EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

02.27.08

When Microsoft Corporation Met Debt

Posted in Deception, Finance, Fraud, Microsoft at 1:49 am by Dr. Roy Schestowitz

Microsoft’s IBM-isation is closer than you might realise

For a fact, Microsoft might soon enter debt and we have been studying for quite some time the true story behind Microsoft’s PR and accounting walls. Not so long ago we returned our attention to the issue of misconduct, including systematic kickbacks. There is more to bribery then just kickbacks, which themselves as a subtle form of bribery more severe than lobbying, which is legalised to a greater or lesser degree.

Reuters has just published an article about the government’s new and more aggressive effort to curb briberies. Here is the opening portion of an article you might find surprising (witness the true scale of corruption):

Companies under investigation for violations of U.S. bribery laws will likely face heightened scrutiny from law enforcement officials all over the world as probes widen and spill across borders, a study found.

Yesterday, having taken a look at Microsoft’s SEC filing, Groklaw brought attention to the following article titled “Debt in Disguise” and we shall return to this in a moment.

The purpose of securitization is to make the credit rating of the company practically irrelevant in a financing, so that even in a bankruptcy the receivables cash flow will be protected….

The rating agencies also rely greatly on legal constructs that say the payment stream to investors will not be hindered. For instance, the transfer of receivables to the SPE must be a “true sale.” That is, the seller must not retain too much of the reward or the risk coming from the asset, says Robert Hahn, a partner with Hunton & Williams LLP. In addition, the SPE has to be “nonrecourse” — in other words, the company’s creditors must not have claim to the assets of the SPE if the originating company goes bankrupt.

“Securitization divorces the creditworthiness of the [company] from the credit of the pool,” says Mark Spradling, a partner with Vinson & Elkings LLP. “True sale and nonconsolidation are part of that separation.”

But the opinion that legal control of receivables has passed to a third party has not been litigated in the bankruptcy courts….

Tapping the capital markets without a lending bank in between means that even non-investment-grade companies can finance at near what triple-A companies pay.

From the latest SEC filing, the portion of interest was this. Read it very carefully.

Antitrust, unfair competition, and overcharge class actions. A large number of antitrust and unfair competition class action lawsuits have been filed against us in various state, federal, and Canadian courts on behalf of various classes of direct and indirect purchasers of our PC operating system and certain other software products. We obtained dismissals of damages claims of indirect purchasers under federal law and in 15 states. Courts refused to certify classes in two additional states. We have reached agreements to settle all claims that have been made to date in 19 states….

Other antitrust litigation and claims. In November 2004, Novell, Inc. filed a complaint in U.S. District Court in Utah, now consolidated with other cases in Maryland, asserting antitrust and unfair competition claims against us related to Novell’s ownership of WordPerfect and other productivity applications during the period between June 1994 and March 1996. …

Patent and intellectual property claims. We are vigorously defending more than 45 patent infringement cases. …

Adverse outcomes in some or all of the matters described in this section may result in significant monetary damages or injunctive relief against us that would adversely affect distribution of our operating system or application products. We may enter into material settlements because of these risks. …

As of December 31, 2007, we had accrued aggregate liabilities of approximately $840 million in other current liabilities and approximately $660 million in other long-term liabilities for all of the contingent matters described in this note. While we intend to vigorously defend these matters, there exists the possibility of adverse outcomes that we estimate could be up to $4.1 billion in aggregate beyond recorded amounts. Were unfavorable final outcomes to occur, there exists the possibility of a material adverse impact on our financial position and on the results of operations for the period in which the effects become reasonably estimable.

Bear in mind that later today Microsoft is likely to be slapped by a very considerable fine for its market abuses. This is important. Consider this in light of Microsoft approaching debt (unless it’s already in concealed debt) and look back at the article “Debt in Disguise”. According to Steve Lake’s latest analysis, none of this is so far fetched.

If you don’t believe me, take a look at what’s happening out there. Linux is cutting into Microsoft’s desktop dominance. It’s also wiping away any hope of it gaining server dominance. Firefox is quickly replacing its browser as the preferred method for surfing the internet. Outlook is being slowly knocked off its pedestal by open source alternatives, and other competitors are attacking them from all sides in their other fields as well. Open Source is on a roll and Microsoft is getting run over on all sides, and while it may not seem like they’re loosing the war, they are. Just because Open Source isn’t in the mainstream news doesn’t mean it’s not winning. And if this isn’t causing Microsoft and Steve Balmer to reach the point of being nearly panic stricken, then I’m a monkey’s uncle. I honestly believe right now that they’re terrified. Hence the battle for Yahoo is a battle for their very existence.

The word “terrified” is the same one that we used a week ago. The taxoperability program was a desperate attempt to escape the Big Fine which is yet to be announced (c/f aforementioned hyperlink). It was an attempt to please the EU while securing some revenue (‘software patent tax’). Without the EU’s nod of approval, will Microsoft gradually go into debt? How does Yahoo fit into this and are OOXML, Silverlight and other anti-LAMP/standards technologies merely a desperate late attempt?

“Why else would many of Microsoft's top executives be dropping like flies and escape the company?”Do bear in mind that, as Glyn Moody puts it, Microsoft’s dumping of Silverlight for youngsters was truly a giveaway (a word that we used only two days beforehand. It gave away Microsoft’s fear.

If you think all of this is crazy nonesense, be aware that we were cited in Linux Journal, among other publications that start to recognise Microsoft’s financial weakness, which the company has effectively been hiding for quite some time. Why else would many of Microsoft's top executives be dropping like flies and escape the company? Again, it’s quite a giveaway. Microsoft was caught with its pants down when trying to spin this. Do not be hypnotised.

Further reading:

“But the $29 billion on hand at last count was less than half the cash and short-term investments held by Microsoft about two years ago.”

Todd Bishop, Microsoft Watcher, Seattle P-I

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

5 Comments

  1. Billy said,

    February 27, 2008 at 4:25 pm

    Gravatar

    Matching Cliches

    The bigger they are, the harder they fall!

    Oh, how the mighty have fallen?

  2. DOUGman said,

    February 27, 2008 at 7:38 pm

    Gravatar

    After reading all the stories here, maybe I was being too generous when I mentioned the 2018 figure earlier, perhaps it’s more like 2010-2012??

    D.

  3. Quantum Flux said,

    March 1, 2008 at 10:04 am

    Gravatar

    Ah the rantings of the ignorant, paranoid, delusionals.

    You guys keep praying and hoping that MSFT is “going out of business”. I guess it makes your apparently really sad and empty lives complete. I’m sure you have no opinions on real world problems, but it’s somehow important to you that, while you can own a Mac or run Linux and use DivX and Firefox, most people run Windows. That you folks see this as the greatest sin in human history and therefore obsess over attempting to spin anything into bad news for MSFT belies your insanity.

    DOUGman… Keep dreaming that MSFT is on its way out of business. Shout it from the roof tops actually. If you shout it long and loud enough, people will realize the depth of your condition.

    A company with $29B being spun as “nearly bankrupt and out of business” and yet still so dangerous, apparently, that govts need to fine it billions a year? Which is it deranged dreamers? Unstoppable juggernaut which must be brought to task, or beaten and broken down charlatan that is almost out?

    I have to say that from a philisophical standpoint, I’m growing to despise the OSS movement. Like all other supposed “free thinker” movements designed to “save us”, it is more and more looking like a fascist wave of extremism that is designed to give you want THEY want like it or not. When was the vote on proprietary software having value and developer time being worth something? Oh thats right. You terrorists (following Stallman) simply decided that the rest of us were “idiots” and your way was THE way forward come hell or high water. Yep. That sounds like JUST the kind of “openness” I’m hoping for. And Im sure those of us in the enterprise space CONSUMING software will feel like we have won SUCH a victory when we are paying massive support costs to IBM, Sun, or some other OSS support titan. Because that will make SUCH a big difference in the day to day and lead to SO much more cost efficiency in our operation.

    Anyone on the practical usage side of this argument sees it for the BS it is. And IF that sea change were to come, what will be the NEXT battle for you frothing maniacs? Because I suspect you wont then start devoting your basement dwelling time to cranking out code for “the good of mankind”… You’ll be on to your next effort in social engineering.

  4. Roy Schestowitz said,

    March 1, 2008 at 10:17 am

    Gravatar

    Your rants and insults aside, I’ll address your point about Microsoft’s finances.

    It appears as though the reality is more complicated than you wish to know. A company is able to move money between buckets and even borrow money from investors, pull money from its savings and shuffle wealth in a variety of ways in order to disguise losses. We have some evidence of this (articles from the mainstream press) and we write a lot about this in this site also, but you are certainly not interested. You have already made up your mind.

  5. CoolGuy said,

    March 1, 2008 at 10:39 am

    Gravatar

    @Quantum Flux

    So u feel threatened by FOSS. hum…

    what kind of proprietor software do u work on that the FOSS is going to replace very soon…i guess u need to hate those FOSS developer…hum…very strange.

    you kind of remind me of that bald guy in Matrix, who wanted to go back to the matrix and enjoy his fake life.

What Else is New


  1. Links 19/4/2019: PyPy 7.1.1, LabPlot 2.6, Kipi Plugins 5.9.1 Released

    Links for the day



  2. Links 18/4/2019: Ubuntu and Derivatives Have Releases, digiKam 6.1.0, OpenSSH 8.0 and LibreOffice 6.2.3

    Links for the day



  3. Freedom is Not a Business and Those Who Make 'Business' by Giving it Away Deserve Naming

    Free software is being parceled and sold to private monopolisers; those who facilitate the process enrich themselves and pose a growing threat to freedom in general — a subject we intend to tackle in the near future



  4. Concluding the Linux Foundation (LF) “Putting the CON in Conference!” (Part 3)

    Conferences constructed or put together based on payments rather than merit pose a risk to the freedom of free software; we conclude our series about events set up by the largest of culprits, which profits from this erosion of freedom



  5. “Mention the War” (of Microsoft Against GNU/Linux)

    The GNU/Linux desktop (or laptops) seems to be languishing or deteriorating, making way for proprietary takeover in the form of Vista 10 and Chrome OS and “web apps” (surveillance); nobody seems too bothered — certainly not the Linux Foundation — by the fact that GNU/Linux itself is being relegated or demoted to a mere “app” on these surveillance platforms (WSL, Croûton and so on)



  6. The European Patent Office Does Not Care About the Law, Today's Management Constantly Attempts to Bypass the Law

    Many EPs (European Patents) are actually "IPs" (invalid patents); the EPO doesn't seem to care and it is again paying for corrupt scholars to toe the party line



  7. The US Supreme Court (SCOTUS) Once Again Pours Cold Water on Patent Maximalists

    Any hopes of a rebound or turnaround have just been shattered because a bizarre attack on the appeal process (misusing tribal immunity) fell on deaf ears and software patents definitely don't interest the highest court, which already deemed them invalid half a decade ago



  8. Links 17/4/2019: Qt 5.12.3 Released, Ola Bini Arrested (Political Stunts)

    Links for the day



  9. Links 16/4/2019: CentOS Turns 15, Qt Creator 4.9.0 Released

    Links for the day



  10. GNU/Linux is Being Eaten Alive by Large Corporations With Their Agenda

    A sort of corporate takeover, or moneyed interests at the expense of our freedom, can be seen as a 'soft coup' whose eventual outcome would involve all or most servers in 'the cloud' (surveillance with patent tax as part of the rental fees) and almost no laptops/desktops which aren't remotely controlled (and limit what's run on them, using something like UEFI 'secure boot')



  11. Reader's Claim That Rules Similar to the Code of Conduct (CoC) Were 'Imposed' on LibrePlanet and the FSF

    Restrictions on speech are said to have been spread and reached some of the most liberal circles, according to a credible veteran who opposes illiberal censorship



  12. Corporate Media Will Never Cover the EPO's Violations of the Law With Respect to Patent Scope

    The greed-driven gold rush for patents has resulted in a large pool of European Patents that have no legitimacy and are nowadays associated with low legal certainty; the media isn't interested in covering such a monumental disaster that poses a threat to the whole of Europe



  13. A Linux Foundation Run by People Who Reject Linux is Like a Children's Charity Whose Management Dislikes Children

    We remain concerned about the lack of commitment that the Linux Foundation has for Linux; much of the Linux Foundation's Board, for example, comes from hostile companies



  14. Links 15/4/2019: Linux 5.1 RC5 and SolydXK Reviewed

    Links for the day



  15. Links 14/4/2019: Blender 2.80 Release Plan and Ducktype 1.0

    Links for the day



  16. 'Poor' (Multi-Millionaire) Novell CEO, Who Colluded With Steve Ballmer Against GNU/Linux, is Trying to Censor Techrights

    Novell’s last CEO, a former IBMer who just like IBM decided to leverage software patents against the competition (threatening loads of companies using "platoons of patent lawyers"), has decided that siccing lawyers at us would be a good idea



  17. Guest Post: The Linux Foundation (LF) is “Putting the CON in Conference!” (Part 2)

    Calls for papers (CfP) and who gets to assess what's presented or what's not presented is a lesser-explored aspect, especially in this age when large corporate sponsors get to indirectly run entire 'community' events



  18. Patent Maximalists Are Enabling Injustices and Frauds

    It's time to come to grips with the simple fact that extreme patent lenience causes society to suffer and is mostly beneficial to bad actors; for the patent profession to maintain a level of credibility and legitimacy it must reject the deplorable, condemnable zealots



  19. Further Decreasing Focus on Software Patents in the United States as They Barely Exist in Valid Form Anymore

    No headway made after almost 4 months of Iancu-led stunts; software patents remain largely dead and buried, so we’re moving on to other topics



  20. Links 13/4/2019: Wine 4.6 and Emacs 26.2 Released

    Links for the day



  21. Links 12/4/2019: Mesa 19.0.2, Rust 1.34.0 and Flatpak 1.3.2 Released

    Links for the day



  22. Caricature: EPO Standing Tall

    A reader's response to the EPO's tall claims and fluff from yesterday



  23. The EPO is Slipping Out of Control Again and It's Another Battistelli-Like Mess With Disregard for the Rule of Law and Patent Scope

    The banker in chief is just 'printing' or 'minting' lots and lots of patents, even clearly bogus ones that lack substance to back their perceived value



  24. Global Finance Magazine Spreads Lies About the Unitary Patent and German Constitutional Court

    Alluding to the concept of a "unified European patent," some site connected to Class Editori S.p.A. and based in Manhattan/New York City tells obvious lies about the Unified Patent Court (UPC), possibly in an effort to sway outcomes and twist people's expectations



  25. New Building as Perfect Metaphor for the EPO Under the Frenchmen Battistelli and Campinos

    The EPO is in "propaganda mode" only 9 months after the latest French President took Office; the Office is seen as dishonest, even under the new leadership, which routinely lies to the public and to its own staff



  26. Links 11/4/2019: Twisted 19.2.0 Released, Assange Arrested

    Links for the day



  27. EPO Still Wasting Budget, Paying Media and Academics for Spin

    EPO money continues to flow like water into hands that are complicit in legitimising the EPO's management and policies; this highlights the grave dangers of lack of oversight at the EPO, not to mention lawlessness or lack of enforcement



  28. Links 10/4/2019: Microsoft's GDPR Trouble, New Fedora 29 Images

    Links for the day



  29. Linux Magazine is Run by Advertisers, Not GNU/Linux (and It's Hardly the Exception)

    Advertising is big money — so big in fact that publications no longer care what’s true but instead focus on what text brings them more income (from advertisers, of course)



  30. Guest Post: The Linux Foundation (LF) is “Putting the CON in Conference!” (Part 1)

    Proprietary software giants with their sponsorships and gifts are more like Trojan horses or parasites striving to infect the host; how can the LF be protected from them?


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts