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 in other sites/networks: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Reddit
  • email
  • Slashdot

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. Site Changes Ahead of Anniversary

    We’re making some changes to the presentation and function of the site — changes that will become more prominent over the coming days



  2. IRC Proceedings: Monday, October 26, 2020

    IRC logs for Monday, October 26, 2020



  3. Links 26/10/2020: rpminspect 1.2, Open Source Hardware Certification and LibreOffice Conference

    Links for the day



  4. Links 26/10/2020: Debian "Bullseye" Artwork, Fwupd 1.5 Released

    Links for the day



  5. [Meme] Satya Na-DL

    Microsoft has shown its real priorities (just before the weekend when many people might not notice)



  6. Jonathan Wiltshire and Debian, Falsified Harassment Claims, Tiger Computing and GCHQ

    Reprinted with permission from Debian Community News



  7. Links 26/10/2020: Linux 5.10 RC1 and Loongsoon Laptops

    Links for the day



  8. The Downfall of Free Software Leaders (and Their Projects or Missions)

    "Cancel George Orwell, and happy hacking."



  9. IRC Proceedings: Sunday, October 25, 2020

    IRC logs for Sunday, October 25, 2020



  10. Links 25/10/2020: Kodi 18.9, ScummVM Android Love, Cutelyst 2.13

    Links for the day



  11. [Meme] Captain Zemlin and Neil McGovern's Ugly Legacy in GNOME (His Predecessors Work for Microsoft Directly Now)

    The Linux Foundation is already ‘sold’ and Microsoft Tim‘s interview with Neil McGovern, published a few days ago, was rather revealing (comments on the article/interview were also harsh)



  12. How Microsoft is Still Worse Than Google

    "I have decided that we should not publish these extensions. We should wait until we have a way to do a high level of integration that will be harder for the likes of Notes, Wordperfect to achieve, and which will give Office a real advantage."



  13. 'President Bill Gates' Wants to Punish Not Only Google After Using “Extensions” to the Web to Reinforce Microsoft's Monopoly (Antitrust Violations Are a Microsoft Thing)

    In gross distortion of facts and of history and in a rather incredible fashion (very shameless and insulting) the corporate media tries to paint Bill Gates as an antitrust hero that will save the world from monopolies



  14. Donald Trump Helped Bill Gates Increase His Wealth by More Than 50%, Especially During the Pandemic

    Contrary to ridiculous narratives disseminated by nutty accounts all around the Web, Gates and Trump are no foes but 'partners in crime'



  15. Our 14th Birthday is Coming

    We're turning 14 shortly and we need ideas from readers (things that can be done to mark the event and celebrate 'on-line')



  16. In Spite of IBM's Difficult Past and Particularly Dark History, Under Arvind Krishna’s Leadership It Has Only Shown Signs of Improving

    This winter, 6 months after Arvind Krishna’s tenure as CEO began, we can generally say that things seem to have improved and we look forward to further improvements



  17. Links 25/10/2020: GNU Taler's IETF Milestone, RISC OS 5.28 and New Ubuntu Community Council

    Links for the day



  18. IRC Proceedings: Saturday, October 24, 2020

    IRC logs for Saturday, October 24, 2020



  19. Links 24/10/2020: GDB 10.1, Kodachi 7.4, Wine 5.20

    Links for the day



  20. Celebrating Code of Conduct Violations

    Reprinted with permission from Daniel Pocock



  21. The Militarised Elephant in the Room Still Commands a Lot of Free Software Development

    We take a difficult (albeit in-depth and perfectly factual) look at IBM's past and present; considering this is the company that controls Red Hat (which in turn controls many key projects in GNU/Linux) we need a better understanding of the real context, not PR fluff and marketing



  22. Juve Patent's Love of Patent Trolls and Their Misinformation

    The press 'gutter' known as Juve (basically propaganda disguised as 'news' since years ago) has gotten to the point where the publisher is just an extension of lawyers and liars



  23. IRC Proceedings: Friday, October 23, 2020

    IRC logs for Friday, October 23, 2020



  24. Look How Many Tux I Give!

    "Long live rms, long live (Hyperbola) GNU/BSD, and happy hacking."



  25. Embrace, Extend, and Extensions: Two New Reasons to Delete GitHub, Which Microsoft Ruined for Everyone (Except the Copyright Cartel and Other Censors)

    GitHub is being turned into a garbage dump with malicious masters (or monsters, or mobsters); many people are denied access for using the 'wrong' browser and developers/projects are being censored (not for doing anything wrong or illegal, either)



  26. [Meme] When EPO Staff Claims to be 'Ill' or 'Sick'... During a Pandemic's European Peak

    Gotta check and verify that those 'lazy' EPO examiners aren't just faking being ill (in order to not meet "production" targets)



  27. The EPO Has Relegated or Lowered Itself to Extremely Poor Standards

    Today's EPO continues to reaffirm the image of global weakness; having failed to improve the working conditions and quality of the work (its actions did the exact opposite), it's nowadays begging China to send over lots of workload irrespective of quality or merit and it is outsourcing the functions of the Office to the United States



  28. Links 23/10/2020: Turing Pi 2, GNU Parallel 20201022

    Links for the day



  29. IRC Proceedings: Thursday, October 22, 2020

    IRC logs for Thursday, October 22, 2020



  30. Links 23/10/2020: 'Groovy Gorilla' Everywhere in the News

    Links for the day


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

Recent Posts