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To: PJ Strifas who wrote (27281)	6/30/1999 6:57:00 PM
From: PJ Strifas	Read Replies (1) \| Respond to of 42771

Here's a very interesting article: SEC making inquiries at Microsoft By Scott Berinato, PC Week June 30, 1999 2:55 PM PT URL: zdnet.com The Securities and Exchange Commission is investigating Microsoft Corp.'s accounting practices, company officials said today. Greg Maffei, Microsoft (MSFT) senior vice president and chief financial officer, said the SEC is investigating Microsoft's reserves and reserve policy as a result of a January Wall Street Journal article. The SEC has requested information from Microsoft and the company is cooperating, officials said. "There was a Wall Street Journal article including some comments made by a former employee ... and we believe those may have been the trigger," said Maffei. "As I said, we don't know the entire scope other than it relates to reserves and reserve policy." Company officials would not comment further. Accounting changes At the same time, Microsoft announced two changes to its accounting practices, which Maffei said were not related to the SEC investigation. The Redmond, Wash., company is reclassifying the way it reports smaller business activities including the Microsoft Network, consulting and support. Second, under amendment 98-9 to SEC rule SOP 97-2, Microsoft has changed the way it reports earned vs. unearned revenue. SOP 97-2 governs when software companies can report revenue on products dependent on features and capabilities shipped in the product. Microsoft officials also said they are still comfortable with earnings estimates for the fourth fiscal quarter with the accounting changes implemented. Microsoft reports earnings in July.