M$ In Deep Hot Water

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

see Robbins Geller Rudman & Dowd LLP Files Class Action Suit against Microsoft Corporation.

I’d say that’s a winning case because M$ was going on about how wonderful RT was doing just days before the latest information, complete with $900million write-down.

10-Q 2013-04-18:“Windows Division revenue increased, due mainly to the recognition of $1.1 billion of revenue related to the Windows Upgrade Offer. Revenue from Surface and increased commercial sales of Windows was offset by the impact on revenue of a decline in the x86 PC market. OEM revenue grew 17%, reflecting the revenue related to the Windows Upgrade Offer, offset in part by the impact on revenue of a decline in the x86 PC market.
Windows Division operating income increased, primarily due to revenue growth, offset in part by higher cost of revenue and sales and marketing expenses. Cost of revenue increased $306 million or 65%, reflecting product costs associated with Surface and Windows 8. Sales and marketing expenses increased $291 million or 43%, reflecting advertising costs associated with Windows 8 and Surface.”

Yes, that rosy picture became a $900 million write-down…

Thanks to a loyal reader for this link.

see also the complaint in Gail Fialkov and others v M$, Steve Ballmer, Peter Klein, Frank Brod and Tami Reller
“9. Unbeknownst to investors, by the end of its March 31, 2013 quarter, Microsoft had amassed a large excess of Surface RT inventory. In violation of the Company’s publicly disclosed inventory accounting policy, generally accepted accounting principles (“GAAP”) and SEC rules and regulations, Defendants caused Microsoft to issue materially false and misleading financial statements and financial disclosures for the quarter ended March 31, 2013. These false and misleading statements materially misrepresented the true financial effect that Surface RT was then having on the Company’s operations.”

Oh, my! How will M$ make right a $34billion in stockholders’ equity? That’s a good chunk of their piggy-bank.

About Robert Pogson

I am a retired teacher in Canada. I taught in the subject areas where I have worked for almost forty years: maths, physics, chemistry and computers. I love hunting, fishing, picking berries and mushrooms, too.
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5 Responses to M$ In Deep Hot Water

  1. oiaohm says:

    dougman yep that prior is why I don’t trust Microsoft books today. In fact what they were doing recently is identical to what they got pulled before the SEC before. Yes include the 12 month delay before the SEC started beating into them.

  2. oiaohm says:

    By the way the term Sheep I use is a acronym.
    System for Human-less Electronic Equity Purchasing = Sheep.

    Now the Sheepherder of these electronic sheep only really check on their sheep every 12 months in the 4Q when they have todo up their financial reports.

    Yes company gets away with cooking a books for 12 months but then they have to pay the piper. They need the 4Q to be good enough that the Sheepherder of the Electronic sheep don’t care.

    This is the problem I told you did I bw you would be eating your words on this topic in the 4Q and you were like what difference is that going to make. Sheep is part of the share-market it is important that sheep are happy yes but is vastly more important that the sheepherder is not upset they have legal teams that will sue you without mercy and the money to hostile take over your company and write it off as a laugh when they sell off all assets and fire all staff. Why this makes sure your company cannot disrupt their profit making sheep again.

    Robbins Geller Rudman & Dowd LLP is one of the largest automated traders. Please note only 1. Yes to Robbins Geller Rudman & Dowd LLP Microsoft total value is pocket change.

  3. dougman says:

    Give it time, M$ will attempt to patent class-action lawsuits.

    This also reminded of when M$ put Windows 8 out, they edited the end user license agreement (EULA) so that users that agreed to the software license, cannot file suit. Sucks to be you!

    M$ can effectively ship its latest operating system with some major flaws that potentially leave you and your data open to attack, but because you agreed to the EULA, you and the inevitable millions of other Windows 8 users can never band together and sue the company.

    “Under the new terms, users will be able to request arbitration or sue Microsoft only in small claims court cases – both of those options prevent large numbers of users from joining a single case against the company and suing on their own behalf as well as on the behalf of other users of the same product or service. It’s likely, although not confirmed, that customers seeking arbitration and settlement will end up with a nondisclosure clause in their settlement that prevents them from discussing the original issue or the outcome of the case.

    Essentially, the move prevents Microsoft from taking a serious hit to its pocketbook or reputation.

    The U.S. Supreme Court ruled that companies can enshrine such restrictions in their EULAs and other agreements.”



  4. oiaohm says:

    Now that a class action has appeared I wonder if bw will say sorry for accusing me of not knowing how to read Microsoft Investor reports when I was stating exactly the same thing as this class action is over. Yes bw does not get it he called me a idiot first.

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