Tag Archives: Microsoft

MSFT: “I’m Rarely Left With Nothing To Say”

The stock market – specifically the S&P 500 and the Dow have become important propaganda tools of Fed/US Government.   After all, a rising stock market means that investors are “discounting” future economic and earnings growth, right?  As long as the stock market keeps hitting new records, any negative economic reports have to be invalid.

Of course, like everything else that hits the mainstream headlines these days, 90% of the time the opposite is the truth.  We can call this “Bernays’ Theorem.”   If you don’t know who Edward Bernays is, please use Google to look him up.

Corporate earnings have become mindblowingly fraudulent, which means that a fraudulent stock market is “discounting” fraudulent corporate earnings reports.

As an example, Microsoft reported earnings yesterday.  But companies can’t just report traditional GAAP earnings statements.   We get a highly unreliable version of GAAP that has been liberalized over the past 20 years to enable companies to distort the true earnings “snapshot,” enabling the presentation of reported net income that  exceeds actual net income.

But the policy deciders didn’t just stop with that bastardization of quarterly earnings reports.  They now permit companies to report “non-GAAP” numbers.   The literal translation of “non-GAAP” is, “if all this good stuff happened that didn’t really happen and might never happen, this what our earnings might look like.”   “Non-GAAP” is a complete fairy-tale.

So yesterday MSFT reports “GAAP” numbers, which we already know are distorted, in which its Fiscal Q4 operating income declined nearly 7% from FY Q4 2015.  Even worse, giving MSFT the benefit if using “non-GAAP” to compare against GAAP, MSFT’s net income plunged 38%.  The source of the decline in operating income was “revenue deferrals.”  Huh?  “Non-GAAP” allows MSFT to pretend the revenue deferrals never occurred.  This revenue that may or may not ever hit MSFT’s top line.

MSFT’s GAAP numbers missed the Street consensus expectations badly.  And yet through the magic of make-believe numbers, MSFT was able to smooth out any non-existing economic revenue and net income to that enables investors to act as if MSFT’s FY 4th quarter numbers were something they were not.

The Fed propaganda part:  MSFT is being attributed for driving the Dow and SPX to a new record close.   MSFT’s earings miss is now magically being reported as a “beat.”  Beat this.

Why was my colleague, Scott,” left speechless?  Because despite GAAP revenue and operating that declined measurably for its fiscal Q4 – AND revenues year over year declined nearly 9% – the stock  spiked up 5.3% today.   It’s inexplicable OTHER than the fact that the Fed is juicing the stock market  in  order to obscure the truth.  click to enlarge graphic


SoT #88: The U.S. Govt Terrorizes The Masses With Terror Propaganda

The horrifyingly tragic mass killing in Orlando was immediately branded as “domestic terrorism,”  well before any investigation of the shooter’s background or motive was conducted.  This is standard operating procedure in the U.S. anytime bullets fly in a public space. Shortly thereafter “ISIS” issues a statement taking claim for the event. But anytime more than one person gets shot in a public space ISIS seems to be on the phone line immediately with Fox News taking credit.

It’s quite formulaic.   Lost in the propaganda, of course, is the now-confirmed fact that the U.S. Government’s Deep State (CIA, NSA, Defense Department, Homeland Security Department) created ISIS in the first place.

Fox News and Fox Business have been featuring a banner all day that proclaims “Terror in Orlando.”  How come Charles Manson or Charles Whitman (U of Texas sniper) were never labeled “domestic terrorists?”

We’ll never know the truth about the Orlando shooter’s background and motives.  It will be drowned into obscurity with a flood of media-driven propaganda and fear porn.   The motive of the Government in this endeavor is to terrorize the citizens into begging for even more funding of the “war on terror.”  Furthermore, it’s an opportunity for the Government to confiscate even more of our rights in the name of “security.”

The Shadow of Truth’s Market Update segment explores this sad tragedy in an attempt to brush away the Orwellian smoke blown around it by the Government and the Government’s presstitutes plus some bonus coverage of the MSFT/LNKD tragedy:

If you ever wonder why people question the government and their motives all one needs to do is ask themselves the questions that are posed above. It becomes quiet clear that something is out of balance. Either someone is lying or these agencies need to be shut down today. Those are the only two answers to the questions we ask. If these agencies can not stop a single mass shooting incident, while gathering 100% of our digital footprint, what purpose do they serve? Who do they serve?  – Rory Hall, The Daily Coin

Microsoft’s Acquisition Of Linked-In Is Beyond Idiotic

I will say right off the bat that Microsoft’s stock is now one of my favorite short-sell candidates.  This is the 2000 tech bubble on steroids.  MSFT itself is extremely overvalued given that its revenues are down over 7% on a trailing twelve month basis compared to its FY 2015 ended June 30th.   Its net income is down 16% on the same comparison basis.   MSFT itself trades at a 38x trailing p/e with declining revenues and income.  It trades at 4.7x sales and 5.4x book value.

It’s been issuing debt like the U.S. Government in order to buy back shares, with its debt load increasing nearly 50%  since September, from $27 billion to over $40 billion.  Since June 2013, MSFT’s debt load is up 333% (from $12 billion).

MSFT’s valuation is in and of itself is insane given it’s debt-addled balance sheet and deteriorating business model.  Microsoft Windows 8 was a total abortion and Windows 10 is not much better.  Anyone with two brain cells to rub together uses the bare bones Windows 7 and the freeware Linux-based Microsoft surrogate software, which can can be downloaded for  free (or a gratis donation) and is superior to MSFT’s crap (see OpenOffice.org, for instance).

Now Microsoft has decided to layer nuclear waste on top of its own toxicity by acquiring Linked-In for over $26 billion.   This is a tragic, if not catastrophic, use of shareholder cash. Here’s LNKD’s net income history:  It reported GAAP net income going from $11.9 million in 2011 to $26.7 million in 2013.  Then it decided to use the Silicon Valley private equity unicorn stock valuation model and spend as much money on “R&D” as possible in order to generate losses.  And it has generated massive losses:  in 2014 it reported a $15.7 million loss. This ballooned to a $164 million loss in its FY 2015.  On a TTM basis, LNKD’s net income has plunged to nearly a $170 million loss.

And MSFT is paying for what?  This is from MSFT’s press release announcing the tragedy:

  • 19 percent growth year over year (YOY) to more than 433 million members worldwide
  • 9 percent growth YOY to more than 105 million unique visiting members per month
  • 49 percent growth YOY to 60 percent mobile usage
  • 34 percent growth YOY to more than 45 billion quarterly member page views
  • 101 percent growth YOY to more than 7 million active job listings   (LINK)

Anyone see ANY mention of those attributes generating any revenue, cash flow or operating income?   Remember when Maria Bartiromo and Joe Kernan used to crow about “clicks and eyeballs” to justify multi-billion market caps for internet businesses with nary a business model?  That’s what this acquisition is all over again.

MSFT on the surface is paying:  5.4x sales, 4x book value, 4.8x enterprise value (market cap + debt) AND 58x enterprise value to EBITDA.    Wait, anyone notice there’s no implied p/e ratio?  That’s because there’s no “e.”  But of course Wall Street has stuck a hockey stick net income forecast for FY 2017, so the implied “forward” p/e is 45x.

Microsoft’s acquisition of LNKD is about as idiotic as it would be to try and convince someone that the sun rises in the west and sets in east.   If anything, this deal is emblematic of an American systemic Ponzi scheme that has gone “off the rails.”

Linked-In is nothing more than a glorified jobs networking bulletin board.  Sure, as the system continues to unravel and more “business services” people lose their jobs, there might be a big jump in “clicks and eyeballs” on Linked-In.  But this will be out of desperation trying to find anyone on the Linked-In board who might offer a ray of hope for employment.  But no one will spend their unemployment check on LNKD’s idiotic premium services.   That will be money much better spent on whiskey and weed, which is exactly what MSFT’s upper management and board of directors must be ingesting to have come up with this idea.   MSFT is my lowest risk short-sell idea of the year.

The best part is that Jim Cramer is pounding the table hard with bullish commentary about this deal.   This makes the idea of shorting MSFT a slam-dunk.  It reminds me of his bullish call on Bear Stearns before Bear collapsed.

If you like this analysis, you might benefit from my Short Seller’s Journal.  Every week is present what I believe to be somewhat unique market insight, a minimum of two short-sell ideas, recommendations for using options and capital/trade management strategies.   My picks greatly outperformed the S&P 500 when the market dropped from early January to mid-February.  You can access the SSJ using this link:   Short Seller’s Journal.