Comments on: Comments on 7130

Post number 7130

ParisParamus — Thu, 19 Apr 2001 19:18:25 -0800

Could Microsoft Really Be Doing This Well? Microsoft's earnings up 14%? I find this rather suspect. Any thoughts (standard NYTimes Link caveats...)?

By: ParisParamus

ParisParamus — Thu, 19 Apr 2001 19:20:18 -0800

Specifically, the economy hasn't done very well recently; PCs aren't selling; what's going on here?

By: owillis

owillis — Thu, 19 Apr 2001 19:22:14 -0800

As the article said, their ramping up in the Enterprise arena - and I bet their web properties are doing better. Why so suspicious?

By: Zool

Zool — Thu, 19 Apr 2001 19:36:26 -0800

Why so suspicious? Because Microsoft is the devil's work :)

By: Kevs

Kevs — Thu, 19 Apr 2001 20:16:30 -0800

Microsoft also has a history of reporting "bad news" to investors and then "surprising" everyone when they blow their expected earnings out of the water. More importantly, though, they have the smartest people in the world and no debt, which usually is good for profits =). Peace, Kevs

By: ParisParamus

ParisParamus — Thu, 19 Apr 2001 20:18:41 -0800

Why so suspicious? Because 14% is a lot, and it doesn't feel right.

By: ParisParamus

ParisParamus — Thu, 19 Apr 2001 20:23:26 -0800

I hope those are not the smartest people in the world: that would be even scarier than MS already is.

By: adamsc

adamsc — Thu, 19 Apr 2001 21:01:42 -0800

I doubt it's really true. Microsoft has a long history of creative accounting to impress Wall Street and reduce taxes. Remember last year? When they didn't pay a dime in taxes because they were able to report a net loss to the IRS? Nobody was selling their stock short because of it... They've also used this to hide profits from more questionable business activities - one quarter they reported a large profit jump, attributed to the cost savings from replacing floppy disks with CD-ROMs. "No, we're not a monopoly. Floppy disks are just really expensive!"

By: nicwolff

nicwolff — Thu, 19 Apr 2001 21:04:15 -0800

Standard NY Times no-registration backdoor link here.

By: Steven Den Beste

Steven Den Beste — Thu, 19 Apr 2001 22:01:05 -0800

There's a lot of overblown rhetoric about the PC market which has lead here, I think, to a mistaken impression. PC sales are not down. PC sales now are higher than they've ever been. But the growth this year was lower than in recent years, and the press has been referring to this as a "slowdown", which isn't quite accurate. ("Less acceleration" is more accurate.) PC sales are up, which is why Microsoft sales are up. There isn't anything suspicious about this.

By: ParisParamus

ParisParamus — Thu, 19 Apr 2001 22:07:45 -0800

OK OK OK.

By: ktheory

ktheory — Thu, 19 Apr 2001 23:13:07 -0800

With my commanding ownership of .0000007% of the company, this is great news. MSFT is up 2.6 points. No worries here.

By: cCranium

cCranium — Fri, 20 Apr 2001 06:37:55 -0800

Also, Paris, despite the ease with which most of us dismiss Microsoft, they do have a whole lot of insanely smart people working for them. They don't own the market, certainly, but it's been their practice since they incorporated to hire the smartest people they're able to, and reward those smart people abundantly.

By: goto11

goto11 — Fri, 20 Apr 2001 06:49:06 -0800

As an accountant, I can tell you there are a million techniques Microsoft could use to pump up their net profits, especially if their goal was to create a large gain for only a quarter or two. Long-term changes are harder to pull off. But with the amount of cash they have to work with, I would say they could make their financials look any way they want, regardless of reality. Microsoft is also quite skilled in keeping expectations low so the predictions aren't hard to beat. It surprises me a little that the shareholders and forecasters don't see this year after year and set their own expectations somewhat above Microsoft's predictions. Regardless, they continue to work the system about as efficiently as anyone.

By: Steven Den Beste

Steven Den Beste — Fri, 20 Apr 2001 08:52:43 -0800

PC unit sales up 3.5% over 1 year ago. Nearly all of those ship with a Microsoft OS (not to mention many shipping with Office).

By: snarkout

snarkout — Fri, 20 Apr 2001 09:24:08 -0800

On the other hand, as the Wall Street Journal reports, U.S. sales of PCs contracted for the first time since 1994. A mixed bag (and Microsoft trimmed it's forecast of worldwide PC sales growth from 10% to 7% for the whole year).

By: ParisParamus

ParisParamus — Fri, 20 Apr 2001 10:32:47 -0800

The reason this sounds fishy is that the replacement/upgrade of computers and software is close to the last thing a company needs to invest in when the economy goes soft--especially the type of software our friend Bill makes ("do I really need the latest upgrade?" "A somewhat faster PC?"). So either the economy sucks or it doesn't. Or is the "economic downturn" just the people in office and their surrogates attempting to dis the Clinton legacy some more? Fishy Fishy Fishy!

By: daveadams

daveadams — Fri, 20 Apr 2001 10:44:58 -0800

14% is a lot For Microsoft, 14% is not a lot.

By: ParisParamus

ParisParamus — Fri, 20 Apr 2001 10:59:02 -0800

daveadams, 14% is 14% of whatever MS previously was. It's a lot, and fishy.

By: holgate

holgate — Fri, 20 Apr 2001 12:39:31 -0800

Net income on a yearly basis are basically flat, according to the official figures. They've taken a big loss on equity investees, which is understandable, and there's also a mysterious $375m charge accounted to the "Cumulative effect of accounting change". Anyone with a professional insight on this "change"?

By: dhartung

dhartung — Fri, 20 Apr 2001 15:56:32 -0800

Seems that much of the revenue growth came from finally getting Windows 2000 Datacenter Server to market; it's a big-ticket item, and they're taking business from Oracle and Sun, both of whom are hurting. Why are these upgrades happening in a weakening economy? Partly because companies held off on a lot of projects while they battened down the hatches for Y2K. A lot of pent-up demand was released last year, and some of those projects are multi-month upgrades that may take some time yet to wind down. So there's some substance to this. I wouldn't be surprised, though, if M$ were using the moment to disguise something else.

By: ParisParamus

ParisParamus — Fri, 20 Apr 2001 17:32:28 -0800

Why are these upgrades happening in a weakening economy? Partly because companies held off on a lot of projects while they battened down the hatches for Y2K. I'm sorry, but this, too, makes no sense to me. I would think Y2K would have accellerated spending in 1999, and that the act of upgrading for Y2K would have dovetailed with normal purchases to the point that spending for several years post-Y2K would be depressed:"We don't really need Windows 2000 [or whatever they called it], Windows 95 might not work after Y2K, so lets buy this in 1999, instead of 2001". I was thinking of a conspiracy with the White House: make the economy look better than it is (or undo my talking down of the economy) and we'll drop the Antitrust thing...

By: owillis

owillis — Fri, 20 Apr 2001 17:36:15 -0800

Companies put all their money into "fixing" Y2K, then held on to it during the market tank. There are conspiracies out there, but there ain't one here.

By: holgate

holgate — Fri, 20 Apr 2001 17:53:12 -0800

Yep, the post-Y2K thing in the corporate sector has been described as a "nuclear winter". MS has the advantage of its tremendous hold on the OEM market (rabid anti-MSers would call it the "Microsoft tax", but it's a testament to their success.) which sustains them in the consumer sector. (Interestingly, Apple seems to be doing well, too.) The real meltdown's at the semiconductor/appliance end, though. Ericsson announced a 90% drop in pre-tax earnings today, with 12,000 layoffs.