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Class-action Suit Filed Against Microsoft Over Surface Write Off
New submitter used2win32 writes with news that at least one investor is unhappy with the Surface inventory write off, claiming that Microsoft mislead investors who purchased stock during Q2 and Q3 by not announcing just how slow inventory was moving at the time "The class action lawsuit claims false and misleading information regarding sales performance of Windows RT based tablets. Microsoft has earned a U.S. $900 million write off and a market share of less that 1% to show for its Windows RT endeavors. Asus, Lenovo, HP, Samsung and HTC discontinued their models leaving Dell as the only OEM producing a Windows RT tablet."
It is unquestionable that Microsoft's compromise by the US government has threatened Microsoft's position in the global marketplace. There may not be an obvious reflection of this damage right now, but things are in motion even now to move away from Microsoft products all over the world. In the past, when governments and business sought to move away from Microsoft, they were drawn back in with special pricing or other deals. And specifically, when the initiatives to move away were pushed by specific individuals, those individuals found themselves attacked and discredited in some way. And when the initiatives were a matter of policy or law, such as a requirement to favor ISO standards compliance products, the Microsoft had set about changing law, policy or forcing through new ISO standards which aren't even being complied with.
None of these tactics are expected to work against the current cause for Microsoft mistrust.
A near $1 billion write off. That would put most companies out of business, and even Microsoft can't keep taking losses like that.
Windows 8 is under-performing, people are pulling out of making Windows Phones, the XBone is facing a lot of backlash, their own tablet is becoming a huge flop, and the hardware makers are deciding they want to focus on other things.
Increasingly it's looking like Microsoft is asleep at the switch and just assuming they'll keep selling as much as they always have.
Either they need to start fixing some fundamentals, or Microsoft is going to face some serious long-term problems.
Lost at C:>. Found at C.
Is there no value in making illegally lying to investors and potential investors a riskier and potentially more costly activity?
Obviously, in an ideal world, the penalties exacted from Microsoft would fully compensate the wronged parties, even after the potential hit is taken into account; but even if that isn't possible, never enforcing anything that might cause stock prices to fall means never enforcing anything. It's the publicly-traded equivalent of 'we can't punish anyone because it might make their family sad!'
The summary says that is not what the lawsuit is about. Surface was clearly not doing well in the first two quarters of its release (Q2, Q3) but MS didn't disclose this until Q4 when they took a $900M writeoff. I'm not sure what the rules are on reporting but I'm guessing the losses were just too large not to report. The lawsuit claims investors who bought stock in Q2 and Q3 were misled by this lack of information. MS does put into their financial statements a disclaimer about how poor sales may affect their overall revenue: "significant investments in new products and services that may not be profitable;" The litigants felt that was not enough. I don't think they have much of a case.
Well, there's spam egg sausage and spam, that's not got much spam in it.
The complaint alleges that Microsoft's first quarter 2013 financial reports were false and misleading. Much of $900 million write down they acknowledged
in the second quarter should have been included in the first quarter statements, they say. If it's true that Microsoft executives knew about the problem and
concealed it in from the investors / potential investors (the owners of the company), that's unlawful, as it should be. That's a fraud on people trying to save
for retirement.
The lawyers will take half the money, so people who were victims of the fraud won't recoup their loss, but punishing fraudulent behavior may tend to
discourage Microsoft and other companies from perpetrating similar lies in the future.
Of course it'll be up to the judge or jury to decide if Microsoft actually did know about the problem by the end of March, in such a way that concealing it
in the first quarter reports mislead investors.
Legally, Microsoft has to tell everybody about a write down at the same time. They certainly aren't going to discuss a price drop with investors while still selling them at stores... That would be stupid. They aren't going to publish news of poor sales 2 quarters early while paying for a media blitz either.. The Internet laughs at that stuff.
What Microsoft did was correct. Hang on as long as possible and drop the price when they are forced to cut their losing streak off.