Microsoft Finally Admits Defeat

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Matt Yglesias notes that investors are shrugging their collective shoulders at Microsoft’s news that it lost money last quarter for the first time in its history:

Interestingly, markets aren’t freaking out and Microsoft’s stock isn’t tanking. That’s because investors seem happy to accept Microsoft’s view that this is basically all just a matter of accounting gimmicks (“the previously announced non-cash, non-tax-deductible income statement charge of $6.19 billion for the impairment of goodwill and the deferral of $540 million of revenue related to the Windows Upgrade Offer”) and the company offered a parallel non-GAAP earnings measure showing very solid 7% revenue increase and 12% operating income increase.

I’m not actually sure how reassuring I would find any of that. If you look at the statement, the basic structure of Microsoft continues to be that it has highly profitable franchises selling Windows and Office and enterprise server software yoked to a staggeringly unsuccessful online services division.

This is no surprise. Especially in the high-tech world, investors have long since concluded that official GAAP earnings are indeed basically a collection of accounting gimmicks and that a simpler look at earnings probably provides a better snapshot of a company’s health. So they’re happily accepting Microsoft’s view because it’s the view that’s been conventional wisdom for a long time.

The second paragraph is more interesting, and it’s the real reason no one freaked out over this news: the market gave up on Microsoft’s online business and priced that failure into Microsoft’s market cap long ago. At this point, investors are probably just relieved that Microsoft has finally admitted the obvious, which might mean that it’s ready to try something different.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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