Summary: HP's CEO leaves amidst a new fraud scandal; Microsoft's executives named among possible replacements and Microsoft's own frauds are revisited

Microsoft's financial situation is a matter of insincerity, for many reasons that we covered before. Adding to Microsoft's problems we recently saw a downgrade, which we mentioned in [1, 2]. Here is the AP coverage of that:

Shares of Microsoft Corp. ( MSFT - news - people ) edged lower after Global Equities Research analyst Trip Chowdhry downgraded the software giant in part due to increased competition from Apple ( AAPL - news - people )'s Macs to its Windows operating system.

Apple has managed to grab a lucrative niche of the rich people's market. It hardly means that Apple can ever attain dominance. As for Microsoft, it is being sandwiched by GNU/Linux and Apple while its shares are 10% within 52-week low, according to this financial news site:

Microsoft Corporation (NASDAQ:MSFT) shares closed the day at $25.37, which means they are now just 10.41% away from its 52-week low, is this finally the bottom for MSFT?

"Microsoft Corporation (NASDAQ:MSFT) Stock Flounders," says another report and one last report bears the headline "Crash In Hindsight: Microsoft Currently 8.50% Below its May 6th Crash Low of $27.91 (MSFT)"; Based on this report, there are Microsoft layoffs/cuts in support and consulting.

Going some years into the past, a Macs-oriented Web site (which recently started praising GNU/Linux at Apple's expense) speaks about "Microsoft the Ultimate Pyramid Scheme" (thanks to Tobin for the pointer).

According to an article at the Register, MS Website Trumpets 'Pyramid' Company, Microsoft has been featuring a case study about GoldQuest, a pyramid scheme company!

This, of course, is not Microsoft's fault. Companies that use Windows to generate funds through pyramid schemes do not have to tell Redmond what they are up to any more than purveyors of spyware, adware, viruses, Trojan horses, networks of zombie computers belching up personal information to Mafia lords, spammers, or anyone else has to. These things manifestly do not have anything to do with Microsoft per se, any more than . . . some other analogy that I was thinking of but forgot.

Any way, the point of this article (and I do have a point) is that Microsoft itself is a kind of pyramid scheme.

In your classic pyramid scheme, you sell something of limited value and tell the seller that they can make money by selling the same valueless thing to friends for the same price less a minor finder's fee. The "mark" is told that as more people join the pyramid, more money trickles down the pyramid to him through the finder's fees, eventually making him rich with very little effort.

In the Microsoft version, the "mark" (an IT guy) is told that if they use Windows, they'll be more compatible and more productive. Further, if they convince 10 users in their company to use Windows, then all the additional savings will be passed on to the IT department, which can hire more people to take care of the additional computers.

Here is the cited article:

MS website trumpets 'pyramid' company

A case study on Microsoft.com is unwittingly promoting a company which has been accused of operating a pyramid scheme targetting people in south-east Asia and Africa.

This page on Microsoft's website explains how Hong Kong-based GoldQuest International Ltd made big savings by moving to Windows Server 2003. The page proudly trumpets GoldQuest's achievements and "500,000 active customers in 120 countries".

"GoldQuest has grown into a ecommerce powerhouse, generating 70 per cent of its $200m annual turnover online," the page gushes. Microsoft claims it has saved the company $82,000 a year in IT costs and helped it increase revenue by $10m a year.

Wow. That's quite an embarrassment, more so than LSE as a "case study" (LSE eventually dumped Windows and went with GNU/Linux instead [1, 2, 3, 4]).

This whole discussion came about in IRC last night. Tobin sought information about Microsoft as a pyramid scheme (like many in the stock market) and Chips B Malroy wondered "what the resignation of the HP CEO will mean with WebOS? Will the next CEO go back to windows?"

For those who have not heard yet, there is fraud claimed at HP, not just Microsoft. Here are some articles from the news:

• Jodie Fisher costs Mark Hurd his job as HP CEO over fraud, sex scandal

  It's obvious there's more to this story than we know and the two people who really know the truth, Fisher and Hurd, aren't talking.





• H-P Chief Quits in Scandal

  Mark Hurd, the man credited with reinvigorating Hewlett-Packard Co., resigned as chief executive of the technology giant after an investigation of his relationship with a female contractor found he violated the company's business standards.
  
  H-P said Friday that Mr. Hurd, 53 years old, didn't violate the company's policy regarding sexual-harassment but submitted inaccurate expense reports that were intended to conceal what the company said was a "close personal relationship" with the woman.





• HP CEO Hurd resigns: Sex harassment & false expense reports alleged

  Mark Hurd, CEO of HP is resigning on the heels of sexual harassment charges by a former HP contractor. The company's investigation concluded that there was no sexual harassment violation, however it did find that Hurd violated HP's "Standards of Business Conduct." Hurd said it was a "painful decision" and vaguely acknowledged that he displayed a lack of character.





• HP Organizational Announcement Conference Call





• HP Settles DOJ Litigation

  As per the latest disclosure made by the largest computer maker Hewlett-Packard Co. (NYSE:HPQ), the tech major has agreed to settle a lawsuit in principle imposed against it by the Department Of Justice (DOJ).
  
  [...]
  
  This lawsuit dates back to the year 2007, when Microsoft Corp. (NASDAQ:MSFT) first initiated this lawsuit, and the Government agency with others to form a combined lawsuit against the three tech majors namely, HP, Sun Microsystems and Accenture.
  
  





• Mark Hurd Resignation: Top 10 Candidates to Replace Him

  Steve Elop, chief of Microsoft’s business division, which handles MS Office. He was formerly chief operating officer of No. 2 networking company Juniper Networks. Known as a no-nonsense taskmaster, Elop is a veteran in the technology industry, having served in senior positions at Adobe Systems and Macromedia.





• HP’s successor to take up huge challenges

  It is reported that HP will look for suitable candidates to the likes of companies such as Apple, Oracle and Microsoft.

Notice the possibility that HP will hire a new CEO from Microsoft (there is a temporary replacement that is a lady, which is interesting after the previous CEO's scandals). We may have already seen the effects of HP hiring a Vice President from Microsoft to become software head. The other interesting thing is, maybe now that companies like HP reveal fraud, so will Microsoft (again). Dell and Intel were in the midst of such a blunder just weeks ago. ⬆

"There is such an overvaluation of technology stocks that it is absurd. I would include our stock in that category. It is bad for the long-term worth of the economy."

--Steve Ballmer