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


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


  1. Billy said,

    February 27, 2008 at 4:25 pm


    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


    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??


  3. Quantum Flux said,

    March 1, 2008 at 10:04 am


    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


    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


    @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. With Software Patents in Europe (and Pushes for the Same Thing in Australia and India) Patent Trolls Now Come to Europe, Attack Android/Linux

    Worst-case scenarios are becoming a reality as Android backers officially attacked by patent trolls using standard-essential patents in London, England

  2. New Information on Limbo in the Enlarged Board, Courtesy of Illegal Actions by the EPO's Benoît Battistelli

    Battistelli's bullying of people whom he is not even allowed to bully turns out to have gone on for a lot longer than promised, and there is no sign of light at the end of this tunnel

  3. Microsoft Customers Complain About 'Inevitable' Vista 10 Because Microsoft Nearly Forces Botched 'Upgrades'

    In a desperate effort to spread Vista 10, sometimes even against people's will, Microsoft really upsets loyal customers, who are eventually eager to explore alternatives

  4. Dr. Ingve Björn Stjerna Explains Why the UPC (“Unitary Patent“ System) is an Undemocratic Sham Whilst UPC Silently Advanced by Patent Lawyers and Politicians

    European patent laws are being covertly overridden so as to allow broader scope of litigation, higher financial damages, speedy injunctions, and even software patents; the European public is intentionally kept in the dark about it, hence kept unable to express scepticism or issue truly effective objections

  5. IRC Proceedings: September 13th, 2015 – October 3rd, 2015

    Many IRC logs

  6. Article Explains Why SUEPO Went Silent Well Over a Week Ago: Nobody is Allowed to Talk to Journalists Without Permission From Battistelli

    More threats from Benoît Battistelli (threats of termination and legal actions on top of it) help hide the abuses of Battistelli and his fellow thugs at the EPO

  7. A Linux World: After Billions of Dollars in Losses Microsoft Changes How It Reports Financial Results

    The abusive monopolist is trying very hard to hide its growing difficulties, especially in an effort to bamboozle non-technical shareholders who cannot understand how Linux has essentially taken over

  8. Microsoft Continues to Extort Linux and Android OEMs Using Software Patents, This Time ASUS (Forced to Pre-Install Microsoft Spyware With OOXML)

    A roundup of news illustrating that Microsoft is still very much in a total war against Android, (mis)using federal regulators and even software patents to get its way

  9. Links 4/10/2015: Linux 4.2.3 , 4.1.10; MPlayer 1.2 released

    Links for the day

  10. Links 2/10/2015: Qubes 3.0, Linux.Wifatch

    Links for the day

  11. Microsoft-Connected Firm Net Applications Used to Mislead About Vista 10 Share and Mock GNU/Linux

    People who are connected to Microsoft (some being former staff) link to a firm that is connected to Microsoft in order to create the illusion that Vista 10 market share grew to 6.63%

  12. Chairman of the Enlarged Board of Appeal (EBoA) and EPO Vice-President of DG3 Suspiciously on Unlimited Sick Leave After Benoît Battistelli's Unprecedented Attacks on Other EBoA Staff

    Rumours suggest that Benoît Battistelli's affairs at the EPO may have something to do with Wim Van der Eijk's longterm absence

  13. Microsoft's Secret Special Relationship With EPO Illustrates Serious Corruption at Microsoft and the EPO

    A big story about the EPO and Microsoft working in a sort of collusion-type setup so as to serve Microsoft's patent agenda, which involves aggression, even against European software that is Free (as in freedom)

  14. Links 1/10/2015: LFS 7.8, Calculate Linux 15 Released

    Links for the day

  15. The 'Microsoft Loves Linux' Baloney is Still Being Floated in the Media While Microsoft Attacks Linux With Patents, New Lawsuits Reported

    Despite Microsoft's continued assault on Linux and on Android (using software patents, which it still discreetly lobbies for), some figures in the media are perpetually peddling the Microsoft-serving lie that 'Microsoft loves Linux'

  16. The Microsoft Botnet Goes Bonkers and ATMs Running Windows Spew Out Cash

    The terrible security (by design) of Microsoft Windows is causing all sorts of very serious and collectively expensive issues

  17. Black Duck Continues to Pile FUD on Free/Libre Software

    Having spent nearly a decade promoting the fear of Free software licensing, Black Duck now does the same regarding Free software security

  18. Links 30/9/2015: New Kernels, Nexus Devices

    Links for the day

  19. Links 28/9/2015: Last News Catchup Before Resumption

    Links for the day

  20. Links 25/9/2015: GNU/Linux in Indian Government, NeoKylin in China

    Links for the day

  21. Süddeutsche Zeitung Explains Imminent Federal Scrutiny Against Battistelli's EPO in Germany

    The German newspaper Süddeutsche Zeitung reveals that actions by the German government may be imminent against the EPO's cliquish management, including its ringleader Benoît Battistelli

  22. EPO Managers, Patent Lawyers, Commissioners and Other Non-Technical Personnel Tackle Democracy, Alter Laws in Bulk and in Secret

    The reckless assault on European democracies and long-established laws across Europe are now lucidly demonstrated when it comes to patents

  23. Europe's Acceptance of and Resistance to Software Patents, Courtesy of Corporate Front Groups and Courtrooms Respectively

    A snapshot of recent developments and upcoming developments in Europe, regarding software patents in particular

  24. German Press Explains EPO Investigation Unit (I.U.), Struggles to Openly Speak to the Secretive EPO

    The secretive Investigation/Investigative Unit (I.U.) of the European Patent Office (EPO) is further studied/explored by a recent article from junge Welt, an old and well-established German newspaper (since 1947)

  25. Links 24/9/2015: GNOME 3.18, Fedora 23 Beta, New Firefox

    Links for the day

  26. Translation Needed of Article About EPO Threats Against SUEPO's Elizabeth Hardon

    A call for translation of an important article that may help shed light on the modus operandi of the Investigation/Investigative Unit of the EPO, which works with Control Risks Group (CRG), the 'British Blackwater'

  27. Media Filled With Spin and Lies Amid Microsoft's Admission of Internal Usage (and Modification) of GNU/Linux

    Further analysis of Microsoft's admission that it uses Linux internally and the media's poorly-researched response to that

  28. EPO Management Justifies Censorship (Even of Journalists) Using Its Vice-President Željko Topić

    The Topić connection to EPO-imposed and universally-induced censorship not just of news sites but also sites which speak about the censorship itself, or dare question the integrity of the EPO's management

  29. Changes at Techrights

    A few short notes on how we are going to re-align the site with disruptive trends, notably patents-related

  30. EPO President Benoît Battistelli Compared to Famous Criminals on European Television

    The Belgian TV network featured a show which was making fun of Battistelli earlier this month


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