Microsoft's $40 Billion On Hand 965
eMilkshake writes "CNN/Money magazine report here that Microsoft has more liquid reserves than 'Ford, ExxonMobil and Wal-Mart have combined' and 'enough to buy the entire airline industry -- twice. Or all the gold in Fort Knox, four times over. It is enough to buy 23 space shuttles or every major professional baseball, basketball, football and hockey team in America.' This is thanks to (according to WinInfo Update) the fact that 'Microsoft handles its investments with an inhouse software application called--seriously--the Catastrophe Hedging Program 2.5.' I wonder what I would do with $40 billion?"
It's about tax evasion... (Score:2, Interesting)
What to do with $40e9? (Score:2, Interesting)
Bill Gates worth more than Microsoft (Score:1, Interesting)
Illegal to Have That Much On Hand (Score:4, Interesting)
Apparently there is some murkiness to get around this for Microsoft. The reason they don't want to pay dividends are the huge tax implications for those that are own massive amounts of stock (read: Bill Gates, Steve Balmer...)
Flexibility (Score:2, Interesting)
Flexibility! That's what all that liquid cash does. While other companies usually reinvest in themselves, or (god forbid) issue dividends, Microsoft is hoarding.
All that hoarded cash gives them a flexibility that no company, or government for that matter!, has ever had before. If MS decides to go into the satellite business, they can just pay cash and build several satellite factories (or auto factories, or airports, or whatever the they want) and virtually overnight put all telecoms in dire shit by relandscaping an entire economy. Give everyone sat-phones and sat-ernet and charge low wireless rates. That's just an example. They could go into realestate development or anything else.
Scary flexibility. I wonder what they're up to. Don't forget Bill. He's been hoarding cash personally as well. We'll just have to wait and see...
Re:It's about tax evasion... (Score:3, Interesting)
By not paying dividends, Microsoft is able to shift the tax expense to the shareholders at the lower capital gains rate when the shareholders sell stock. Bill Gates and his crew sell a large amount of Microsoft stock each year.
I believe Ralph Nader has already been looking into this.
Go Ralph!!
Re:It's about tax evasion... (Score:2, Interesting)
No corporation pays taxes (Score:3, Interesting)
Here's how it works. A corproation is a legal entity designed to make money. It has a list of expenses and a list of revenues. One of those expenses is "taxes." When the government raises taxes on a corporation, the corporation has to make up for the higher costs. It does this by increasing the price of its products or services. I.e., the consumer has to bear the brunt of the higer cost of the corporation's tax. I.e., the corporation is merely a tax proxy for the government.
All wealth in the country is held by two groups: individuals and government. People talk about "Microsoft's $40 billion," but Microsoft is owned by individuals. It does not exist without the individuals who make it run.
Ralph Nader wrote about this a wile back (Score:2, Interesting)
Glad to see that CNN can only took a couple months to write about it!
Mr. Nader's letter on the topic was the first I read of this topic.
Would YOU accept $1 million to use MS products? (Score:5, Interesting)
Wait -- I think I'll copyright this posting. And patent the idea.
Re:It's about tax evasion... (Score:1, Interesting)
Here's how. Post something copyrighted by the Co$ (they'll delete it and make some bogus claim, "we believe we have the right to post it, but our lawyers advised us that it would be a long and costly lawsuit..."), or post a post that exposes a bug in SLASH (like javascript within <a > to dynamically insert forbidden html).
Also, if you want to lose moderator priveledge, repost the "moderation investigation" thread.
Five pages and no mention of Open Source. (Score:5, Interesting)
Our office just got a letter from the BSA saying they wanted an audit. That was all it took to convince the management and they were the only ones that needed convincing. The employees were all fine with the idea as long as they had browsers, e-mail and Word functionality. Took about two days to convert a dozen Windows PCs to RedHat and OpenOffice and we got right back to work --no Windows, no problem.
If everything is so rosy and upbeat with Microsoft why are they whippin the BSA dogs into a frenzy all around the globe even going after little piss ant mom and pop shops? Perhaps the forty billion is going to be needed after all.
Catastrophe Hedging Program gives it away (Score:4, Interesting)
Obviously, if a progressive administration decides that the Microsoft monopoly is bad for the country and takes steps to break up the company, force price levels, or some other nonsense, Microsoft will have to do the only thing that makes sense - form its own country.
They'll need a basis for currency - so they will be able to buy out Fort Knox and have a gold-based money system. If they buy out Wal-Mart, they can issue MicroWall dollars, and that currency will be the only money accepted at Wal-Mart and Sams. The world will have to recognize the new currency - how can Americans go without WalMart?
Of course, the National ID for the nation will be based on .NET technology, and will be mandatory. Forget your SSN - remember your PPID (Personal Product ID).
The only question is, where would you establish the new country? You might be able to buy a state, but the U.S. could use military might if you tried to take territory away. South America would be more thematic, but I think Gates has other plans. Obviously, the Gates Foundation's work to bring health care to third world countries (especially in Africa) is a thinly veilled operation to find poor third world governments that could easily be toppled or bought out. What third-world country wouldn't welcome King Gates, with nationalized health care and no taxes (remember, it's the citizens of developed nations that pay the Microsoft tax).
Makes you want to puke (Score:4, Interesting)
Let's look at this company for a short second...it certainly didn't have any where NEAR $40B in the bank in 1995, just prior to Win95 being released. Win 3.1 pretty much ruled the roost; and IBM was desperately trying to released the stranglehold that MS had over them due to the (favorable) DOS licensing. Microsoft was very powerful, but at that time Office hadn't yet driven EVERY OTHER competitor out of the market, and the Internet wars hadn't even kicked up yet. But there is one indisputable fact: the trend had been well established in the American (nee World) consumer mind that Intel/Microsoft was a standard and compatibility with that system was absolutely mandatory.
So, 7 years later, Microsoft made Bill Gates the richest guy around, had TONS of cash sitting in banks, runs competitors into the dirt, and basically laughed off US Gov't legal action--several times! This has to be about as clear as it gets that Capitalism as we understand it is an incomplete model. Previously in history, mega-wealth like this was built on the backs of slaves--the railroads, for instance. But not Gates'. There were no slaves...merely consumers. One could argue that this is truly "Capitalism at its best!" for certainly it was Capitalism that provided Gates with such wealth. Only that is a short sighted thought, considering it is Capitalism that ALSO states that in such a market competitors should have been clamoring to compete! And I REFUSE to believe that DOS/Win3.1/Win32 was absolutely the best, most marketable product during that period...okay, it may have been the best, but was it "97% of the market" best? I just don't believe so--I mean look how quickly Linux has stormed the scene. Are we to assume that NO ONE else but Microsoft was so astute at making operating systems until some kid sat down at his PC? Something just DOESN'T make sense here.
So what dynamic about Capitalism are we missing? What overlooked problem could explain a seemingly complete breakdown of basic competition? Or, can it be explained with what we already know? Personally, I look at Microsoft's accounting tactics. But of course they really didn't start until AFTER a pretty good amount of money had been made. I then look at the role of the US Government in making Billy G. a gazillionaire...after all, think of all those government agencies sending YOUR tax dollars to Redmond. Of course the relationship doesn't end there--military contractors would conform their systems to the Gov'ts, and state and local gov'ts would do the same. It is nearly like a viral chain of Microsoft infection. And all the while, we were supporting government research that could have/should have been capable of creating an open source operating system.
So is it the infamous Keynesian "invisible hand" run amok that created this? Does any one have a GOOD idea as to how much money Microsoft has profited (taking into account the top-down, hierarchial spread of influence) off the US Government since 1990?
Given my newfound respect for the dynamism and aggressiveness of true Capitalism, I refuse to call Bill Gates a Capitalistic success story...to do so would be to forever sully the greatness of the fair-market system.
Re:Illegal to Have That Much On Hand (Score:3, Interesting)
All companies have to pay out dividends eventually, otherwise the price of the share would be zero (since the price of the share is basically the net present value of the the stream of expected dividends).
Microsoft uses stock splits to basically pay out a stock dividend to their shareholders...
I believe you're thinking of stock buy backs, not stock splits.
The "Survival" Stash (Score:2, Interesting)
Re:bankrupt the world (Score:2, Interesting)
1) liberal that believes in a finite amount of money
Don't be stupid, liberals do not believe in a "finite" amount of money. They believe that wealth is created through labor, unlike conservatives, who believe that wealth is created through interest, forgetting that wealth created through interest is destroyed through inflation.
For someone who made a crack about a /. reader not having taken any economics classes, you obviously don't know your macro economics very well either.
Re:What to do with $40e9? (Score:2, Interesting)
Hire a team of 100 of the most brilliant programmers, designers, etc. , give them everything they need in terms of office space, supplies, aides etc. etc. and pay them generously. Then let them work for ten years to build the best OS ever from scratch.
Re:MOVE TO THE FOOD! (Score:3, Interesting)
Nicaragua wasn't communist in the sense of Cuba or the USSR. I'm not talking about governmental systems here, I'm talking about economic systems. Even then, capitalist countries aren't completely honest, too. Admittedly, democracy seems to help keep corruption levels down, but that's a function of democracy and totalitarianism, not capitalism and communism. I will also agree that communist countries tend to be totalitarian, but using that as a justification for blanket statements is just as irrational as blindly following every statistic a government publishes.
We won't know the truth of Cuba until communism falls, just as we didn't know the truth about the Soviets until they fell.
We can't know with 100% certanity, but our concept of life behind the iron curtain in the USSR didn't prove to be all that different from the fact. About the only difference I see is that we now know that the USSR's technology level wasn't as high as the Cold War hype held it to be.
Efficient countries create surplus capital (even Marx agreed) and in capitalist ones, they end up making more and more until all are satisfied. Communist ones are inefficient and try to satisfy everybody but year after year, they make less and less. This fact is what makes the leadership eventually flinch and change from communist to capitalist societies.
I think I mentioned that in my original post. But economic efficiency is not a good measure of public health, since it includes not just things like the amount of food, but also things such as the number of TV's a people owns, and it tends to measure only efficiency, not equity. No, places like Cuba didn't have the number of fatiron computers and such that we have, but a country's ability to produce enough food for its people is not so directly related into GDP. Again, look at Nicaragua. Since it went capitalist, its GDP has increased while its ability to take care of its citizens has decreased markedly.
Re:Capitalist countries lie too (Score:3, Interesting)
And the truth about the USA is, it wasnt built by capitalism, it was built by slavery
Uh, no. In fact, Slavery held back the American economy. Look at any economic analysis of slavery: SLAVERY IS NOT ECONOMICAL. When you factor in all the costs of slavery, it's much cheaper to pay someone a wage and let them take care of themselves.
Maybe a different kind of depression (Score:3, Interesting)
Living in a lucky country [welcome-to.com] where the economic measures didn't even shorten stride as they gallop into the unknown, I have noted a few other people starting to bemoan the degree to which money is starting to get in the way of even the simplest things which are essential to our very humanity
But every day it looks more likely that we do not have to wait till after the boom for depression, but that depression has already set in, both for those whose ever harder work continues to underpin the indicators and for those struggling to find their way into the loop.
There is something primitively natural in the cycle of long growth and rapid death which flies in the face of human aspirations to fairness, the kind of overgrowth which our granting veto to the bean counters has made has made an inescapable aspiration of every human institution
So you don't have to wait for the depression to follow Wired's long boom [wired.com], you just have to look around and ask people how they feel.