"Where there is no vision, the people perish: but he that keepeth the law, happy is he."
-- Proverbs 29:18, King James Bible (KJV)

Tuesday, June 14, 2016

Is LinkedIn Acquisition by Microsoft Partly Guided By Offshore Profit Parking and Tax-Avoidance Strategies: Borrowing to Beat the Fed

This is an immediate follow-up on our previous two postings:
David Kocieniewski at Bloomberg now reports Why Microsoft, With $100 Billion, Wants a Loan for LinkedIn, a purchase loan which would permit Microsoft to avoid billions of dollars in taxes and keep its offshore parked profits out of the reach of the U.S. federal government.

How many years now has the U.S. Congress been writing legislation?
Over 200 years...?

And they still can not master how to write simple, proper tax laws that do not enable, indeed, that prohibit such large-scale massive tax avoidance?
It is really quite remarkable.

Note: the fact is that Congressional representatives are much more busy these days in NOT doing things and bragging about it, like not filling federal judicial vacancies (for political reasons).

That Congress has a job to do has not yet reached many Congressional ears.

It is symptomatic of a currently broken system of government, led by an ever-weaker chief executive, who should instead simply appoint nominated judges to office whenever Congress refuses to fulfill its Constitutional duties as regards their orderly and timely confirmation process.

Not helpful thus far is also a timid U.S. Supreme Court that is not up to the task of even enforcing its own rightful Justice succession.

The Microsoft LinkedIn Acquisition and Adjusted-Ebitda Earnings Numbers Excluding Cost of Stock-Based Compensation as an Expense

This is an immediate follow-up on our previous posting on Microsoft's Deal to Acquire LinkedIn : Blessing or Bane?

Andrew Ross Sorkin at "Deal Book" at the News York Times examines One Unspoken Reason Behind the LinkedIn Sale relating to adjusted-Ebitda earnings numbers that exclude the cost of stock-based compensation as an expense for purposes of calculating earnings, a practice strongly criticized e.g. by investors such as Warren Buffet.

Microsoft's Deal to Acquire LinkedIn : Blessing or Bane?

Can LinkedIn prosper under Microsoft rule?

At Forbes, Mark Rogowsky asks: For Microsoft, LinkedIn Deals Looks Awfully Familiar But Is It Familiarly Awful?.

Microsoft has not been very successful in acquiring companies in the past so it is a very legitimate question as to whether LinkedIn will change that picture.

We think that the reason for Microsoft's past failures with acquired companies is to be found in a navel-gazing "company culture" that presumably has arisen out of its near-monopoly market position with the former DOS and now Windows operating systems ("OS").

Microsoft's dominant OS position has seemingly created a climate in which the company and its staff are used to doing what THEY want to do and not necessarily what the users want (or need).

The terrible Metro interface -- only mildly corrected in Windows 10 -- is one example of this phenomenon, marked by squares "off"-colored to meet a skewed concept of "designer art" having no apparent rhyme or organized reason for being. Color for the sake of color is not design. At least various types of programs could have been "color-coded". "Orange" for .exe, e.g., etc. Or "sky blue" for browsers. Nothing of the kind has happened. It is just a haphazard conglomeration of rather dreary shades, and that from a company with billions at their disposal. It all looks adolescent. Who can explain it?

That kind of "we do what we want" arrogance may work in developing and selling Windows and Office, but it works only because of a near-monopoly dominance where users are more or less forced to take what they are given.

Such a unilateral "me-oriented" corporate philosophy does not bide well, however, for acquisitions of companies engaged in real market competition.

The Nokia acquisition is a good example, culminating in Microsoft offering "Windows" phones that THEY (Microsoft) wanted to sell to promote THEIR "Metro" OS interface rather than offering phones for their OWN quality on the basis of what THE USERS needed and wanted to buy (in competitive markets).

We see this as well in the case of Microsoft acquisition Skype -- the graphic interface of which, however, has gotten worse since Microsoft acquired it, with staff and programmers implementing changes that few users want or need, rather than offering useful improvements FOR THE USER.

It is difficult to see how Microsoft's "take it or leave it" approach towards users will be beneficial to LinkedIn, which, rather, needs to upscale its presentation to meet the demands of the modern social media world.