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Thursday, 30 May, 2002, 17:48 GMT 18:48 UK
Microsoft 'close to SEC deal'
Microsoft founder Bill Gates
Microsoft's figures are widely thought to be 'managed' to meet expectations
Software leviathan Microsoft is in talks to settle an investigation by stock market regulators into allegations that it has filed false figures, reports say.

The company has a long history of meeting stock market expectations with its quarterly profit and sales numbers.

But the reliability of those numbers has been questioned by the Securities and Exchange Commission, the key US regulator of companies listed on the stock exchange.

Now, according to both the Reuters news agency and the Wall Street Journal, Microsoft is on the verges of settling the investigation.

The result will probably not be a fine, both reports say. Instead, they believe, the company is set to make a public pledge to abide by the rules in future.

Neither Microsoft nor the SEC was ready to comment on the reports, although a Microsoft spokeswoman said the SEC examination had been under way since June 1999.

Filling the cookie jar

The investigation follows years of on-target earnings from Microsoft, which - in the turmoil that is the technology industry - has attracted suspicion in some quarters.

Allegations have been levelled that the company indulges in what is known as "cookie jar accounting".

In other words, says the accusation, it moves profits and sales from unit to unit, smoothing the ups and downs of its performance.

At the height of its success in the late 90s, so the story goes, it put revenues aside, reporting them as lower than they actually were.

This would allow it to ride out the lean times more easily, ensuring that it does not appear to underperform when things are more difficult.

Should the allegations prove to be true, they would be the mirror image of most of the accounting irregularities the SEC is currently examining, which usually involve companies claiming to make more money than in fact they have.


The settlement

Appeal court ruling

Appeal hearing

Analysis
See also:

27 May 02 | Science/Nature
10 May 02 | Business
23 Apr 02 | Business
18 Apr 02 | Business
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