Financial Pyramid Building Techniques by Microsoft

Following is quoted from the updated 2007 blog of Bill Parish, Owner of Investment Management and Research Services. There is a lot to think about if some of what he has uncovered is true.
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The fundamental problem is that Microsoft is incurring massive losses and only by accounting illusions are they able to show a profit.  Specifically, Microsoft is granting excessive amounts of stock options that are allowing the company to understate its costs. You might ask yourself, what would happen to Microsoft's stock price if the public suddenly realized that they lost $10 billion in 1999 rather than earning the reported $7.8 billion?  If 80 percent of its stock value or roughly $400 billion is the result of a pyramid scheme, one might also ask what kind of effect this could have on the retirement system. It is also important to note that this is a relatively new situation that did not occur before 1995.  Microsoft has always been a highly valued stock and that might have been justified prior to 1995.

This situation is not about stock valuation, product quality or whether or not Microsoft has monopoly power in its markets.  Nor is it part of a pro or anti-Microsoft movement.  This situation is instead a shining example of financial fraud and corruption enabled by bad government policy.  If not quickly and aggressively addressed, we will all be losers as credibility in our financial markets is destroyed.

The Financial Pyramid At Microsoft Is Now Accelerating

One need only examine the State Teachers Retirement System of California to see the impact.  This one system now owns more than 16 million Microsoft shares with a current market value of $1.4 billion due to its commitment of indexing based upon the S&P 500.  If 80 percent of this value is the result of a pyramid scheme, based upon manipulating a breakdown in the accounting rules, that would imply a future loss of $1.1 billion to the teachers of California.  It is unfortunate that teachers will bear this loss when they are already struggling to keep pace with inflation. To confirm this amount one need only contact James Wollman, CEO of the California State Teachers Retirement System.  This is just one public retirement plan in one state.

Microsoft is a Cash Machine but Where Does the Cash Come From?    Source LINK

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