Velocity Reviews - Computer Hardware Reviews

Velocity Reviews > Newsgroups > Computing > NZ Computing > Microsoft Shareholders Paid for Record Earnings in Q1 2007

Reply
Thread Tools

Microsoft Shareholders Paid for Record Earnings in Q1 2007

 
 
Dianthus Mimulus
Guest
Posts: n/a
 
      05-05-2007
Microsoft Shareholders Paid for Record Earnings in Q1 2007

http://biz.yahoo.com/seekingalpha/07...4_id.html?.v=1

"" Microsoft's own numbers tell us the way it is making more and more each
quarter is partly funded by making each share worth less and less in
assets. At the very least, this fact that Microsoft is dipping into its
assets to pay for its record earnings makes me question just how
successful those Vista and Office launches really were. ""


--
Dianthus Mimulus

"You'll have to excuse me — I have a long
bath and a short dress to get into."
 
Reply With Quote
 
 
 
 
Jack
Guest
Posts: n/a
 
      05-06-2007
"Dianthus Mimulus" <(E-Mail Removed)> wrote in message
news:(E-Mail Removed)...
> Microsoft Shareholders Paid for Record Earnings in Q1 2007
>
> http://biz.yahoo.com/seekingalpha/07...4_id.html?.v=1
>
> "" Microsoft's own numbers tell us the way it is making more and more each
> quarter is partly funded by making each share worth less and less in
> assets. At the very least, this fact that Microsoft is dipping into its
> assets to pay for its record earnings makes me question just how
> successful those Vista and Office launches really were. ""


The article also says that:

"Now, this topic actually did come up during the earnings call. Microsoft
reported that it had redeemed about $1.7 billion in unearned revenue from
its Technology Guarantee program during this quarter as the result of the
Vista and Office launches. Microsoft had deferred that revenue collected
from computers shipped in calendar Q4 2006 with Windows XP that would later
have to be upgraded to Vista for free."

Can anyone tell me what's wrong with this accounting policy?


 
Reply With Quote
 
 
 
 
Dianthus Mimulus
Guest
Posts: n/a
 
      05-06-2007
On Sun, 06 May 2007 21:11:18 +1200, Jack wrote:

> Can anyone tell me what's wrong with this accounting policy?


Deferring revenue instead of accounting for revenue when it was
actually received?


--
Dianthus Mimulus

"You'll have to excuse me — I have a long
bath and a short dress to get into."
 
Reply With Quote
 
Jack
Guest
Posts: n/a
 
      05-06-2007

"Dianthus Mimulus" <(E-Mail Removed)> wrote in message
news:(E-Mail Removed)...
> On Sun, 06 May 2007 21:11:18 +1200, Jack wrote:
>
>> Can anyone tell me what's wrong with this accounting policy?

>
> Deferring revenue instead of accounting for revenue when it was
> actually received?


Yes, in the Microsoft example quoted, why should the income be recognised in
the income statement before the Vista upgrades had actually been shipped?


 
Reply With Quote
 
Dianthus Mimulus
Guest
Posts: n/a
 
      05-06-2007
On Sun, 06 May 2007 22:54:08 +1200, Jack wrote:

>> Deferring revenue instead of accounting for revenue when it was actually
>> received?

>
> Yes, in the Microsoft example quoted, why should the income be recognised
> in the income statement before the Vista upgrades had actually been
> shipped?


Because XP was what had been sold, with a FREE upgrade to Vi$ta once it
had shipped.


--
Dianthus Mimulus

"You'll have to excuse me — I have a long
bath and a short dress to get into."
 
Reply With Quote
 
Jack
Guest
Posts: n/a
 
      05-06-2007

"Dianthus Mimulus" <(E-Mail Removed)> wrote in message
news:(E-Mail Removed)...
> On Sun, 06 May 2007 22:54:08 +1200, Jack wrote:
>
>>> Deferring revenue instead of accounting for revenue when it was actually
>>> received?

>>
>> Yes, in the Microsoft example quoted, why should the income be recognised
>> in the income statement before the Vista upgrades had actually been
>> shipped?

>
> Because XP was what had been sold, with a FREE upgrade to Vi$ta once it
> had shipped.


I have several friends who bought new computers with Windows XP on them late
last year, who would have waited until Windows Vista was released if the
free upgrade to Vista hadn't been part of the deal. In other words, in their
minds, they were really buying computers with Vista on them, because this
was how it was advertised. So from Microsoft's point of view, they were also
selling these people Vista, they didn't want XP. Therefore, from Microsoft's
viewpoint, the revenue wasn't actually earned until Vista had been shipped
to these people.


 
Reply With Quote
 
El Chippy
Guest
Posts: n/a
 
      05-07-2007
On Mon, 07 May 2007 18:12:25 +1200, Dianthus Mimulus wrote:

>
> Sorry, mate.
>
> Revenue is earned when the money changes hands.
>
>


Bzzzt. Wrong answer, -10 points to you. A voucher is a promisary note.
Until that "promise" is fulfilled it is a liability.

from http://www.pwc.com/gx/eng/about/svcs...tion120_29.pdf
(PriceWaterhouseCoopers)

Revenue from the sale of goods should be recognised when all the following
conditions have been satisfied [IAS18.14]:
a) the risks and rewards of ownership of the goods are transferred from the
seller to the buyer;
b) the entity retains no managerial involvement or control over the goods;
c) the entity can measure the revenue reliably;
d) probable economic future benefits will flow to the entity; and
e) the entity can measure the costs incurred in respect of the transaction
reliably.
 
Reply With Quote
 
Dianthus Mimulus
Guest
Posts: n/a
 
      05-07-2007
On Mon, 07 May 2007 09:32:07 +1200, Jack wrote:

> I have several friends who bought new computers with Windows XP on them
> late last year, who would have waited until Windows Vista was released if
> the free upgrade to Vista hadn't been part of the deal. In other words, in
> their minds, they were really buying computers with Vista on them, because
> this was how it was advertised. So from Microsoft's point of view, they
> were also selling these people Vista, they didn't want XP. Therefore, from
> Microsoft's viewpoint, the revenue wasn't actually earned until Vista had
> been shipped to these people.


Sorry, mate.

Revenue is earned when the money changes hands.


--
Dianthus Mimulus

"You'll have to excuse me — I have a long
bath and a short dress to get into."
 
Reply With Quote
 
sam
Guest
Posts: n/a
 
      05-07-2007
Dianthus Mimulus wrote:
> On Mon, 07 May 2007 09:32:07 +1200, Jack wrote:
>
>> I have several friends who bought new computers with Windows XP on them
>> late last year, who would have waited until Windows Vista was released if
>> the free upgrade to Vista hadn't been part of the deal. In other words, in
>> their minds, they were really buying computers with Vista on them, because
>> this was how it was advertised. So from Microsoft's point of view, they
>> were also selling these people Vista, they didn't want XP. Therefore, from
>> Microsoft's viewpoint, the revenue wasn't actually earned until Vista had
>> been shipped to these people.

>
> Sorry, mate.
>
> Revenue is earned when the money changes hands.
>
>

Nuh uh
If you buy a ticket to a show, the revenue isn't earned until after the
fat lady sings
 
Reply With Quote
 
Dianthus Mimulus
Guest
Posts: n/a
 
      05-07-2007
On Mon, 07 May 2007 18:28:59 +1200, sam wrote:

>> Revenue is earned when the money changes hands.
>>
>>

> Nuh uh
> If you buy a ticket to a show, the revenue isn't earned until after the
> fat lady sings


But if that ticket says "this voucher entitles Standard Seat purchaser to
get a one-off FREE upgrade to a luxury seat, depending on availability"
then what was purchased was the Standard Seat, and the POSSIBILITY of a
FREE upgrade.

Likewise those who purchased a PC with MS WindowsXP installed were... ta
duh ... purchasing MS WindowsXP. They were offered a FREE upgrade as an
incentive to purchase WindowsXP.

They couldn't purchase Vi$ta because it wasn't a product on the market
that was available to purchase.

IMHO the revenue should be recognised as income from selling MS WindowsXP,
and should be accounted for when that PC was sold, and not several months
later.

I mean, where does that stop? Including a voucher with Vi$ta so that those
who purchase Vi$ta get a 50% discount on a 300% inflated price for
LongHorn?


--
Dianthus Mimulus

"You'll have to excuse me — I have a long
bath and a short dress to get into."
 
Reply With Quote
 
 
 
Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Ex-Olympus CEO proves Japanese running Olympus and shareholders wouldrather sweep the problems under the rug RichA Digital Photography 5 01-09-2012 02:45 AM
Program which calculates earnings (with some difficulties).. Joop Van den tillaart Ruby 4 09-07-2007 01:04 AM
Re: Glamis Gold Ltd shareholders hit Jackpot jenny is hot Digital Photography 2 09-04-2006 02:16 PM
Boost your 2006 earnings!! Tim Godfrey Computer Information 1 12-30-2005 08:42 PM



Advertisments