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Microsoft's $40 Billion On Hand 965

Posted by CmdrTaco
from the now-thats-an-eye-opener dept.
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?"
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Microsoft's $40 Billion On Hand

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  • If Microsoft declares a dividend, the shareholders have to pay taxes. If they hold the money in reserve, they only pay taxes when they sell.
    • (IANAL) That was the first thing I thought about. The problem (for MS) is that that's theoretically illegal. You aren't allowed to hold more reserves than you need just so your shareholders can avoid taxes.

      That's the theory. I'm sure the MS lawyers have a more profitable reality. Personally I've always thought it was a stupid law: it punishes companies that build themselves a solid shelter for the rainy times.

      • Well, it's more likely they've found a loophole. The way I read it (very briefly) Microsoft likely doesn't fall under the category of "Personal Holding Company [irs.gov]", because 50% of the corporation's stock is not held by fewer than 5 individuals. Microsoft also can argue that they're actually going to use all that cash - someday. IAAPTP, but this is not legal or tax advice.
        • Personal holding companies are targeted at people who seek to incorporate their personal lives (in a nutshell). Someone like Sarah Jessica Parker could conceivably create SJP Inc. and avoid paying payroll taxes to herself on what would otherwise be wages. She could also distribute shares to her friends and family (kids) in an effort to shuffle income off her return (personal holding companies pre-dated the kiddie tax, so at one point the PHC was necessary to prevent this sort of thing).

          In any case, it is absolutely clear that MS is not a PHC.

          Guac-foo.
    • by Anonymous Coward
      Microsoft is also getting away with not paying any accumulated earnings tax. This tax is designed to tax companies that are accumulating excess earnings and do not pay dividends.

      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!!
    • by guacamolefoo (577448) on Monday May 06, 2002 @11:39AM (#3469929) Homepage Journal
      It's not even close to tax evasion. Ta evasion is illegal. Tax avoidance through compliance with the code and regulations is just being smart.

      Companies are pretty much free to retain their earnings for reinvestment. There are some limitations on this general rule, but generally it is kosher (there's an old case - Dodge v. Ford Motor Co. - 204 Mich. 459, 170 N.W. 668 (1919))- in which the Dodge brothers sued Henry Ford for, among other things, retaining too much cash and not paying dividends).

      There are also a number of tax cases where C corporations (whose dividends are taxable if distributed to shareholders) have been nagged by the IRS to declare dividends. The theory is that the retention of the cash has no real business purpose and it is being done solely for the avoidance of taxes. This is one way the Service can enforce what is called the "business purpose" doctrine.

      Microsoft has answered claims such as you raised before, and it is a non-issue now. Especially in today's world of hyper-leveraged balance sheets collapsing, there is no way that Microsoft's war chest will be questioned by the IRS.
      • You are correct. "Tax evasion" was the wrong phrase. "Screwing over the American public by legally avoiding taxes" would be better.
        • by krlynch (158571) on Monday May 06, 2002 @12:13PM (#3470262) Homepage

          I guess I don't see how not paying taxes you don't owe (your "legally avoiding taxes") is "screwing over the American public". The rules were set by representatives YOU (not MSFT) elected, and if you don't like the rules, lobby to get them changed ... but don't accuse the people and corporations who actually follow the rules of being tax cheats.

          Let me put this another way: Do YOU give the government more tax revenue than you are required to do by law? If not, you hardly have a right to complain about others doing exactly what you are doing....

      • No, it's 'tax-innovation', a right they have and are exercising. Must guard that right to 'innovate'.

        Companies can retain earnings for reinvestment, and some to guard against a rainy day, but that isnt what Microsoft is doing.

        It should be blindingly obvious to anyone who's even caught a whiff of a newspaper the last ten years that Microsoft does not _care_ if what they are doing is, in fact, illegal. It isnt illegal until they are convicted of it, and even then they can pay their way out of a punishment.
    • Dividends are stupid (Score:3, Informative)

      by crow (16139)
      Dividends are stupid. If Microsoft decides it has more cash than it needs and wants to provide shareholder value with the money (possibly with the federal government threatening to tax the "excess" cash reserve), then a stock buy back makes much more sense than a dividend. In theory, both provide the same value to the shareholders, but a stock buyback provides capital gains instead of income.

      So even if the government decided to enforce the tax on "excess" cash reserves, there would be no need for a dividend.
      • uhh... dividends are not stupid, at least to those of us who would like to actually have a reliable income stream from our assets.

        egad... why would you invest in a compnay that has no growth prospects, like MS with such a high PE ratio anyway? you would only invest in this company if they provided a yearly dividend (aka income stream to YOU).

        thats how the stock market has ALWAYS worked, and will continue to work, in the post-internet-boom.

        i suggest you dont invest if you dont understand why dividends are a good idea.

    • by Loundry (4143)
      This needs to be repeated over and over again because many people do not understand it. Corporations do not pay taxes. Corporations collect taxes.

      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.
      • People talk about "Microsoft's $40 billion," but Microsoft is owned by individuals. It does not exist without the individuals

        But I wasn't talking about Microsoft avoiding taxes. I was talking about Bill Gates using Microsoft as a tax shelter to avoid taxes.

    • It's tax avoision. It's a word -- look it up. I don't say "evasion", I say "avoision".


      With apologies to Kent Brockman.


      In case it wasn't obvious: :) :)

  • by tsa (15680)
    I would fund a project to get us to Mars with that much money.
    • by Anonymous Coward on Monday May 06, 2002 @11:49AM (#3470024)
      With $40 billion you could afford to buy four trillion pennies. More than enough to buy every penny in existence. Then you'd have a monopoly on making change.
    • For 2-3 billion, you could buy every American (roughly 250 million people) a $1000 computer running Linux. If you setup a non-profit organization to distribute the systems and donate the money to the NPO, you could probably right it off your taxes as well. Almost all of this money would go directly into the economy, generate jobs, even people who have no use for a computer, could turn around and sell it for a few hundred dollars and as a bonus, Microsoft Monopoly would finally be broken.

  • by aengblom (123492) on Monday May 06, 2002 @11:28AM (#3469820) Homepage
    Breaking News!!!! Extra Extra!!

    Microsoft Rich! Really Rich.

    Who'd have thunk it..
  • Ralph Nader (Score:2, Insightful)

    by sisukapalli1 (471175)
    Ralph Nader pointed out that the money is a sort of a n "illegal tax shelter" for very rich people such as Billie Boy, Paul Allen, and Steve Ballmer.

    S
    • Re:Ralph Nader (Score:5, Informative)

      by sql*kitten (1359) on Monday May 06, 2002 @12:16PM (#3470298)
      Ralph Nader pointed out that the money is a sort of a n "illegal tax shelter" for very rich people such as Billie Boy, Paul Allen, and Steve Ballmer.

      Honestly, you Slashbots. One the one hand, Enron are bad because they used accounting tricks and pretended to have billions of dollars that they didn't. Microsoft, perhaps surprisingly, eschew fancy creative accounting, and have real cash money, which they invest in, among other things, T-bills, just like Grandma.

      Let's put $40B into perspective. That's about a quarter of the shareholder value lost by Vodafone since it's peak. That's less than the value that Juniper or AOL/TW lost in a year. That's less than Marconi were forced to write off. It's a fraction of what Cisco or GE are worth. In other words, in an industry as volatile as high tech, it's only prudent to keep a lot of hard cash on hand - it's called "Catastrophe Hedging" for a reason.

      If it were illegal, the Govt. would have busted them. The name Arthur Andersen was impeccable, far more so than Microsoft, but when the broke the rules, they were taken out in short order.

      On /., Microsoft can do no right, so perhaps I should be unsurprised by this story. Rather than bashing them, why not download the CLR and C# source for FreeBSD [microsoft.com] and have a play with that?
  • by Lxy (80823) on Monday May 06, 2002 @11:29AM (#3469833) Journal
    Man, if I had that kind of cash sitting around I'd be tempted to buy the DOJ. Oh, wait....
  • Since Microsoft wants the Government to go away and do business as usual maybe Billy BOy should have his company help pay the national debt oh. 30 billion of it off =]
  • Wow (Score:5, Funny)

    by gatesh8r (182908) on Monday May 06, 2002 @11:30AM (#3469844)
    So M$ DOES get a nickel for everytime Windows crashes...
  • That OEM copy of 'doze 2k you filched from work for your girlfriend's laptop really *hurts* those poor, poor, Redmond urchins that have to spend sweatshop-centuries at industrial keyboards. How could you be so immoral?

  • by loggia (309962) on Monday May 06, 2002 @11:32AM (#3469856)
    Did you know that it is illegal for a public company to have that much on hand and not pay dividends to shareholders?

    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...)

    • You've obviously forgotten the Golden Rule:

      He who has the gold, makes the rules.

    • by chrisw15 (230370) on Monday May 06, 2002 @11:54AM (#3470061)
      Actually it's not illegal, it depends on the company. Some shareholders may force the issue in particular companies but there is no law stating that dividends must be paid out. Some companies never pay out dividends (Sun, Cisco, Microsoft, etc are all examples of this). The trend in the past 20 years has been to decrease the dividends given out or to not give one out at all. Microsoft uses stock splits to basically pay out a stock dividend to their shareholders...
      • Some companies never pay out dividends (Sun, Cisco, Microsoft, etc are all examples of this).

        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.
        • by Bastian (66383) on Monday May 06, 2002 @12:41PM (#3470502)
          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).

          The value of a share of stock is whatever people will pay for it, same as everything else. There are a lot of factors going into that, but I think anyone who follows the stock market would agree that the prime determinant of a share price is far more random than the one you suggest. The amount someone will pay for stocks today is related to how likely they think it will be that the stock will be worth more tomorrow. (i.e., I'm paying $15 a share because I think I will be able to sell it for at least $16 a share sometime in the future.)

          It has little or nothing to do with dividends or anything else related to how much money the company has on hand, or even whether it's turning a profit. If it had much at all to do with those factors, there would be no way to explain the share prices that dot.coms were hitting during the last decade. I don't think it was exactly a big secret that most internet firms are considered fiscally fit if they succeed in having a net profit somewhere in the area of zero.
      • Stock splits are NOT dividends. When a stock splits, they take away every share of stock you own, and give you 2 (or 3), each sort half as much. The net is zero. Investers don't like shares of stock going much over 100/share because it becomes difficult to deal with. Check out BRK though for a counter example of that.

        Dividends are different. Companies don't like to pay them because investors don't like them anymore. They are taxed twice from some points of view. They come out of earnings, so the company pays income tax on dividends, and then the investor pays taxes on the dividend. (Unless you are investing in a tax free account like an IRA) Thus most investors prefer their companies to take the dividend money and invest it in growing the company. A company has two choices for spending profit, they can give it to the owners, or they can build the buisness.

    • http://www.cptech.org/ms/rn2bg20020104dividend.htm l

      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.

  • Flexibility (Score:2, Interesting)

    by Hampo (576776)

    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...

  • "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"

    Could someone tell me how many Libraries of Congress(LoC) that is?

  • by phalse phace (454635) on Monday May 06, 2002 @11:33AM (#3469877)
    every /.er would be able to get laid, and probably a hundred times over.
  • by weave (48069) on Monday May 06, 2002 @11:34AM (#3469883) Journal
    Don't think about the billions they have now, think about the billions they are losing because of those greedy poor grade schools who are allegedly not using properly licensed donated PCs.
  • by spagma (514837) on Monday May 06, 2002 @11:34AM (#3469886) Homepage
    So how long will it be until we see a Microsoft sponsered sporting team? Oh boy, I cant wait to see the Colorado Avalanch taking on the Redmond Blue Screens of Death.
  • That Geforce 3 you bought last year for $400 is now worth $100. Its like that in all of the tech industry. If that sort of thing extends to the rest of the economy, having huge reserves of cash on hand makes a lot of sense. Because of deflation, that sort of liquid reserve effectively grows above and beyond any bank interest. Of course if they are betting wrong, and we end up with inflation, its an incredibly stupid move.
  • Don't ask me why, but somehow I've got a hunch that Castrophe Hedging 2.5 runs on FreeBSD.
  • Q & A (Score:5, Funny)

    by sam_handelman (519767) <skh2003 AT columbia DOT edu> on Monday May 06, 2002 @11:37AM (#3469915) Homepage Journal
    Q: How are all these liquid assets held? Gold? Deposit accounts?

    A: Mostly greenbacks, some gold and other precious metals. It's all held in a gargantuan bin, several city blocks on a side, with a giant dollar sign on the front. Bill likes to swim in it.

    Q: The bin, I assume, is heavily secured.

    A: Surprisingly, no. MS Security is quite porous, considering the massive resources available to it, and is often compromised by sub-literate ex-cons and bored underachieving teenagers (including, purportedly, Mr. Gates' own nephews.)

    Q: Isn't he afraid it might be stolen?

    A: Occasionally, as mentioned, thuggish dog-faced brutes will attempt to break into the bin. However, what Bill really worries about is that some practitioner of the dark arts might infiltrate his mansion and steal the first dime he ever earned - the magical powers of which are the only thing that keeps MS successful in spite of the low quality of their primary product.
  • Occasionally when I compile an online COBOL program I get a message saying "an error has occurred" or "a serious error has occured" but you know you're fucked (not really) when "a catastrophic error has occured". I always think it's hilarious when the compilers feel it neccessary to rank the errors - as if some were less in need of fixing than others.

    Ergo, I wonder if Catastrophe Hedging Program 2.5 ever has a catastophic error. Better question - does this program share any code with Microsoft Money?

  • by aengblom (123492)
    I thought 640KB was enough for anyone. Silly Gates.

  • by crisco (4669) on Monday May 06, 2002 @11:42AM (#3469954) Homepage
    You know that Troll that keeps posting all the math that shows BSD only has like 3 installations worldwide? And that other guy that posts to every other Microsoft story (posting to every one of them is too much) on how all those stock options are a grand pyramid scheme and Microsoft isn't worth so much after all?

    They need to get together and come up with some good fuzzy math that shows how Microsoft will burn through that $40 billion in a week and make the DOJ irrelevant. Then we can all go home.

  • If Enron inspired the congressional employee stock option bill passes, most of that money will go to dealing with the fallout.

    They currently report 4-7 billon a year profit.

    When they can no longer report employee stock options as income... 17 billion dollar annual loss.

    At that rate 40 billion dosn't last very long.

  • by Profane Motherfucker (564659) on Monday May 06, 2002 @11:43AM (#3469969) Journal
    I said it before, and now this confirms it, Gates really can make More money than Jesus at a promisekeeper's convention [slashdot.org].

    It's a pity that Microsoft doesn't do a little more with their money than sell shit at top dollar. But, perhaps it's a Geffen Good, type thing. No fucking joke: start selling Linux at $99 for an install, and maybe the fucker will skyrocket.

    Oh, for the days when huge corporations like Michelin did nice things. Says a French citizen, who grew up in Clermont-Ferrand (home of Michelin): "They subsidized the schools, busses, gave their workers bicycles, and helped fund the hospitals." But that was a long fucking time ago, and now it's all about fucking money. Ye, gods, though. How much fucking money does a place need? That's just irresponsible. Maybe I'm just some fucking yahoo, which is most likely the case, but it seems like one has a fucking obligation to be less of an asshole when one has the money to rule the world.
  • by Kenja (541830) on Monday May 06, 2002 @11:44AM (#3469982)
    Just think about how many copies of Linux that much money could buy.
  • $40 billion? (Score:5, Insightful)

    by argStyopa (232550) on Monday May 06, 2002 @11:44AM (#3469984) Journal
    Everyone else has been funny, so I'll bite on the question:

    If I had $40 billion in CASH, an infallibility complex, and a slowly-dawning-realization that a) I'm not going to be able to take it with me and b) everyone doesn't love me as much as I think they do I'd sure use that money for something significant.

    I don't mean "feeding the poor" significant. They'll forget it tomorrow. I mean like building the first moon base, or a space elevator, mine the first asteroid or some such thing. Be the person that really sparked civilian development in space, and you will be remembered forever (besides doing a good turn for humanity in the really-long-view).

    My $0.02, so that leaves room for another 39,999,999,999.98 more good ideas.
    • Re:$40 billion? (Score:5, Informative)

      by Greyjack (24290) on Monday May 06, 2002 @12:00PM (#3470113) Homepage
      You mean like, say, curing malaria [nationalgeographic.com]? Or the eradication of polio [gatesfoundation.org]? Or, say, targetting funds towards cures for tuberculosis and HIV?

      Say what you will about his business practices, Bill (with, I'm sure, some conscience prodding from his wife) is doing some good stuff with his money. More than you'd ever see Ellison or McNealy do with their coin (if they had as much as he does, that is).

      Hell, Ellison would do something loony like buy Costa Rica and turn it into the Federated Republic of Oracle, complete with its own airforce and navy.

      Now that I mention it, that'd be sorta cool.

      • Re:$40 billion? (Score:5, Insightful)

        by weave (48069) on Monday May 06, 2002 @01:00PM (#3470649) Journal
        Agreed, but I gotta say, while feeding and curing poor children in third world countries is admirable, the end result will simply be that they will live long enough to reproduce and make more poor starving children.

        The only real cures are to overthrow the corrupt governments that keep these country's citizen's impoverished, and/or take mean steps to cut down the birth rate (like, here, we'll feed you and your family for as long as you allow us to put this norplant thing into your woman).

    • Nooo you need to build an underground missle to cover the world's cities in hot molten magma.. Unless they all buy 2 Million copies of Windows XP and Office XP by noon tommorow...

  • I would like to see what kind of bug list and change log the Catastrophe Hedging Program has. I'm sure people would be fired for a rounding error or misplaced decimal. I could see Bill Gates face while using the program to handle his finances and get a blue screen before he could hit save.
  • Haven't they been around more than just 38 months? How long have they been making this much? Seems that either the number is wrong, or they should have more than just $38bn . . .
  • You mean... (Score:5, Funny)

    by Rorschach1 (174480) on Monday May 06, 2002 @11:48AM (#3470013) Homepage
    They're not using MS Money for that?
  • The real problem for MS is that this reduces the return on equity substantially: you get 2% return on $38.7 billion of assets and 40% return on $15.6 billion of assets (as of the Q1-02 10Q.)

    If they dumped the cash, they would have a pretty amazing ROE.

    One way to do this without causing ordinary income to people who don't want ordinary income is to do a stock buy-back. This allows people who want to sell to sell and still get capital gains treatment. People who don't want any taxes don't have to sell at all. Note that if they used all the cash and equivalents on their balance sheet to buy back shares at today's prices, it would be 14% of the outstanding shares.

  • It makes me feel rather uneasy that a single company has got cash reserves which exceed the annual budget of quite a few countries.

    And questions like, "Is Microsoft still a sure bet?" are way off target. Microsoft has never been a "sure bet", and will never be. Its monopoly and its management which seems to be slightly disconnected from reality from time to time are likely to cause a sharp downfall some day, and there won't be a warning.
  • Say, Bill Gates decided to buy every sports team in America (so he can use them as characters for his X-Box) and he wanted to pay cash for each one. Would it be possible with Bill to go to his regional Federal Reserve Bank and actually withdrawl $40 billion in cash? Does the US actually have this amount of money in circulation that Bill could withdraw?

    Also, I haven't checked Forbes lately but isn't Microsoft's cash reserve smaller than Bill Gates' personal net worth?

    In my dream world, Bill Gates would start wearing a monocule, have a persian cat on his lap and becomes the world's #1 super villian.

  • With some exceptions, Microsoft's chief interest is on selling software licenses. And they're the only company in such a unique position to do this.

    They're selling something with an unlimited supply--software. Normally, when your supply is infinite, your demand is undefined (our economy and society work on scarcity). It is only by a legal fiction that Microsoft can impose value on these bits of information. In some cases they never even have to hand out a CD for each license they sell. A company pays for a license just to LAN install Microsoft software onto a new workstation.

    Insurance companies don't even have it this good.

    My pseudo-philosophical interpretation: Capitalism has trouble placing a value on intellectual property. Even Rand seemed quite unsure about how copyrights/patents should specifically work.

  • It's almost, but not quite, enough to cover their outstanding stock options, if they were all to be cashed in:

    http://www.billparish.com/msftfraudfacts.html [billparish.com]

    (did originally find this link here?)

  • by Rocketboy (32971) on Monday May 06, 2002 @11:59AM (#3470105)
    If Microsoft offered US$100,000 to each open source developer who agreed to use MS products exclusively from now on, would you take it? If one assumes that there are 50,000 open source developers capable of actually writing a program which compiles, this would cost Microsoft $5 billion, or roughly five months interest on its stash. To me it seems a very cheap way of absorbing the competition.

    Wait -- I think I'll copyright this posting. And patent the idea.
    • Okay, so Microsoft pays $5 billion to clear out the current crop of free software developers. What impact do you think this will have on current developers of proprietary software, and on new CS students and programming hobbyists? "What? I just need to write one impressive open source package, and then Microsoft will pay me six figures never to do it again?!" Within ten years, you'd have 200,000 new free software developers coding away to try and earn their chunk of payola.

      Of course, it might be possible for Microsoft to "buy off" just the very top developers, and do some real damage (as well as scoring themselves some great employees) that way. Didn't they try to hire Alan Cox once?
    • Wait a minute, we all know Bill Gates is paying millions of Internet users $10,000 each to help test out his e-mail tracing program.

      No wonder they need the billions in reserve - they must owe so many helpful users.
  • Funny thing, that... (Score:2, Informative)

    by roseanne (541833)
    From the article:
    Even as it continues to search for the next wave of growth, Microsoft is working hard to replace its reputation for hypergrowth with one for machine-like consistency. When talking about Microsoft's revenue and financial performance, executives and analysts alike frequently use words like predictable, smooth and visible.
    These days MS is the most dependable company around (apart from probably IBM) when it comes to clearing bills etc. Don't even get me started on some of the trouble some allegedly reputable banks/financial institutions cause today when it comes to *returning* money.
  • to re-engineer windows according to the demands that will be set forward when they lose their case. After all, they've failed to provide credible external witnesses.

    It's actually quite interesting that they've amassed 40 billion. According to their claims about driving innovation and the need to stay on top, they should spend more on R&D if they wish stay in the rat race.

    Another thought. If you dispersed 40 Billion USD across the globe, you would make a lot of people rich by their own standards. Now there's something to think about..
  • I wonder what I would do with $40 billion?

    Oh! Oh! I know! That's an easy one: I'd buy IBM and put the rest of the cash into their teleporting research except for some small change that would buy me a launch vehicle into space. When the teleport research is done, I'd launch the receiving pad into space and invite Bill Gates for a demo:

    "Ah yes, step up here please, Mr. Gates"
    *Zzap*
    "Goodbye. Mr. Gates."

  • That's what they said in court isn't it?

    All those poor suckers running business's using Microsoft Windows seem all to willing to send checks to Microsoft. You'd think that their own profits would be more important....

    $40 Billion IN TODAY'S ECONOMY????? Me thinks business's over spent on their IT budgets just a TINY bit.

    Thank you Microsoft. May I have another? Thank you Microsoft. May I have another?.....

    LoB
  • I heard they built some highly advanced artificial intelligence into this application. Every morning when they come in, its lights are blinking on and off frantically, and it's spitting out miles of ticker-tape that repeats over and over:

    "must kill stallman! must kill stallman! must kill stallman!..."

  • by ahfoo (223186) on Monday May 06, 2002 @12:09PM (#3470219) Journal
    Interesting how CNN Money conspicuously failed to mention that perhaps Open Source might be part of the equation in the shrinking Microsoft market outlook for the future. That would be a form of publicity I suppose. Wouldn't want that.
    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.
  • The name of the program, Catastrophe Hedging Program, gives it away. If there is some huge catastophe that would lower the value of Microsoft, then this huge reserve comes into play.

    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).

  • by ScooterComputer (10306) on Monday May 06, 2002 @12:15PM (#3470283)
    This article makes me sick. I used to be rather anti-capitalist. Then I went on a personal crusade, reading Smith, Marx, Keynes, and, most recently, Schumpeter...I realized that much of what I THOUGHT I knew about Capitalism was incorrect. I also realized that most of what OTHERS THOUGHT about Capitalism was wrong. After my readings I came to appreciate Capitalism, but also to loathe it--primarily because one of the most basic tenets is that the consumer MUST make CONSISTENTLY INTELLIGENT purchasing decisions. And I feel that it is far too easy in today's mega-adverstising, high-incentive, low-intellect environment to expect that. In short, big companies (including the government) have found success far simpler to attain by buying off the intelligence of the consumer. And the result is companies like Microsoft.

    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.

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