no exception. This post is intended to show that:

  1. Financially, Microsoft does not do as well as its media will have you believe
  2. Financial misconduct at Microsoft is quite routine

Several days ago, Microsoft declared its quarterly dividend.

Microsoft Corp. today announced that its board of directors declared a quarterly dividend of $0.11 per share. The dividend is payable March 13, 2008 to shareholders of record on February 21, 2008. The ex-dividend date will be February 19, 2008.

Tax Evasion and Deception

On the very same day, the Associated Press published an article about a Wisconsin bill that would address some tax loopholes.

Wisconsin Bill Would Require More Reporting on Tax Loopholes

[...]

A message left with Microsoft was not immediately returned.

We mentioned the Gates Foundation and gave some detailed information a couple of times in the past, or at least alluded to it. It is worth repeating and re-qoting the analysis of the Gates and Buffet Foundation “Shell Game”.

My background is finance and accounting. As a socially conscious venture capitalist and philanthropist, I have a very good understanding of wealth management and philanthropy. I started my career in 1967 with the IRS as a specialist in taxation covering many areas of the tax law including the so-called legal loopholes to charitable giving.

[...]

However, the Gates Buffet foundation grant is nothing more than a shell game in which control of assets for both Gates and Buffet remain the same.

[...]

The only difference is that the accumulation of wealth by these two will be much more massive because they will no longer have to pay any taxes.

This is seen as acceptable by some, but it’s rather obvious who loses the most . Itgoes well beyond the Foundation. Below we present two incident from the past few months alone:

1. Ecuador Tax Agency Closes Microsoft Branch Offices For 7 Days

“We have twice requested balances, payment reports and complete tax information, but the company hasn’t given it to us, so in accordance with our laws we have proceeded with the closure,” the SRI official in charge of the proceeding said.

2. Microsoft Office raid in Hungary

“Such behavior could lead to the exclusion of competitive products from the market and violate European Union rules, according to the authority known as the GVH.”

The example above is less to do with tax; it’s more about other types of practices. Other companies that came under fire for their financial practices recently inlcude Apple (Steve Jobs accused of turning a blind eye to predating) and Cisco in Brasil (massive case of tax evasion). Microsoft hasn’t escaped scrutiny though. Consider this article [expired]:

Microsoft’s past stock options practice poses questions

[...]

Microsoft in 1999 announced that it would end a policy of awarding options at monthly lows and said it would take a $217 million charge, though many details of that discontinued practice haven’t been widely known, The Wall Street Journal said Friday.

Those details raise questions about how Microsoft began the practice, what prompted the company to end it and whether the way the options were dated–at 30-day lows the month after they were granted–influenced other companies, it said.

Tough Life Where Cash Cows Are Absent

”Everywhere you look other than Windows and Office, business for Microsoft has been very tough.“Microsoft makes obscene amounts of money through sales of: (1) Windows (the consumer rarely has a choice); (2) support contracts; and (3) Office. The latter explains why the company has resorted to corruption in defending something which Microsoft says is a simple matter of its commercial interests, namely OOXML.

Everywhere you look other than Windows and Office, business for Microsoft has been very tough. Legal expenses — incurred due to retaliation for anticompetitive practices — have been huge (exceeding a billion dollars per year). Now, consider Windows Mobile.

Microsoft Hides Its Mobile and Business Apps Divisions

The company is folding its two worst-performing divisions — Microsoft Business Solutions (its business applications unit) and its Mobile and Embedded units — into the Microsoft Business Division and Microsoft Home and Entertainment units, respectively.

There are some more examples of this here:

The Secret Failures of Microsoft

There is no choice involved; even most Linux users are forced to pay for a Microsoft license in order to obtain a brand name PC.

[...]

They are bound to an oath to swear allegiance to Windows XP Professional and must never mention Linux and Windows in the same breath. If they step out of line in any way, Microsoft dramatically raises their OEM licensing fees and sends them to indoctrination camp, where they face chairs being hurled at them by angry monkeys.

[...]

Why do Windows enthusiasts exibit much hostility to an obvious fact? Because if they admit that 80% of the company’s revenues come entirely from an OEM tax, and not from any choice on the part of consumers…

[...]

Microsoft’s decade of investments in WinCE and Windows Mobile Smartphones have only barely matched the market share of Palm, which itself is a run down company out of ideas. Microsoft couldn’t out-maneuver the incompetent Palm within a decade of trying; now both are ineffectually fighting over the dying PDA industry while Linux and Symbian slaughter them in the smartphone arena…

Remember the XBox 360, which has already lost several billion of dollars rather than make money? Consider for example:

1. How Much is Too Much

Microsoft says it will stick with Xbox. But with years of heavy losses behind it, the pressure’s on for the gaming division to make good

2. Microsoft stoic despite massive losses

If you were to judge by the PR rhetoric, you’d think the 360 was an unstoppable commercial juggernaut. As usual though, PR lies.

3. Loot: Redmond, We Have a Problem, Or, What’s Wrong With the Xbox 360

At this point, Former becomes impassioned. That’s not fair, he says; we always saw this as a long-term venture. To which we reply that we were talking about the original Xbox, and while other divisions of the company throw off more profits in a single quarter than the entire $5 billion or so lost in the home and entertainment division to date, the fact remains that, as we take-our-word-for-it predicted, the Xbox group has been spectacularly unprofitable for Microsoft. Hence, our heretofore unpublished Vietnam analogy. The rest of the night is a blur, but we digress.

[...]

The worst case scenario for Microsoft, then, is one in which the Xbox 360′s bid for the mass market is blocked by the Wii for the next two to three years, at which point the aging and underpowered Wii gives way to a cheaper-than-it-is-now PS3 with a selection of AAA titles that’s far wider than what the PS3 has at the moment; new installments of Playstation’s own popular and casual-leaning games; and a slew of new franchises from Sony’s much-larger studio operation.

Of course, some of these colossal losses can be compensated for by sales of Windows and Office (among a few other profitable products).

Looking a year back, Microsoft’s relied on Windows Vista to save its day, but a major magazine has just named Vista the #1 tech disappointment of 2007. It’s hardly surprising and it’s also the cause for aggressive attacks against GNU/Linux and Free software. Here are some of these year-old articles, which also spoke about the company’s buybacks — a sign of great weakness:

1. Microsoft counts on Vista to recharge stagnant stock

There was a time in the 1990s when shares of Microsoft stock seemed to double every couple of years. 1996: college for the kids. 1998: a place on Whidbey. 1999: early retirement.

Times have changed.

2. A Dozen Stocks For ’07

Millen also thinks $36 billion in planned share buybacks will help the stock.

3. Commentary: Microsoft needs more than just buybacks to lift its shares

Microsoft shares, which have been dormant for the last few years, have been looking up over the last couple months. The Dow industrials component has gained about 20% since hitting a 4-year low of $21.46 on June 13.

To help move things along, Microsoft not only launched a $40 billion stock repurchase program that lasts through 2011, the company also said its previously announced 4-year, $30 billion stock buyback program was completed in just 2 years.

The following is an article from the Seattle P-I, which tends to be favourable to Microsoft. The article has been highly damaging. It claimed that Microsoft had lost over half of its cash pile in just 2 years. This happened quietly.

Software Notebook: Microsoft’s cash pile isn’t what it used to be

But Microsoft has taken a series of steps to reduce its cash balance. Specifically, by Microsoft’s count, the company has paid out nearly $100 billion through dividends and repurchasing its own stock in the past five years.

That’s just what the stock (MSFT) does not tell the complete story.

Adding Insult to Injury — Microsoft Vice President Resorts to Crime

Robert Bach really dropped the bomb when he resorted to inside-trading. He did this just before a technical and financial disaster was announced (the persistent denial had already lost consumer trust). Here are some articles about this:

1. Microsoft exec dumped stock prior to Red Ring announcement

To make matters more murky, the sales were not registered with the Securities and Exchange Commission within the mandatory two days of the transaction, a result of an alleged “administrative error.” Microsoft has since remedied the issue by following the “procedures required of late-filers.”

2. Microsoft’s Bach sold more stock before Xbox news

Microsoft Corp. executive Robbie Bach sold $3 million more in company stock during the period leading up to an announcement about a costly flaw in its Xbox video game console than previously reported, according to a filing Monday with the Securities and Exchange Commission.

3. Insider Trading Hasn’t Affect Microsoft Stock – Yet

MarketWatch.com reports that Robbie Bach, president of Microsoft’s Entertainment and Devices division, sold $6.2 million of Microsoft stock just prior to announcing that Microsoft was going to have to extend XBox 360 warranties to three years because of extensive failures. The filings note that this was not part of any scheduled diversification or selling program; this was a conscious, unscheduled sale by the guy in charge of releasing news that could affect the value of Microsoft stock.

[...]

Insider trading is a very serious violation of the law; just ask Martha Stewart, who served five months in prison for avoiding losses of $43,000 through trades that just had suspicious timing (no insider trading was actually proven). This is $6.3 million that went straight into Robbie Bach’s pocket.

Under normal circumstance, this guy would be investigated, maybe even jailed. Then again, don’t we already know that Microsoft is virtually above the law, lacking supervision of any kind?

Interesting Quotes from SUSE Forums

Posted in Interoperability, Microsoft, Novell, OpenSUSE, Quote, Samba, Ubuntu at 6:14 pm by Dr. Roy Schestowitz

A reader has informed us of some quotes of interest. These come from suseforums.net, which very recently suffered technical issues.

It is worth seeing how they try to spin the Samba deal in Novell’s favour, despite the fact that Groklaw, for example, used that deal to explain Novell’s stupidity.

Here’s a side topic:

I hope this is also a little step closer to loosening all those tightly held asscheecks on the matter of Novell (and others) working together with Microsoft to get better interoperability between Linux and MS product.

Here is the reasonable response:

It’s interesting that Samba never saw the need to sign a deal similar to the MS/Novell covenant, in order to get full protocol interoperability information. Not only that, no revenue is changing hands. All in all a good deal worked out by the PFIF legal team. Here’s a podcast by Jeremy Allison that explains the deal.

In another separate thread you’ll find more of these sour grape excuses, targeting Ubuntu, as usual.

Normally, we wouldn’t feel the need to post a forums announcement from another forum, but the actions of the Ubuntu Forums members it addresses hurt everyone in the Linux community, and are antithetical to the spirit of the global Linux community.

This seems very reasonable, but one might say that assigning liability to Ubuntu Forums is a bit unfair.

OOXML Causes Trouble in the Business World

Posted in Formats, Free/Libre Software, GNOME, GNU/Linux, Open XML, OpenDocument, Standard at 5:56 pm by Dr. Roy Schestowitz

Doors still closed to proprietary OOXML

As we already know, OOXML files are rare. In fact, they are so rare that it’s unreasonable to use that format. Microsoft has tried to enforce its use by ending the availability of Office 2007 predecessors, but quietly enough it actually enables businesses to ‘downgrade’ their software (to XP and Office 2003). This was reported quite recently and its the result of continued customer backlash. Without plug-ins or new default file formats that rely on user innocence, OOXML is likely to be rejected for quite some time. It’s the big opportunity for ODF.

The following new article from the Korea Times demonstrates the issue.

Think of the productivity cost of millions like him having to adjust to a new system. Moreover, his coworkers couldn’t read the Microsoft Word files that he sent them in the new “.docx” format. They wrote back and asked him to resend files in the older “.doc” format ― which might not have worked if he had inadvertently used some new-fangled formatting feature.

Let us return to the GNOME Foundation and ask ourselves why it is helping Microsoft’s OOXML increase market penetration. It seems insane. OOXML is in a losing position, but it’s getting help from the FOSS world. Danijel Orsolic (Webmaster of Libervis) has just posted a good comment to express his feelings about this:

I’m not so deeply in-the-know about this whole issue, but I have been following it for a while, and I mostly tend to agree with what Charles says here.

I can’t possibly believe OOXML is an open standard and I can’t possibly believe that it’s propagation is in ANY way good or necessary in light of the increased ODF adoption. So excuse me to say this as a layman, the *user*, the one in the *market* who will be forced to deal with the consequences of what GNOME and others do here, but I see a lot of nonsense going on and am not in the least surprised that some people believe “conspiracy theories” like those on Boycott Novell.

It sometimes seems to me as if people get into some sort of a suspense mode and totally start ignoring certain memes which have been around for so long that they’re practically common sense. How the hell can you trust in ANY sort of collaboration with Microsoft or giving in to Microsoft just because they are ubiquitous and expect not to get hurt?

Why can’t we stick to our own damn guns? Remember? Free Software, Open Standards? If you ask me the whole “interoperability” thing is just an MS-serving FUD. Supporting OOXML is not about interoperability. How can supporting a closed standard be for interoperability when the whole idea of a closed standard is diametrically opposed to the idea of interoperability!

So I’m sorry if I’m starting to believe that some in our community have simply been played by Microsoft and Novell and that Microsoft IS actually getting what they want. If it wasn’t this way why are we even having this discussion? Step back and think, why are we finding ourselves worried about *ourselves* playing their game at all?

ODF is better. Free Software is better. Stick to it and don’t freaking give in!

You can ignore this comment as a rant of an “uninformed”, but I assure you it will keep popping up. As Charles well said, in this community users are equal to the mighty developers and “luminaries” of the community. Free Software is an user-oriented movement.

And guess what. I’m a user, a very concerned and involved one as well!

Thank you.

Thank you, Danijel, for acknowledging what many others simply refuse to see.

OOXML patent issue prompt

Quick Mention: GPLv3 Adoption Continues at Its Regular Good Pace

Posted in Free/Libre Software, FUD, GNU/Linux, GPL, Microsoft at 5:36 pm by Dr. Roy Schestowitz

GNU Richard StallmanIt has truly been a while since we last mentioned the GNU GPLv3. The licence appears to have passed a mental barrier quite a long time ago. Its pace of adoption can no longer be stopped or slowed down. Microsoft tried very hard to prevent the network effect by paying its lobbying arms, hired ‘researchers’, friendly journalists, etc. We have extensive covered all of this here and provided evidence. GPLv3 incompatibilities are sometimes being criticised, but the more projects get converted/upgraded, the smaller an issue this become.

Here is the latest report from Palamida, in case you wish to see a graph that is unaffected by season trends.

We would like to wish everyone happy holidays and start a wonderful new year next week. The year is coming to an end and the GPL v3 adoption has made it past 1300 GPL v3 projects.

PolishLinux has just published a decent article about Microsoft’s attempt to use fear and legal action to stifle adoption of GNU/Linux. As it rightly argues, all Microsoft can ever do is slow adoption down.

What can Microsoft really do?

In short – it can delay the domination of GNU/Linux on the market and nothing more. I have no idea how much time will that take. Five, fifteen, fifty years? Microsoft’s “actions” are bothersome, however, it does not change the fact that GNU/Linux is generally favored by the Big Business. Have a look around: supercomputers, film industry, academic circles, WWW servers, embedded systems, Dell, Lenovo or IBM’s actions. GNU/Linux (I am referring here more to the phenomenon rather than to a particular product) is ubiquitous and used commonly by companies which could paradoxically afford a commercial solution (Google for example).

No matter what happens, Free software survives and therefore thrives. It only need to protects its freedom and ensure it isn’t devolving through misuse and loopholes (e.g. Tivoization). To say more on the question of inevitability, consider this bunch of references:

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