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01.30.10

Microsoft Business Keeps Declining and Microsoft is Lying About It, As Usual

Posted in Deception, Finance, Microsoft, Vista, Vista 7, Windows at 10:35 am by Dr. Roy Schestowitz

Microsoft lies

Summary: Response to the financial deception which Microsoft has just spread to unsuspecting journalists (and the sobering reality)

MICROSOFT is bluffing big time, but almost nobody calls them on it. We contacted one Microsoft-focused journalist (Joseph Tartakoff) who was parroting Microsoft only to find that in defence of his writings, he only repeats more Microsoft talking points*. A lot of reporting is done by one journalist who echoes another, who is affected by seeding from Microsoft’s PR people (whose role is by definition to deceive and it comes to show how far PR goes). Yesterday we explained why Microsoft is lying in its report, so we won’t be doing that again. Microsoft can claim to have only “embellished” the results, but the outcome is still the same. Microsoft can adjust their expectations (for analysts to be “surprised”) and it does this all the time. We have shown this repeatedly for years. Since 2008 in fact, we have exposed the ways Microsoft was spinning, cooking numbers, and lying about its results. Microsoft is almost obliged to lie in order to paint a good picture to its clients. It’s a form of mass hypnosis.

“Microsoft can claim to have only “embellished” the results, but the outcome is still the same.”Anyway, few people did actually engage in some investigative reporting and got hold of the real numbers. These show that Microsoft is down in almost every area of business, even compared to the slump of last year (right after Wall Street had crashed) which should be easy to beat. Many companies beat that quarter, many by huge numbers (like hundreds of percentages in profit growth).

Joe Wilcox deserves credit for actually doing some work and extracting real numbers from Microsoft’s bundle of lies. In his article he states that “Business [is] down 3 percent from $4.88 billion a year earlier [is] Online Services Business [is] down 5 percent from $609 million a year earlier [and] Entertainment & Devices [is] down 11 percent from $3.26 billion a year earlier.”

And this is what Microsoft calls a good quarter? A lengthy discussion about this took place in our IRC channel yesterday. It starts here.

Chips B. Malroy explains that: “Overall, I see this quarter as a failure for MS in dollar terms, once the deferral is out of the picture, it looks like a decrease to me. In fact some divisions lost, especially Xbox360 lost. Wilcox article actually shows decreased on most things.”

DaemonFC says that “they don’t like to lose, so they force themselves to put up with loss every quarter in divisions that are never going to do well.”

And on it goes…

Microsoft employees from Mini Microsoft are apparently not foolish enough to believe the spin from Microsoft. One commenter writes (identity unverified): “if you take out the deffered revenue out of the report, microsoft missed on the revenue side by about half billion dollars and barely makes it on the earning side due to cost cutting. summary: expect more cost cutting since that seem to have neautralized the revenue miss.”

As Pogson puts it:

The figures are now in. That other OS client division brought in $2.8 billion more revenue than in the same quarter last year. The sad thing is that $1.7 billion of revenue counted this quarter was deferred income from sales of Vista (with upgrade rights to “7″). That means they got a 20% increase in revenue when PC production returned to normal from the slump. That means no “pop” in the quarter in which “7″ was released. The CPU and PC sector saw 30 and 15% increases. Up-selling is just not working…

Yes, Microsoft growth from Vista 7 debut is outpaced by overall growth in the market. This is telling. One of our readers told me yesterday: “They can only fake things for so long of course. The bang you are hearing in the future is MS hitting a brick wall.” Not even a brand new release of Windows managed to put a smile on the face of Microsoft’s CFO. He quit the company last month and the Seattle Times reveals that he got himself a “hush deal”:

In addition to the $1.9 million sayonara payout disclosed last month, Liddell’s Dec. 1 “resignation agreement” bars him from ever writing, speaking, blogging or podcasting anything about Microsoft and its executives covered by a confidentiality agreement he signed in 2005.

Going back to the numbers, Chips B. Malroy says: “Wilcox, big fanboi that he is, still does dive into the numbers more, for that I too give him some credit”

Compare that to Joseph Tartakoff, who is parroting Microsoft’s claim: “Msft has sold 60 million Windows 7 licenses over two quarters #pcbuzz”

These are of course fake numbers and we have already explained why (many times in fact). Microsoft used exactly the same tricks with Windows Vista. These numbers are bunk, just like Microsoft’s results, which will easily have the readers forget that Windows revenue was down by a staggering 40% in the previous quarter (Microsoft announced this on the very same day that Vista 7 was released, so the financial news was buried by design).
____
* For instance, he uses “official” Microsoft numbers when he writes that “MSFT headcount down 8 percent year over year #pcbuzz”. Many more were temporary and external staff, but Microsoft does not want reporters to pay any attention to them. I also told him that “MSFT faked their results through deferral” and he then referred to analysts, whose expectations are always being beaten because Microsoft ensures they are set that way by revising them. The state of reporting is depressing when people who call themselves “journalists” become lazy and prefer to be told what to write (by companies).

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6 Comments

  1. Needs Sunlight said,

    January 30, 2010 at 11:06 am

    Gravatar

    The claims of Vista7 growth could very well be explained if some items are shifted from one quarter to another. MS has done that kind of thing before. So I would look for it again here.

    Roy Schestowitz Reply:

    The problem is that Microsoft will link to these numbers (through inaccurate reports), relying on the fact that people won’t remember the deferral. In 2012 Microsoft would just trivialise this and claim that Vista 7 was a smashing success based on the results of of this (highly-stuffed) quarter. It can use words like “record-breaking” and “best-selling”.

  2. Chips B. Malroy said,

    January 30, 2010 at 1:44 pm

    Gravatar

    Roy says:
    “The problem is that Microsoft will link to these numbers (through inaccurate reports),………”

    Hiding the truth by almost any means is just the standard play from MS. If you want another example of this recently, just look at Bing search results. Bing showed a 1% gain worldwide in a short time. Problem was it was reported by (paid by M$) researchers who skewed the results, used data collected only, or mostly only, from the US market. When the eventual truth finial came out, Bing had actually lost market share to Google. And if you need further prove of this, just look at this quarter results, online services (Bing) revenue down by 5%.

    If the economy does not bounce back soon, MS is going have a really hard time lying about its finical data in the next few quarters. The boom in computer sales is not helping that much as the computers sold are cheaper models, with cheaper windows licenses on them, less profits from MS. Where this is probably heading, is like some are saying on Mini’s blog, layoffs. Which can be done by just getting rid of the bottom 10%, you know, the ones that management does not like. Or MS can cut whole projects, so as to not call it really a layoff. Expect MS to call it anything but a layoff. But a rose is still a rose, and a layoff (or Bing or Vi$ta) still stinks no matter what you name it.

    Roy Schestowitz Reply:

    It is not just Microsoft that uses these dirty tactics; Novell too does that. If you grill them about it, you know what they will say…?

    “But everyone is doing it!”

  3. Needs Sunlight said,

    January 30, 2010 at 2:01 pm

    Gravatar

    @ Chips : I’d say that Microsoft is a significant factor in the sad state of the economy. Having the products around actually reduce your productivity and there are many activities which are faster, easier to do with pen and paper than to fuss with Microsoft products.

    Roy Schestowitz Reply:

    I beg to dispute that claim. Technology in general has increased productivity; what’s required is more robust technology and since Microsoft destroyed competition in the market, we don’t have that yet.

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