graphic
graphic  
graphic
Technology
graphic
SEC probes Microsoft
graphic February 13, 2002: 7:26 a.m. ET

Report: Investigation to determine if software maker understated profit.
graphic
graphic graphic
graphic
NEW YORK (CNN/Money) - Microsoft Corp. is still being investigated by the Securities and Exchange Commission for possibly underestimating its revenue in order to show a sustained earnings growth, according to a published report.

The Wall Street Journal reported Wednesday that the software provider, which disclosed the investigation more than two years ago, is of limited concern to analysts. But it said the investigation is the flip side of the current investigation of the collapse of Enron Corp., a company that is accused of overestimating its profits in financial reports.

Several stocks have seen sharp declines recently when their companies were faced with questions about accounting practices.

A spokesman for Microsoft told the Journal that the company is fully complying with the SEC and takes its financial reporting responsibilities seriously and is doing everything it can to comply with rules.

graphic  
The paper said questions revolve around whether Microsoft properly recognized revenue from sale of software in the proper quarter, allowing it to build a reserve of revenue that can be recorded in future periods.

The investigation was apparently sparked by former Microsoft auditor Charles Pancerzewski, who sued the company for wrongful termination in 1997 and later settled with the company. Pancerzewski, who says he was terminated for complaining about accounting practices, told the paper he last talked to the SEC last year.

He disputed that underestimating revenue and income would not hurt investors, arguing that a company doing so would allow it to use reserves it built up on the books to show earnings growth that it had not truly achieved.

The paper cites an e-mail, disclosed during Pancerzewski's suit, that former Microsoft Chief Financial Officer Michael Brown sent to company Chairman Bill Gates in which he said, "I believe we should do all we can to smooth our earnings and keep a steady state earnings model."

Shares of Microsoft (MSFT: Research, Estimates)  lost 99 cents to $60.14 in trading Tuesday. graphic





graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

graphic