Microsoft's debt exceeds even Madoff's
OUR WIKI now contains this page about Microsoft's financial situation. It is not what many people imagine it to be and last year we pointed out that Microsoft has debt. Yes, it's true. We just couldn't quite tell at the time how big the debt was, but now we have a clue. Here is some background reading:
Tech companies, which generally throw off tons of cash, added a healthy sum of debt to their balance sheets last year, the Wall Street Journal notes.
“While Google and Apple have no debt, Microsoft has a huge debt approaching a tenth of a trillion dollars.”Microsoft's debt is not so unusual, but it is far greater than the rest. Novell's own debt is an issue we explored last year.
Many of Microsoft's business units make no money. They just lose a lot of money, but people continue to think about Windows and Office, which are the exception, not the norm. These are cash cows whose revenue is actually declining (Office revenue is still going down). We mentioned this some days ago when we cited Joseph Tartakoff, but as Tartakoff later points out (regarding the same article of his that he tweeted about 4 times): "Microsoft's online losses up to a staggering $713 million, from $411 million a year ago" (this is not surprising at all).
That's the loss in just one quarter and one business unit! It used to be over $2 billion in losses per year, now it's around $3 billion in losses per year, assuming this new pace of losses carries on.
More information about Microsoft's real financial performance is coming soon. We are going through reports and interpreting them. It doesn't look too good.
Microsoft keeps taking on debt, whereas some of its biggest competitors remain debt free. Terry Porter writes: "It's interesting that Google and Apple both deploy Unix and are debt€ free, so perhaps using Unix must be good for business?" ⬆
"Microsoft, the world’s most valuable company, declared a profit of $4.5 billion in 1998; when the cost of options awarded that year, plus the change in the value of outstanding options, is deducted, the firm made a loss of $18 billion, according to Smithers."
--The Economist, 1999
Comments
Tom Womack
2010-04-25 12:47:39
Which isn't unreasonable since they have $36 billion in investments, including $13 billion in Treasury bonds.
your_friend
2010-04-27 22:55:40
Non free softare has never been a sustainable business model. This is why Microsoft has invaded media and the web. It's not working out for them for the same reasons their software business is not. Everything Microsoft buys, it wrecks trying to feed Windows. Customers don't like it and Windows itself is a basket case. The apparent success of Windows and Microsoft in the 90s is really the story of many other non free software company failures.
uberVU - social comments
2010-04-25 12:33:27
This post was mentioned on Identica by schestowitz: #Microsoft Debt Almost Doubles to About $80 Billion in Just a Few Years http://ur1.ca/wzal #fraud #deficit #sec...