Jack Schofield 

Microsoft has agreed to stop

Microsoft has agreed to stop "cooking the books", following an investigation by America's Securities & Exchange Commission. Or as the story puts it, Microsoft "agreed to stop using an accounting practice that allegedly understated revenues and misled investors". The problem was that it had too much money coming in following the launch of blockbuster products, so it would stash a few hundred millions in its cookie jar as "deferred income", and later smooth out its revenue figures. (Wall Street and investors love firms that show nice financial numbers and make their targets.) Of course, it is not such an unreasonable thing to do if you get money up front (Windows licences) and suffer costs later (support, bug fixes etc).
  
  


Microsoft has agreed to stop "cooking the books", following an investigation by America's Securities & Exchange Commission. Or as the story puts it, Microsoft "agreed to stop using an accounting practice that allegedly understated revenues and misled investors". The problem was that it had too much money coming in following the launch of blockbuster products, so it would stash a few hundred millions in its cookie jar as "deferred income", and later smooth out its revenue figures. (Wall Street and investors love firms that show nice financial numbers and make their targets.) Of course, it is not such an unreasonable thing to do if you get money up front (Windows licences) and suffer costs later (support, bug fixes etc).

 

Leave a Comment

Required fields are marked *

*

*