Bonum Certa Men Certa

Buybacks/Dividend Fail to Lift Microsoft, Board Approves Additional Debts Weighing at $16 Billion

Money on a dark desk



Summary: As Microsoft tries hard to artificially elevate its stock, more debt gets issued and there is potential for yet more to come

IN the previous post we showed technical inferiority at Microsoft but did not discuss financial problems. Microsoft receives some downgrades these days (a Standard & Poor’s analyst and Credit Suisse help Microsoft's stock not at all), so it's a mixed forecast. Microsoft has increased dividend only to see it being rather ineffective:



Microsoft's Fatter Dividend Doesn't Spur Buying Interest



[...]

Shares of MSFT will now have a dividend yield of 2.54%, based on the new dividend payout and last night’s closing stock price of $25.15. The stock has technical support in the $23-$24 price area. If the shares can firm up, we see overhead resistance around the $27-$28 price levels. We would remain on the sidelines for now.


There are some other companies that resort to stock buybacks right now. The Microsoft-friendly/funded press does its service to Microsoft by making it seem like wonderful news.

“I have seen companies go bankrupt, and latter be reborn, without debt.”
      --Chips
A reader of ours, Chips, quotes an article as saying that "Microsoft intends to use the net proceeds from the offering for general corporate purposes, which may include funding for working capital, capital expenditures, repurchases of stock and acquisitions."

"Yes, debt," said our reader, "but look at the impending debt with this next article: 'Microsoft Corporation (NASDAQ:MSFT) has raised quarterly dividends 23 percent to 16 cents per share. Microsoft Corporation (NASDAQ:MSFT) has raised quarterly dividend by 3 cents to 16 cents per share, a 23% increase, and has obtained approval from the board to sell additional debts worth $16 Billion.'"

"The way I read this," remarked the reader, "is that MS has already sold 4.75 billion in debt, in addition to whatever debt they already have, and is planning more debt up to another 16 billion. I know it's cheap for MS to borrow money right now. But one has to wonder, if they are really sitting on a pile of money, wouldn't it just be cheaper still, to use that? And if they simply do not want to move money from one country to another, to avoid paying taxes, then doesn't that imply that MS is not making money in some countries, or worse, perhaps avoiding taxes illegally?

"I have seen companies go bankrupt, and latter be reborn, without debt. Basically these were small companies, usually owned by a handful of people. They managed to keep all the machines they owned. Bankruptcy laws vary from country to country. I say it might be possible for MS to game the bankruptcy system in the future. Divisions can be spun off. Shell companies can buy divisions as well. All I am saying here, is not to trust MS with your money. This is a company without ethics."

Another reader brought to our attention this older article which says:

Microsoft makes 60 percent of its profits on Windows, 60 percent on Office, and minus 20 percent on everything else, they said.

Sort of jibes with what some of the Microsoft financial services guys say—if you aren’t a developer or a salesperson, Microsoft doesn’t know what to make of you.


This may help explain why Microsoft keeps playing with the buckets, as currently confirmed also by the 'Microsoft press' (albeit with positive spin, as one ought to expect).

Regarding Microsoft debt, Microsoft's sympathiser Dina Bass covered it positively, as did Forbes which wrote: "Microsoft announced last night that its board had approved a 23% dividend hike, to $0.16 per share. The dividend is payable on December 9 to shareholders of record as of November 10."

It's an attempt to elevate the stock. This got covered also in [1, 2, 3, 4, 5, 6, 7, 8]. Here is how Microsoft claims to be performing (the debt is a misfit):

Microsoft (MSFT) offered $4.75 billion in AAA-rated bonds yesterday at rates nearing record lows. The software behemoth boasts an impeccable balance sheet with $37 billion in cash on hand against a minor $6 billion in strategic debt. Microsoft is a cash machine generating $24 billion in operating cash flow over the last 12 months. Given the company's standing, investors would clearly be willing to accept very low yields. Yet, the pricing was still fairly astonishing given what it implies about expectations for economic growth.


One financial site asks, "Microsoft's Higher Dividend: Will It Help?"

Another headline answers: "Citigroup Does Not Believe Microsoft's Dividend Yield Will Double As Soon As Some Expect"

Mini-Microsoft writes about the company's meeting. Some comments in this blog keep suggesting that more Microsoft layoffs are coming very soon [1, 2, 3].

Our dear reader Wayne has published the post "Microsoft Death Watch" (with this sequel). To quote a portion:

Last night one of my connections told me that Oracle is working really hard on the next version of Open Office. He isn’t close enough to the situation to have solid details, but he was told that Oracle is aiming to take Open Office from good, to fantastic. If Oracle manages to do this, it could do a huge amount of damage to Microsoft, as Microsoft’s main cash cow is Office. And of course ever office suite installation that Microsoft loses to Gnome Office, Google Docs, IWork, KOffice, OpenOffice, Word Perfect Office, and that other available alternatives has a major impact on profitability.

In the fall of 2009 I predicted that Microsoft would enter Chapter 11 Bankruptcy Protection in five years, based on my reading of their United States Security and Exchange Commission filings. That was before I was aware that Microsoft was in debt – my thanks to Dr. Roy over at Techrights for digging out this information. Attempting to fully evaluate Microsoft’s current financial health is difficult. The company regularly moves products from one division to another. While other companies also do this, in Microsoft’s case a lot of the moves appear to make to have no rational basis, leading me to believe that Microsoft is doing this to hide the true financial health of the company.


A key point is that Office 2010 sales disappointed to an extent [1, 2, 3, 4]. People just won't pay much for yet another version of an office suite, at least not anymore. "It's a "good article re: Microsoft Death Watch... exactly what I've been thinking of late," said cubevector in IRC (#techrights). The future is mobile/mobility and Microsoft does atrociously there, leading even to Slate/mobile/Courier-related departures and layoffs.

For those who think that Microsoft engagements in fraud are unlikely, one need only look back at financial misconduct, not just at Microsoft but also in Bill Gates' Corbis [1, 2, 3]. Then there is the Samberg/Pequot scandal, which is very recent and Microsoft-involved fraud. Microsoft's stock is how it got done, as covered previously in:



Here is an article from last week. It says more about the Pequot Capital scandal:

A former independent documentary filmmaker turned financial analyst, David Zilkha began working at Pequot Capital in April 2001, fresh out of his job as a product manager at the Microsoft office campus in Redmond, Wash. Educated at Oxford and Columbia universities, Zilkha wanted to enter investment management after working in the technology industry. He landed an interview with Pequot founder Arthur Samberg in January 2001.

The next month, Samberg e-mailed Zilkha, asking him for his current views on the software giant's fiscal situation. Samberg said he was not impressed with his analysts' research on Microsoft. That's where Zilkha came in. In the first of several e-mails Zilkha wrote to Samberg, he replied, "The worst is over for Microsoft," according to a SEC complaint. The next month Samberg bought a long position in Microsoft stock.

During the following weeks Samberg was buying and selling Microsoft stock based on conflicting information. He sold his long position because of predictions that Microsoft would fall short of its quarterly earning estimates. A few weeks later, however, he bought another long position when he heard good news about Microsoft's latest operating system, Windows 2000.

In April, Zilkha was still employed by Microsoft. He got an e-mail from Samberg, asking for "tidbits" about Microsoft's earnings. Zilkha told him to buy Microsoft stock as soon as possible. He then e-mailed coworkers, asking them about the quarterly earnings.

They told him Microsoft would meet or surpass its earning estimates. Zilkha relayed the information to Samberg. In April, just before the earning estimates went public, Zilkha told Samberg that the Microsoft chief financial officer seemed relaxed and that his disposition "augurs well."

By the time Microsoft's earning statements were released in April 2001, Samberg had bought 21,000 call options in the software conglomerate's stock. A friend of Samberg also bought 300,000 shares based on his recommendations. Pequot's Microsoft stock increased in value by $14 million. Samberg's friend made $372,000 on his own trades.


It will not be too shocking if Microsoft too is doing illicit financial things given its track record. The thing is, it's hard to allege this without concrete evidence and that's how criminals like Madoff escaped scrutiny. The system discourages rather than rewards the inquisitive.

"I have no special talents. I am only passionately curious." --Albert Einstein

Recent Techrights' Posts

Twitter as X-Rated Hatred: Criticising Microsoft is Not OK, Calling for Beheadings (With Bounties on People's Heads) is OK
Twitter automation missed 'hit job' advertising
Balancing Activism Against (or With) Basic Necessities and Daniel Cantarín on Our Collective Battle for Software Freedom Around the World
"I'm VERY angry about lots of stuff happening here in Argentina, all of it shielded behind the word "freedom"."
 
Links 16/08/2024: YouTube Bans and Surveillance Expanded
Links for the day
We Were Right All Along and the Collaborators of Microsoft Helped Competition Crimes of Microsoft
Once again vindicated regarding UEFI "secure boot"
[Meme] The New Windows Slogan
stat me up
Addendum: Associate's Notes on Free Software as a Labour Issue and the Connectivity Swindles
these are related issues/causes
Microsofters Infiltrating Roles of Authority and Government Positions to Protect Microsoft and to FUD Microsoft's Competition
friends of Microsofters who bully me and my wife
Links 16/08/2024: UK Skills Deficit and Kim Dotcom to be Extradited to the US (for Doing the Same Stuff GAFAM Does)
Links for the day
Gemini Links 16/08/2024: Overgeneralisation and Games
Links for the day
Russia's Yandex 5 Times Bigger Than Microsoft... in Ukraine
They'd rather rely on the Kremlin than on Microsoft
[Meme] Gemini is Different, So What?
different, not worse
Now It's "Official": Over 4,000 Known Gemini Capsules in Lupa
For the first time ever
Clown Computing
Reprinted with permission from Dr. Andy Farnell
[Meme] What Freedom Means to IBM
Free labou
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Thursday, August 15, 2024
IRC logs for Thursday, August 15, 2024
From 99% in 2012 to 27% in 2024: How Microsoft Lost Georgia
What we're seeing is a migration from Windows to other platforms, notably GNU/Linux
To Understand Cisco's Mass Layoffs Look at the Company's Soaring Debt (Same at Microsoft)
Look what's happening to Intel - down almost 60% since the start of the year, 57% to be precise
Windows Flying Low at 25%
It's another all-time low
[Meme] Long Texts You Never Bother Reading (Because Life is Too Short, Unlike Those Texts)
The devil is in the terms of service
Links 15/08/2024: Monkeypox Hysteria and Modern Homesteaders Living Off the Grid
Links for the day
Gemini Links 15/08/2024: Confession of a Convention Game Master and Some Release nostalgia
Links for the day
Congratulations to Romania, Where Windows is Now "Minority Market Share" Platform
Time will tell if GNU/Linux can pass 5% on the desktop/laptop "form factor" there
Why It Matters That 4,000 Gemini Capsules Are Known to Lupa and Why Gemini Protocol Matters to Us
I have no doubt Gemini Protocol will continue to expand because it solves a real problem
Links 15/08/2024: Avast Surveillance Scandal Unsolved and Facebook Still Censors Terror Sympathisers
Links for the day
Daniel Cantarín's Response to Alexandre Oliva's Talk on Achieving Software Freedom in the Age of Platform Decay
Soylent News caught up with the series
4,000 Gemini Capsules
it's basically one capsule short of 4,000
"Microsoft is a Sponsor of The New Stack."
Many articles turn out to be just ads
New Highs for Android in Russia, But It's Reportedly Working on Its Own Linux-Based Operating Systems (GAFAM-Free)
statCounter isn't equipped to properly parse user agents or to keep up
Upcoming Series: Terms of Service (TOS) Under the Microscope, FSF Party, GitHub Scandals, Clowns, and More
Right now we have way more material than we have time to cover. But that's a good thing.
Gemini Links 15/08/2024: Lies of Therapy and Web Applications
Links for the day
Software Freedom in Perspective - Part 5 - When Richard Stallman Came to Argentina
It might seem a bit harsh, but a discussion at the end of this series will tie things together and explain why those things were said
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Wednesday, August 14, 2024
IRC logs for Wednesday, August 14, 2024
Russia develops an alternative to Android and iOS | News.az
Russia already has several of its own operating systems
Links 14/08/2024: Ecology and War Inside Russia
Links for the day
Daniel Pocock - Use of Technology in European Parliament Election Campaign (Public Talk)
It starts in 4 hours
Android About to Fly Past Windows in Portugal
Perhaps by month's end or next month Portugal will be orange (Android majority)
How OpenAI Will Decrease the Losses
You have no losses when you have no users left
Giving Control to Microsoft is Always a Dire, Huge Mistake
Microsoft is known for buying things and sabotaging things, not for creating things
Founders That Sell Their Company to Microsoft Speak Out
"Microsoft's closure of Arkane Austin in May was one of the more shocking events of the past couple of years"
In Chile, Microsoft's Web Browser (a Chrome Copycat) Fell to 3.6%, About the Same as Firefox and Opera and Less Than Safari, Yandex Browser, Google Chrome
It does not look like Chileans fancy Microsoft's browser. They go out of their way to use something else, even on Windows.
Software Freedom in Perspective - Part 4 - Daniel on Linux-based Mobile Platforms in LATAM (Latin America)
GNU, Linux, and mobile
Almost Nothing of Invidious Left Online (YouTube is Attacking Gateways)
what it looks like at this very moment
Gemini Links 14/08/2024: Funeral for an E-reader and a Mother Wants a Laptop
Links for the day
Links 14/08/2024: 8 Years of GDPR and Ridicule of "Hey Hi" (AI) Hype
Links for the day
This is How You Give Microsoft More Control Over LibreOffice Both as Software and as a Project
Didn't the Document Foundation learn from prior Microsoft Store scandals connected to LibreOffice?
"Heroes of Fedora" Are Just Salaried Employees of IBM (But "Community" is Just Sounding a Lot Nicer)
A real community would not allow IBM a majority
YouTube Has Thrown Free Software Users Into a Crisis
For many Free software users, who rely on Invidious, YouTube is nearly dead already
[Meme] "New Chapter in the FSF."
We expect to have some coverage from this week's event
There is No I in "GAFAM" and Soon There Won't be I At All (Like Novell Vanished, Not Overnight, as It Took Over a Decade)
Intel is going through the biggest crisis in its entire history
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Tuesday, August 13, 2024
IRC logs for Tuesday, August 13, 2024
It's a "sm0l" World and It Won't Outsource to the Pentagon Anymore
As many people aren't interested in a new PC - or simply cannot afford one - we can expect leaner operating systems to gain further
Software Freedom in Perspective - Part 3 - GNU/Linux in Argentinian Desktops/Laptops
Daniel explains why many years ago many PCs shipped with GNU/Linux and that there was an economic reason for it. At least in Argentina.
Tivoisation and Decommodification in Clown Computing
Some firms or organisations lost sight of what "servers" or "hosting" even mean
The News Vacuum
The problem is worse than just an absence of reporting
x86 Lowered the Standards of Hardware Products
A lot of it is just hacks and cheats that help fake performance