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

08.16.13

Microsoft Sued (Class Action) for “False and Misleading Statements” Regarding “Financial Performance”

Posted in Finance, Fraud, Microsoft at 12:58 am by Dr. Roy Schestowitz

Financial fraud continues, without the ‘Bernard Madoff’ treatment

Bernard Madoff

Summary: The latest crimes of Microsoft lead to a class action lawsuit filed by its own shareholders

Microsoft is no stranger to financial fraud, which goes a long way back at the company. The software monopolist, Microsoft, habitually defrauds investors. I can say that with confidence given my decade or so of research into it. Traditionally, Microsoft has bribed the accusers, but what happens when class action is at stake? Microsoft paid, while entering debt/operating at a loss, millions of dollars to one employee who had blown the whistle on financial misconduct (also see [1, 2]), but can Microsoft afford to bribe millions of people?

The press release about this new class action lawsuit says:

The complaint charges Microsoft and certain of its officers with violations of the Securities Exchange Act of 1934. Microsoft is the world’s largest software company, primarily as a result of its near-monopoly on Windows personal computer (“PC”) operating system software and its Microsoft Office collection of productivity programs.

The complaint alleges that, during the Class Period, defendants issued materially false and misleading statements regarding the Company’s financial performance and its tablet computer, the Surface RT. Specifically, defendants misrepresented and failed to make public the following adverse facts: (i) that the Company’s Surface RT product was experiencing poor customer demand and lackluster sales; (ii) that the Company’s Surface RT inventory experienced a material decline in value during the quarter ended March 31, 2013; (iii) that the Company’s financial statements for the quarter ended March 31, 2013 were materially false and misleading and violated Generally Accepted Accounting Principles and Microsoft’s publicly disclosed policy of accounting for inventories; (iv) that the Company’s Form 10-Q for its third quarter of 2013 failed to disclose then presently known trends, events or uncertainties associated with the Surface RT product that were reasonably likely to have a material effect on Microsoft’s future
operating results; and (v) that based on the foregoing, defendants lacked a reasonable basis for their positive statements about the Company’s Surface RT product during the Class Period.

“It’s a pretty clear case about lying,” iophk says. “It’s there in black and white and registered with official sources. Not much chance for a normal company. However, there are people that help Microsoft avoid the regular rules of business.”

We have covered some examples of that before. iophk continues: “Will they still make a special exception for Microsoft even in the case of defrauding investors and the government?

“Wasn’t there a good quote from an authority that criticised Gates for equating being forced to follow the rules with an attempt to destroy Microsoft?”

‘A government official involved in the case said: “The government is not trying to destroy Microsoft, it’s simply seeking to compel Microsoft to obey the law. It’s quite revealing that Mr. Gates equates the two.”‘ (source)

Here is some further commentary on this news:

No, they’re not being cooked, just sued for misrepresenting their financial situation in public statements upon which some investors base their decisions.

Pro-Microsoft sites like Neowin covered this with apparent concern:

The exact sales of Microsoft’s Surface RT tablets are the subject of a newly filed class action lawsuit against the company. The lawsuit alleges that Microsoft has issued “false and misleading statements” concerning the sales of its first PC hardware product, which Microsoft launched in October 2012.

The law firm of Robbins Geller Rudman & Dowd filed the suit on behalf of the plaintiff, Gail Fialkov, and Microsoft is named as a defendant in the case. In addition, the lawsuit names CEO Steve Ballmer as a defendant along with former CFO Peter Klein; Corporate Vice President Frank Brod; and Tami Reller, who served as the head of business and marketing for the Windows division until the company’s recent restructuring, when she was then named as head of all marketing.

The lawsuit claims that Microsoft failed to state how bad sales of the Surface RT have been and that the company’s inventory of the tablet “experienced a material decline in value during the quarter ended March 31, 2013.” The lawsuit also alleges that Microsoft’s financial statements for that same quarter were “materially false and misleading” and violated both general accounting practices along with Microsoft’s own “policy of accounting for inventories.” The law firm is seeking an unspecified amount of damages from Microsoft.

“Pogson covered it yesterday,” wrote iopkh, “Microsoft got caught lying to the SEC. PCWorld [part of IDG] is trying to cover for them now.” Here comes IDG with Microsoft-leaning promotional language that belittles the case:

Microsoft couldn’t be reached for comment at press time.

The promotional language is not hard to see. Apparently crime is not taken seriously anymore, especially when rich people commit the crime (unless they’re lone wolves like Bernard Madoff and not Goldman Sachs, hence easier to prosecute and use as a whipping boy to appease the public).

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

What Else is New


  1. Links 18/9/2014: Windows Copying GNU/Linux, Germany Moves to Security

    Links for the day



  2. Web Site 'Patent Progress' Now Officially 'Powered by CCIA' (FRAND Proponent, Microsoft Front)

    After talking a job at CCIA, "Patent Progress" and its chief author should be treated as dubious on real patent progress



  3. Articles About the Death of Software Patents in the United States

    Recent coverage of software patents and their demise in their country of origin, where even proponents of software patents are giving up



  4. The Death of Software Patents is Already Killing Some Major Patent Trolls

    VirnetX seems to be the latest victim of the demise of software patents in the United States



  5. More Microsoft Layoffs

    More Microsoft layoffs go ahead as the company is unable to compete



  6. ODF on the Rise

    Milestones for OpenDocument Format (ODF) and the launch of FixMyDocuments



  7. Links 17/9/2014: CoreOS, ChromeOS, and systemd

    Links for the day



  8. Italy is Cracking Down on Microsoft's Monopoly Abuse While Gradually Moving to GNU/Linux

    Italy is not only moving to Free/Open Source software but also to GNU/Linux while at the same time barring Microsoft from forcibly tying Windows to new PCs



  9. OpenSUSE's 'Assurances' Are Classic MBA School Hogwash

    OpenSUSE is not part of any commitment, except for SUSE's; the impact of the Novell/SUSE acquisition casts uncertainty on the project's future



  10. Links 16/9/2014: Firefox OS Smartphones in Bangladesh, “Treasure Map” of the Internet

    Links for the day



  11. The United Kingdom Should Dump Microsoft For the Sake of National Security

    The UK has issues of Microsoft dependency and Windows viruses; its migration to Free software and GNU/Linux is not fast enough to guard its autonomy in the age of digital imperialism



  12. CBS Hires Even More Microsoft Staff to Cover Microsoft Matters

    CBS continues to be infested with Microsoft staff past and present (this time Dave Johnson) and the bias in output is quite revealing



  13. Microsoft Has Just Killed Minecraft for GNU/Linux and the Possibility of Free/Open Source Releases

    Persson sells out to Microsoft and lets the abusive monopolist destroy the popular cross-platform game that a community has been built around



  14. Another Reason to Boycott Intel UEFI

    More anti-competitive aspects are revealed inside UEFI, which helps merginalise GNU/Linux



  15. Quick Mention: Novell and SUSE Passed to Microsoft's 'Partner of the Year', Microsoft Focus

    Novell is changing hands again, and falling into the hands of even more Microsoft-friendly actors



  16. Links 16/9/2014: Linux 3.17 RC5, KDE Frameworks 5.2.0

    Links for the day



  17. Željko Topić, Benoît Battistelli, and the European Patent Office (EPO): Part II

    Part II of our look into the EPO appointment of Željko Topić and other matters showing the dubious integrity of the EPO



  18. Links 14/9/2014: Android-based Watches Earn Optimism

    Links for the day



  19. Links 14/9/2014: Eucalyptus Devoured

    Links for the day



  20. Links 11/9/2014: Linux Toilet Project, Linux-Based Wheelchair Project

    Links for the day



  21. Links 10/9/2014: Brian Stevens in Google, Ubuntu 14.10 Expectations

    Links for the day



  22. Links 9/9/2014: Hating/Loving Linux, Android Aplenty

    Links for the day



  23. Links 8/9/2014: Linux 3.17 RC 4, Switzerland Welcoming Snowden

    Links for the day



  24. Suspicion of High-Level Corruption at the European Patent Office (EPO): Part I

    The European Patent Office (EPO) Vice-President has a background of corruption and his appointment to the EPO too is believed to be reliant on systemic corruption



  25. Links 6/9/2014: Core OS at DigitalOcean, Women in Xorg

    Links for the day



  26. Software Patents 'Quality' Debated in Courts, Microsoft's Biggest Patent Troll Still a Chronic Liar

    Intellectual Ventures, Microsoft's and Bill Gates' largest patent proxy, continues to spread lies about its motivations, claiming that patent assessment is among the goals when in fact only the courts and patent offices do this



  27. New Article Explains How Bill Gates Prevents Schools From Moving to GNU/Linux and Free Software

    A new article from Al Jazeera provides details about the role of so-called 'charities' of billionaires inside school systems



  28. Microsoft Sued for Large-scale Copyright Abuses

    Microsoft reveals its disregard for copyright law which it loves so much to wield as a weapon against its competition and clients



  29. Links 5/9/2014: New WordPress, Systemd Debate Continues

    Links for the day



  30. 'Embrace and Extend' at Microsoft: The New Generation

    Some of the latest examples of Microsoft's predatory acts against Free software and against competition in general, disguised as acts of friendliness


CoPilotCo

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

CoPilotCo

Recent Posts