Microsoft shuffles revenue to inflate Windows sales?

By on November 15, 2010, 7:16 PM
Microsoft surprised many people when it posted record earnings for its fiscal 2011 first quarter. The quarter showed 66% increase in Windows sales year-over-year, but Information Week says that number isn't everything it's chalked up to be. After digging through the company's SEC filing, the site found that Redmond has shifted cash between its business divisions and the Windows group got an artificial boost in the process.

It's reported that Microsoft moved around $259 million to the Windows group, bumping the total revenue by 6.5% to $4.24 billion. With that unexplained maneuver stacked on top of the company's $1.5 billion deferral for a Vista to Windows 7 upgrade promotion, Windows sales actually increased 11% on-year instead of the touted 66%.

Microsoft declined to comment on how the company's Windows division gained the extra $259 million. As Information Week notes, 11% isn't bad, but it's on par with expectations for overall PC market growth. Also, for what it's worth, Net Applications' numbers suggest that Windows has lost over 1% of the OS market since last December.




User Comments: 9

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KG363 KG363 said:

This is sad news to me

mario mario, Ex-TS Developer, said:

Now imagine it said Apple instead of Microsoft.

Start the flame war!

UT66 said:

Microsoft. 100 thousand divisions building one big mess. but they do like to add.

fwilliams said:

good thing cooking the books is legal

or else Microsoft might have to bribe some more people

Guest said:

Now I know why I didnt buy the stock.

gwailo247, TechSpot Chancellor, said:

Keeping a market share of 90%+ is pretty impressive no matter how long you do it. Its just inevitable that their market share has to drop.

Since OS appears to be the new Ford vs Chevy debate, you're going to polarize people.

Archean Archean, TechSpot Paladin, said:

Good to see that accounting processes / practices of big companies in IT are coming into light as well. I think to clear the air, MS should explain what compelled them to do it, there is nor harm in such clarity IMO, it should only add to trust/goodwill which in the end is the most important assets of any business. Anyone is more likely to survive financial crisis, but not trust deficit.

ucould2 ucould2 said:

I noticed just a day or two ago when I evoked interest in buying a Garmin A10 Nuvifone. When they arrived on the scene at the beginning of the year (February) they were offered with Windows 6.5 UI. Now both versions (A10 and A50) of the Garmin Asus phone come with Andriod 1.6 Donut. And the only place you see the Windows 6.5 is on cheap Chinese nock-offs. 259 million is a lot of phones to sell on deferral, even to the whole population of China

nazartp said:

Archean said:

Good to see that accounting processes / practices of big companies in IT are coming into light as well. I think to clear the air, MS should explain what compelled them to do it, there is nor harm in such clarity IMO, it should only add to trust/goodwill which in the end is the most important assets of any business. Anyone is more likely to survive financial crisis, but not trust deficit.

I, actually, spent some time looking at the quarterly report - nothing shady there. Deferral of revenues and internal shake-ups are nothing new in the business world. In fact the deferral of revenues is a requirement on revenue recognition. And the way the revenue is recognized is, at least partially, driven by who within the company oversees what revenue streams - their bonuses are tied to those numbers.

One thing people should look at - overall company revenues grew about 25% year-on year. Given how shitty the economy is, that's remarkable.

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