Bonum Certa Men Certa

The SEC is Going After Microsoft (Again), Not Just Goldman Sachs

US Securities and Exchange Commission Seal



Summary: The SEC (U.S. Securities and Exchange Commission) contacts Steve Ballmer regarding oddities in Microsoft's latest financial report

WE WISH to begin with factual background that a lot of people are unaware of. A few months ago, right around the time that Microsoft's CFO quit he was also paid millions of dollars by Microsoft to keep his mouth shut. This is not a standard transaction. This could indicate malpractice and there is reason for prejudice because the SEC previously caught and investigated Microsoft for financial fraud (Microsoft eventually settled), after a Microsoft employee, Charles Pancerzewski, had blown the whistle and presented to the judge convincing evidence of fraud taking place at Microsoft. Microsoft paid Pancerzewski millions of dollars to shut him up and eliminate his evidence [1, 2]. It's a typical maneuver from Microsoft, which also hires/pays critics to walk away and not share their knowledge with the public. We gave several examples of this before.



A few days ago we wrote about Microsoft's close relationship with US banks/the Fed, which are aflood with misconduct these days. They contact Microsoft for help brainwashing the public [1, 2, 3, 4, 5, 6, 7, 8, 9], as we noted some days ago when we wrote about the SEC suing Goldman Sachs for fraud. For those who have not read that previous post, Microsoft's CEO was asked to create a seasonly game to teach the public about deficit crunching (Microsoft too has debt) and as this new article shows, using games to brainwash minds is not out of the ordinary (war games are the most famous example).

PepsiCo International and Microsoft have teamed up to create an integrated digital advergaming campaign to take advantage of what's expected to be increasing interest in soccer as the World Cup gets underway.


But anyway, here is the interesting development. Pogson has found this document [PDF] buried inside the SEC's Web site. Since it is available as a PDF, we decided to append it at the bottom as plain text. Microsoft's response is an HTML-formatted mail and here is what Pogson makes of it:

Then, in the last quarterly report, M$ combined that other OS and “live” segments. I guess they thought a zigzag in the curve would hide something like the inflection in the client OS stuff. Further, internally, they use a different set of books, omitting some important details. So, investors should be comforted knowing that internal decisions are made on false assumptions. We have known for years that including the browser in the OS was done not for good business reasons but to exclude competition from the market. I guess that other search engine is more of the same.


There is actually more to it because Microsoft is 'embellishing' its numbers by deferring revenue, for example [1, 2, 3, 4]. One writer asks about Microsoft: "Are we seeing a revival?" Well, only if Microsoft's lies are being believed because in the previous quarter just about any business unit at Microsoft was down. Yes, it was mostly down, but Microsoft claims a surge.

Let me be clear. I'm not a fan of Microsoft (NASDAQ:MSFT). I dislike its products and I don't much like its business policies. I'm a child of the open source world and a fan of cloud computing, and Microsoft has long been a dirty word as far as I'm concerned. It's probably a dirty word as far as many investors are concerned.


Wallstcheatsheet.com, which is another news site, has just published the article "Proof Microsoft has Become Irrelevant" and it says:

If this keeps up [for Bing] , Microsoft may want to rename it ‘Ding’ because that’s how big an impact they’ve had in the search space.

For the moment, Kin and Bing are not making huge waves.


We wrote about it in the previous post. Bing as a "success" is part of an illusion Microsoft is spreading and Kin is a major disappointment which we'll address in the next post. There is more to Microsoft's financial reports than meets the eye. Don't believe what you see next week when Microsoft releases another report and immediately spins it as "success". Microsoft is not honest about its financial situation.







Mail Stop 4561 December 11, 2009 Mr. Steven A. Ballmer Director and Chief Executive Officer Microsoft Corporation One Microsoft Way, Redmond, Washington 98052-6399

Re: Microsoft Corporation Form 10-K for the Fiscal Year Ended June 30, 2009 Filed July 30, 2009 01-14278

Dear Mr. Ballmer: We have reviewed the above-referenced filing and have the following comments. Please be as detailed as necessary in your explanation. After reviewing this information, we may raise additional comments.

Please understand that the purpose of our review process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter. Form 10-K for the Fiscal Year Ended June 30, 2009 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Segment Product Revenue/Operating Income (Loss) Online Services Business, page 25

1. We note that the operating loss for your Online Services Business increased by 102% and 84% in 2008 and 2009, respectively, and is a significant portion of your




Mr. Steven Ballmer Microsoft Corporation December 11, 2009 Page 2

consolidated operating income in 2009. Tell us whether these increasing losses are indicative of future results and the consideration given to identifying and quantifying any related known trends, events and uncertainties that would reasonably be expected to have a material impact on your liquidity, capital resources and/or results of operations. Refer to Item 303(A) (3) (ii) of Regulation S-K and Section III.B.3 of SEC Release 34-48960.

Item 8. Financial Statements and Supplementary Data

Note 22. Segment Information and Geographic Data, page 77

2. Tell us what consideration you gave to reporting revenue from external customers for each of your products and services or each group of similar product and services in accordance with paragraph 37 of SFAS 131.

3. You indicate that your financial reporting systems provide more than one measure of segment profit and loss for management to operate the business, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Tell us what consideration you gave to reporting the segment information that is most consistent with that used in your consolidated financial statements. In this regard, we note that the segment information provided beginning on page 23 is presented in accordance with U.S. GAAP. Refer to paragraph 30 of SFAS 131.

4. We note your statement that segments are not designed to measure operating income or loss directly related to the products included in each segment, due to your integrated business structure. Further explain this assertion and tell us what operating costs are excluded from each segment. In light of this apparent limitation of the data, indicate how the segment information presented is reliable and relevant to users of your financial statements.

5. You state that “inter-segment cost commissions are estimated by management and used to compensate or charge each segment for such shared costs and to incent shared efforts.” Clarify for us what is meant by these estimated inter-segment cost commissions and tell us what consideration you gave to describing in the note the basis of measuring this allocation. Also, clarify what is meant by allocating cost commission “to incent shared efforts.” Explain your basis for determining the appropriate amounts that will provide motivation and justify why management believes the allocation methodology is reasonable. Refer to paragraphs 25(b) and 29 of SFAS 131. *******

Please respond to these comments within 10 business days or tell us when you will provide us with a response. Please submit all correspondence and supplemental




Mr. Steven Ballmer Microsoft Corporation December 11, 2009 Page 3

materials on EDGAR as required by Rule 101 of Regulation S-T. If you amend your filing, you may wish to provide us with marked copies of any amendment to expedite our review. Please furnish a cover letter that keys your response to our comments and provides any requested information. Detailed cover letters greatly facilitate our review. Please understand that we may have additional comments after reviewing any amendment and your response to our comments.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all information required under the Securities Exchange Act of 1934 and that they have provided all information investors require for an informed investment decision. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.

In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:

● the company is responsible for the adequacy and accuracy of the disclosure in the filing;

● staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

● the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. In addition, please be advised that the Division of Enforcement has access to all information you provide to the staff of the Division of Corporation Finance in our review of your filing or in response to our comments on your filing.

You may contact Melissa Walsh, Staff Accountant, at (202) 551-3224 if you have any questions regarding comments on the financial statements and related matters. If you need further assistance, you may contact me at (202) 551-3226

Sincerely,

Craig D. Wilson Sr. Asst. Chief Accountant


Comments

Recent Techrights' Posts

They Don't Tell Us that 'Digitalisation' (Now Sold as "Hey Hi") Just Means Customers Become Unpaid Staff and Are Made Accountable
People are being conditioned to associate technology with something undesirable, at times even unbearable
Amazon Web Services (AWS) Has Layoffs and Microsoft Gaming/Entertainment Division Has an Uncertain Future
it's good to see all those horrible things crashing and burning
 
Gemini Links 22/07/2025: Thinkpad and Pinephone
Links for the day
Links 22/07/2025: "Blog Restart" and Microsoft Clobbered by “ToolShell"
Links for the day
Global Warming and Global GAFAM Energy-Wasting
Burn more money (borrowed, loans), then hope the waste will somehow translate into profit?
No Compliance With the European Patent Convention (EPC) at the European Patent Office (EPO)
It's about preventing competition against this autocracy
Blue-Collar Trolls vs White-Collar Trolls
Examples of white-collar trolls
Apple Vision Pro Failed So Badly That Its Sales Are About 2,000 Times Smaller Than iPhone Sales
What's left for Apple to offer other than hype?
To Millions of People "Year of the Linux Desktop" Was Some Time in the 1990s (Bootable GNU/Linux as a Complete Operating System is Over 33 in Age)
In some sense, "year of the Linux desktop" was 33 years ago
Make No Assumptions (or Demands) About the Screen Resolution Used by Other People
There are usability aspects, aside from accessibility aspects
Why Wayland (and XWayland) Won't Solve the Key Problem It Proclaims to be Tackling (the Same Is True for Rust)
The problem isn't Wayland per se but the false promises and efforts to force everybody to move to it whilst insulting or demonising everyone who won't play along
Diplomatic Immunity Should Not Exist for Anybody
The EPO in its current form gradually 'normalises' the end of European democracy
Brett Wilson LLP Stopped Sending Me Papers When I Showed It had Sent Me Over 5 Kilograms of Legal Papers
A week ago we lodged our third lawsuit
Microsoft Mass Layoffs and Shutdowns Became the New Normal at Microsoft
Microsoft mass layoffs became a topic of everyday media coverage since May
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Monday, July 21, 2025
IRC logs for Monday, July 21, 2025
FSF "Raised Almost $139,000 During This Summer Campaign"
"Thank you for making a stand against dystopia!"
Gemini Links 22/07/2025: VPS Exploited and Fear of View
Links for the day
LLM Bots vs Techrights
Slows things down a bit
New Publication Sheds Lights on Abuse of Workers at the European Patent Office (EPO)
Put in simple terms, they're killing the Office, harming remaining staff, try to hire rubber-stampers
Links 21/07/2025: Hardware, Health, and Imperialism
Links for the day
Gemini Links 21/07/2025: "When Buying Isn't Owning" and "CMS Special Edition"
Links for the day
Links 21/07/2025: Indie Web and Toxic Politics
Links for the day
[Meme] Microsoft Lawyers Throwing Stones in Glass Houses
threatened me with bankruptcy
Google "AI Overview" is Not AI and Not Overview
do not be misled; what Google does isn't smart, it's just ripping off the sites it already crawled for as long as 27 years
Making the Case to Dump Microsoft and GAFAM for National and Digital Sovereignty
"Sovereignty is difficult"
The Tactics of the Opposition (Microsoft Lunduke): Associate With K00ks, Throw in Vaccines to Muddy the Water
Who stands to gain from this?
Europe's Second-Largest Institution (EPO) and Largest Patent Monopoly Office Needs More Transparency, Not Less Transparency
In the EPO, what good are elections when one candidate literally bribes all the voters?
How Not to Report News About Microsoft
This pattern of misreporting is so widespread that it's hard to believe it's not intentional
Computer Science is Under Attack, They Want Everyone to be a Consumer
If people can no longer acquire Computer Science education and real Computer Science experience, they will not know how to control their own digital destiny or emancipate the very same universities that now control the syllabus and instead of teaching Computer Science encourage the outsourcing of systems
The Best Tools Are the Simplest Tools
There's a hidden message here about the merits of sticking with X
Ofcom Online Safety Group Speaks of Protecting Women Online, Will Brett Wilson LLP Ever Listen?
They've essentially became like the Taliban's "burka police"
Social Control Media Relies on Advertisers, So It'll Always Be Hostile Towards Free Software
Sales, sales, sales
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Sunday, July 20, 2025
IRC logs for Sunday, July 20, 2025
Fragmentation of Data
Life is too short to "hoard" data
In Defence of "Spinning Rust"
Just because something is "old" (or older) doesn't mean it ought to become extinct
Using Free Software to Prepare Legal Documents
LibreOffice is openly complaining about OOXML as an obstacle
Tech and Technology Are Not the Same Anymore
"Are you into tech, Sir?"
Our Articles About SLAPPs Receive Recognition and Interest
This week we shall continue writing about the 3 lawsuits we filed
Are You Served?
For many people, advocacy of Free software and GPL enforcement are assumed to be happening
Conspiracy or grooming? Alex Jurado, Voice of Reason compared to Outreachy
Reprinted with permission from Daniel Pocock
Links 20/07/2025: Security Breaches and Former 'Open' 'AI' Engineer on Hype and Culture Issues
Links for the day
Links 20/07/2025: Fending Off BRICS and US Government Attacks Its Own Media (Like China and Russia)
Links for the day
Framed by social control media: Alex Belfield, Voice of Reason
Reprinted with permission from Daniel Pocock
Gemini Links 20/07/2025: Summertime and OCC25 Wrap-up
Links for the day
Jamie Zawinski Complained About Wayland, Then Decided to Give It a Go, Now Complains Again About Wayland
Ask IBM (Red Hat) why it's worth throwing so much away just for Wayland fanaticism
Slopwatch: Planet Ubuntu, LinuxSecurity, and More
former "Linux" blogs which basically became slopfarms
Russia Set to Ban Facebook?
If WhatsApp is made to "leave", that means Facebook or "Meta".
Links 20/07/2025: More GAFAM Lawsuits, Layoffs, and SLAPPs
Links for the day
Taking Stock of a Good and Productive Week
We shall now be taking a break, unpacking the new hard drive (8 TB), and making backups of everything
Nice Recovery (From Actual Fire) by PCLinuxOS, New Version of PCLinuxOS Released, Now Top of DistoWatch
PCLinuxOS is a community-driven distro
More Microsoft Shutdowns That Mostly Slipped Under the Radar
Remember what happened to books 'sold' by Microsoft?
Microsoft Lunduke Still Fighting Cancel Culture With... Cancel Culture
There will be no "winners" in such 'debates'
The History of Daily Links and Politics
"I support Wayland, but I also support abortion..."
Ageism in Tech
Your protocol is "old"...
Microsoft is at 0% "Market Share" in Most Areas
Depending on the taxonomy chosen, there may be dozens of categories other than desktops and laptops
"The moment MSFT stock fails to start tumbling, that’s the beginning of another corporate giant going under."
There are far more layoffs at Microsoft than at Intel, but you would not get this impression based on Wall Street media
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Saturday, July 19, 2025
IRC logs for Saturday, July 19, 2025