Understanding Microsoft’s Circles of Influence, Enron's Collapse and a Brilliant Financial Pyramid Scheme
Key Performance Data for 2 Year Period Ending 6/30/2001
Reported net income $15 billion
Wages paid but not charged to earnings $22 billion
Actual Net income if wages fully charged Significant loss
Federal Income Tax Paid “Zero”
Estimated Damage from Products (viruses, etc.) >$10 billion
Legal judgments paid for product liability lawsuits “Zero”
Microsoft was able to completely escape federal income taxes due to a masterful and legal manipulation of the tax
code which they are fighting desperately to not disclose to the public. This includes claiming a tax deduction of $22
billion for wages for this same two-year period. These wages were printed up as new stock certificates on a photo
copy machine in the accounting office and passed out to employees who later cashed them in at their brokerage
company.
Both Bill Gates and Paul Allen have been aggressively selling their Microsoft stock for years with Gates now
owning only 11 percent of the company.
The largest Microsoft shareholders are now public pension plans that index to the Standard and Poors Index of
the 500 largest U.S. based corporations, the S&P 500, of which Microsoft has often been the largest share of the
index. Each company's share of the index is based upon its total market value in relation to the total index market
value.
What this means is that the biggest source of funds to purchase Microsoft stock is now taxes remitted to the
government by individuals and businesses. The government then uses these tax receipts to buy Microsoft stock for
public employee pension plans in order to pay future pension obligations. We will closely examine this tax circle of
influence and show that Microsoft has become an unofficial taxing authority.
Microsoft’s largest single customer is now the Pentagon and the largest individual shareholder of defense related
securities is now Bill Gates.
...Clearly, such ownership interests will further accelerate the use of Windows in key defense systems...
Although a useful commercial operating system, Windows has also become a national security risk far greater than
the recent anthrax threat...Already Microsoft enabled electronic viruses...have resulted in temporarily shutting
down the defense department, White House and other key agencies in addition to resulting in a related multi-billion
dollar economic cost.
Microsoft is now the largest and most powerful global media company and is engaged in a brutal media war with
AOL Time Warner for control of AT&T Broadband and the nations cable system.
Microsoft's primary tools for sustaining its Windows monopoly are the consulting divisions of large public
accounting or CPA firms... these accounting firms operate as consultants rather than engineers and therefore look
for service intensive solutions rather than product intensive solutions, thereby allowing for greater billing fees.
This is quickly dumbing down the Internet and unnecessarily exposing users to viruses and significant support
related costs.
It surprises me that Linux users have not organized and tried to work more closely with these CPA firms. They do
not seem to understand their significance in proliferating Microsoft's monopoly. More importantly, these CPA firms
like service intensive solutions which is an ideal fit for Linux.
While CFO at Microsoft Brown also simultaneously boasted regarding his ability to influence accounting standards
in addition to being Chairman of the Nasdaq Stock Exchange at the same time...
Major corporations continually fail to understand the significance of being pulled into Microsoft’s distribution
channel via partnerships. These partners, whether media or technology companies, fail to realize how Microsoft
closely manages “channel profit.” Whether you are a media company or a reseller, your profits are being managed
and your days numbered.
A prominent recent example is Compaq Computer, once a great innovator but now simply a part of this channel
with no hope for the growth in profits required to satisfy shareholders. Compaq’s solution is to give up and merge
with Hewlett Packard.
This is the same strategy Paul Allen has used to erect an abusive monopoly at Ticketmaster. Ticketmaster locked up
arenas around the country, a clear monopoly, and then dictated terms to bands in addition to price gouging
consumers on fees. It is so bad that several bands, most notably the Irish band U-2, have boycotted Ticketmaster. It
is again startling that the department of justice did not review Paul Allen’s activities more closely, the second
largest Microsoft shareholder.
The Bill Gates Foundation now has $24 billion in assets, primarily Microsoft stock, and is being skillfully used to
leverage growth in the Windows monopoly by targeting schools and libraries with free software and preparing
them to receive education content curriculum via the Encarta Education Server Product.
A key strategy here is installing Windows in public libraries and schools ranging from pre-school to leading public
and private universities all around the world. One need only compare this foundation to the two primary Hewlett
and Packard founders foundations to see how masterfully Microsoft uses it as a business rather than a true
foundation.
Contrary to popular belief, the whole DOJ anti-trust circus has been a wonderful distraction for Microsoft from its
core risk, product liability lawsuits. Whether or not a monopoly is significant yet much more frightening for the
company must be product liability lawsuits. This is after all the main argument in the anti-trust trial, lack of product
quality and excessive cost due to lack of competition. The damage here is real and quantifiable
McDonalds is sued for its coffee being too hot yet Microsoft can issue products that become virus magnets and
cripple many organizations, in particular telecom companies, with support costs. This is one area where the Linux
group should aggressively organize if they are serious about competing with Microsoft. An ideal place would be
slashdot.org where a coordinated legal action could be mounted and a law firm engaged to handle this activity.
billparish.com
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