Did Microsoft Alter Windows Sales Figures? 165
Saxophonist writes "InformationWeek claims to have analyzed Microsoft's most recent Form 10-Q and observed that a reported increase in earnings for the Windows unit may be due to accounting trickery rather than actual sales growth. Microsoft apparently increased its reported revenues for its Windows, Server & Tools, and Office units at least partly through shifting revenues from other units. While there may be nothing 'to suggest the company's revisions violate any accounting rules,' the actual growth in Windows sales was likely nowhere near the high double-digit percentage growth claimed. InformationWeek speculates that revenues from Xbox and Surface may have been among the revenues shifted to the other divisions."
Re:Desperate CEO? (Score:4, Interesting)
I just don't think this is new for them, just easier to notice.
LoB
Re:Company released sales figures (Score:5, Interesting)
Except of course that people are using these numbers to do something important.
And this isn't just an idle problem: There have been colleges, pension funds, charitable foundations, and retirees crippled financially for decades because they looked at companies like Enron which were generating good consistent returns and decided that it was a good investment. This stuff does real damage to people, and the SEC simply doesn't have the resources to stop it.
Re:the truth! (Score:5, Interesting)
Interesting quote:
The spokesperson said some of the changes were the result of embedded systems products being moved from EDD to Server & Tools and Mac Office's move from EDD to the Business unit after Bach left.
For many years, Mac Office revenue was counted towards Entertainment and Device Division. I've always thought that was rather strange that it wasn't part of the Microsoft Business Division where it belonged. MS might have organized revenue based on the executive in charge which is normal. But also it could be that MS was trying to soften the massive losses of the Xbox first seven years.
Re:the truth! (Score:5, Interesting)
There isn't anything particularly brain twisting here, and I'm not sure what mistaken impression the revisions discussed in the article are supposed to create (before the revisions, the quarterly net income for the entire company is $5.4 billion on revenues of $16.2 billion, after the revisions it is exactly the same, most businesses would kill to be that profitable, and they would kill their mothers to have the 'billion' in those numbers).
Here's what you are missing: Everyone expects Microsoft to be highly profitable in their core business, and investors are used to the sad fact that Microsoft wastes a billion here and there on things like buying revenue for Ping. So if the losses in the online division grow, or XBox doesn't as well as expected, nobody cares much because the main business is safe as ever. All those losses in online can be stopped any second by just leaving that business area, if Microsoft wants, so it's nothing to worry about.
But if Microsoft makes less money in Windows, Office, or Server, or if it is found out that it props up its main business by moving money from other areas, that is a very, very bad sign and investors would be quite unhappy.
Re:SOP? (Score:5, Interesting)
Your example is actually correct. Microsoft as a monopoly is restricted in what they are allowed to do much more so than a smaller company like Apple. It might not always make sense, but abuse of monopoly power is a very serious offence.
These days it might sound funny to talk about Microsoft as a 900-pound gorilla, but at one time they definitely were.
And then Monkey Boy sells his stock (Score:5, Interesting)
So the company lies/misstates/whatever to make the core businesses look better and prop up the stock.
And the, by some coincidence, monkey boy sells a billion or two of stock.
Move along. Nothing to see here.........
Re:the truth! (Score:3, Interesting)
It is a sad state of investing that investors like companies that are growing or expanding. In decades past, it was enough that a company was profitable and stable. But back then most companies offered dividends with shares. More companies are going away from dividends and thus there is not a lot of interest by investors to be concerned with stability. They want growth.
If MS cut all the unprofitable products, then that would show then as not growing or expanding in anything other than Office and Windows. Even though MS offers dividends, their stock price has been fairly stagnant in the past decade. That would drive more investors away.
Re:the truth! (Score:3, Interesting)
Here's what you are missing: Everyone expects Microsoft to be highly profitable in their core business, and investors are used to the sad fact that Microsoft wastes a billion here and there on things like buying revenue for Ping. So if the losses in the online division grow, or XBox doesn't as well as expected, nobody cares much because the main business is safe as ever. All those losses in online can be stopped any second by just leaving that business area, if Microsoft wants, so it's nothing to worry about. But if Microsoft makes less money in Windows, Office, or Server, or if it is found out that it props up its main business by moving money from other areas, that is a very, very bad sign and investors would be quite unhappy.
Hrm....maybe all those unprofitable divisions aren't so unprofitable after all?
Re:Yes (Score:4, Interesting)
Microsoft wants to make their company seem like it is more profitable so that their share values go up, shareholder confidence returns, and they give the people the impression that they are still on top making the best product. Apple's been killing them in the area of revenue yet Microsoft had been ahead in profit. Now Apple has that crown too--even with obvious overhead of paying for the bill of materials (BOM). Microsoft seems to have problems coming up with new ideas and technology. Everyone knows they are basically stuck with Windows and Office, and that that'll last only so long.
So, people distrust them and they have an issue with demonstrating they are still on top (which they are, just not the very top any longer). So, they cook the books to make it seem like they are doing better than they are with their new product.
Does anyone here have any knowledge of products that Microsoft is developing that will satisfy the masses addiction to technology? Don't say WinMo7 because that's pretty much going to flop in my opinion. Anything else? I don't think they can sustain following up on other's products. They need something new and unique to them. A new radical version of Windows isn't it either. They are basically loosing on the embedded front, they are loosing on the smart phone market, they are loosing the tablet wars (which I don't think they can bring themselves out of).
Re:Company released sales figures (Score:3, Interesting)
Enron is a completely different case. They were actually lying about their financial status. MS did in fact earn as much money as their reports say, and did have as many expenses. They just decided that, for reporting purposes, it looks better if they attribute a greater share of that profit to sales of Windows and Office rather than sales of Xboxes. Nobody is going to suddenly discover that MS is actually bankrupt and has been lying in their statements; at worst they might learn, in surprise, that enterntainment devices have become bigger business that previously expected.