This story was written by Keith Dawson for the Media Unspun email newsletter and is Copyright 2002 by Keith Dawson.
M E D I A   U N S P U N
It's Good to Be Microsoft

We have some good news and some bad news. The good news is that one company is thriving, prospering, and growing amid the wreckage of the tech economy. The bad news is that it's Microsoft.

OK, so their stock is not the healthiest -- it touched a 12-month low this week. But all the major outlets reported from Microsoft's annual analyst bash in Redmond yesterday, and most of them used headlines similar to the Wall Street Journal's: "Microsoft Sets Plans to Boost Work Force, R&D Spending." The numbers: Microsoft will add 5,000 new troops in this fiscal year and bump R&D spending by 20%, to $5.2 billion. (The company still has $39 billion in cash on hand.)

Several outlets quoted Microsoft CFO John Connors asking rhetorically, "Are we nuts?" But few of the analysts the press talked to thought the company's aggressive spending in the teeth of a tech depression is a bad strategy. The San Jose Mercury News did find one "underwhelmed" industry watcher who worried that Microsoft can't possibly keep up the double-digit growth rates fueled by its desktop monopoly: "That's 65% of revenues and 100% of earnings. Who cares about MSN and Xbox?" Most news organs ran bylined pieces from Seattle bureau staffers or national reporters. Oddly enough, one of Microsoft's hometown dailies, the Seattle Post-Intelligencer, stitched together reporting from Bloomberg and Reuters.

Microsoft addressed two of the big questions swirling in the business world: accounting for stock options and business ethics. The Seattle P-I reported that some watchers were expecting Microsoft to announce a policy shift and begin reporting options as a business expense. The Merc quoted Steve Ballmer thus: "The health of the technology ecosystem is very important." In other words, Microsoft won't change its accounting practices for the sake of the financial health of its partners and competitors. Right. The Seattle P-I calculated that if the company had expensed stock options in the previous quarter, earnings would have been 16 cents per share, vs. the 28 cents the company reported under the current rules.

Microsoft had several execs speak to the question of business ethics, assuring us that we will never see Microsoft's name featured alongside those of WorldCom and Enron. The CFO managed to cover this subject without mentioning the recent settlement of an SEC probe into Redmond's accounting irregularities. - Keith Dawson

Microsoft Sets Plans to Boost Work Force, R&D Spending,,SB1027619656816104040,00.html
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Microsoft to boost R&D 20%

Microsoft to Step Up Spending and Hiring

Microsoft fuels up for more growth (Bloomberg, Reuters)

Microsoft to add 5,000 new workers

Microsoft to Boost R&D, Hire 5,000 More (Reuters)

Microsoft to hire 5,000, boost spending (Boston Globe)

Microsoft to Shift Strategy

Silicon Valley Mood Worsens (Seattle Post-Intelligencer)