[Am-info] Microsoft Settles With SEC

[Fred A. Miller]

Microsoft Settles With SEC

Maybe Microsoft was hoping the idea would catch on with consumers
and businesses. Among the findings of a Securities and Exchange
Commission probe into the software maker's books, a settlement of
which was revealed Monday, is the fact that the company on paper
reduced the useful lives of the computers it owns from three
years to one year to accelerate depreciation. If PC buyers
thought that way, sales of Windows could skyrocket. Most computer
vendors work on the assumption that three to four years
represents a natural upgrade cycle.

The investigation covered Microsoft's fiscal years from 1995 to
1998. Among other charges levied by the SEC was that the company
maintained between $200 million and $900 million in cash reserves
that it didn't report on financial statements as required by
generally accepted accounting principles. Jonathan Geurkink, a
Wells Fargo Securities analyst, believes the company may have
been looking to create a hedge to use in down quarters. "Wall
Street likes to see nice, even revenue streams," Geurkink says.
"It's ironic--most investigations these days focus on companies
overstating their revenues," he says. The SEC says Microsoft did
overstate income on some occasions.

The agreement simply calls for Microsoft to adhere to GAAP in
future income statements. A Microsoft spokeswoman declined to
elaborate on the case or say whether the company plans to
implement new financial-control mechanisms. In a statement,
Microsoft said it's "pleased to have resolved these matters with
the SEC." The company also said the agreement does not require it
to restate financial results for the years covered by the
investigation. - Paul McDougall

For more on Microsoft, read:
Microsoft To Buy Danish Software Company
http://update.informationweek.com/cgi-bin4/flo?y=eHZh0Bce7K0V20BcXt0As

Microsoft's 3Q Earnings Fall Short Of Estimates
http://update.informationweek.com/cgi-bin4/flo?y=eHZh0Bce7K0V20BbV70Ao

-- 
Fred A. Miller
Systems Administrator
Cornell Univ. Press Services
fm@cupserv.org, www.cupserv.org
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