Stubbing your SOX toes - Microsoft style
December 27, 2005 by Dennis Howlett
Sometimes bloggers screw up big time and then we get to find out whether the so-called blogosphere is a talking shop in miniature or wether it has real influence. Today is one of those days. In a post about Google but which discussed the issue of RSS feeds, Microsoft uber-blogger Robert Scoble said:
"Yeah, we’re doing our own in Office 12, but let’s be honest, how long will it be before that gets to more than 50% usage? I’d guess 2010. And even then there are lots of people who’ll still have Outlook 2003, and older Outlook clients, who’ll need to read feeds."
I pounced on this. Since when was Scoble the self-appointed sales forecast person at MSFT? Must be a new position. OK - so I’m assuming Scoble has some inside research track others don’t. Is he divulging a material event for the purposes of Section 404. Sarbanes-Oxley Act?
When questioned about the predictive quality of the post, Scoble comes back with:
"Dahowlett: actually, I think uptake on this version will be a lot faster than that, but I wanted to be very conservative."
Which is it ‘honest’ or ‘conservative?’
So let’s take this a step further. All those that think Scoble has triggered a 404 event, vote by leaving a comment. (Apart from the fun value, I’ll find out if anyone a: actually reads this over Christmas and b: if anyone knows how to apply 404 in these circumstances and c: what lessons there are to learn for those who are thinking about using this as a communications medium.)
More seriously from a practice perspective, let’s assume you’ve got a handle on making a difference in a chosen market - do you really want your junior staff dictating the conversation around the value this service delivers? It’s a real risk.
I’m no SOX expert, nor do I play one on the internet. At the very least, using your recounting of the story as my sole basis for coming to a conclusion, it seems that Scoble once again blurs the line between "personal blog" and "official MSFT communications channel". I trust that he was "just" mouthing off about Office 12’s prospects, however it sounds a bit more serious than that. What do I win for reading this post over the holidays and commenting?
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What you win are Gold stars for being so sad as to read this post at this time of night CET I earn extra stars for monitoring the posts at this ludicrous time of night! But seriously I do think Robert needs to take care. This isn’t trivial.
He does have a lot to offer - if he knows the parameters…
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But of course forecasting is all crystal balls, and in any case Scoble is not making a forecast that in any sense has a financially quantifiable impact on Microsoft’s results. Perhaps you did not like the implication that SaaS may not be as revolutionary as some are predicting?
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Dennis, would sayings from Robert Scoble really be taken so seriously by a compliance authority? Makes me think blogging anonamously is the way to go.
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To Alastair’s point - I’d not thought of the SaaS angle at all but then MSFT hasn’t made up its mind what it’s doing there yet so it’s too early to tell. I had other issues in mind. Scoble is in a unique position and has access to information others outside the company could not possibly obtain. He may not be an exec in the conventional sense but he’s got a huge megaphone that many listen to. From my meetings with the man, I suspect he knows a lot more than he’s letting on. Given the way 404 operates in the US (and how paranoid US execs are about this stuff) I would argue he’s making a clear prediction. And it’s important because Office 12 will be the biggest launch in 5 years. If it fails or doesn’t get taken up as quickly as past releases, then MSFT has a revenue hole. Given the pace of current change, the many apps being released almost daily (none of which are going on MSFT platforms), the influence of OSS inside the developer community and the bets VCs are making in non-MSFT apps then IMHO this is an issue way beyond the actual numbers. Either way, the more interesting point is just how much impact and influence he really has. By making these kinds of statement and then seeing the response, we get to find out. It has implications for anyone looking at this medium. Finally - it seems incredibly naive to pontificate around M&A in the public arena. Either that or he’s been mandated to make ‘noise’ in the market and we’re out here sucking it up…
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Sorry, but you aren’t a very careful reader. I said "I guess."That means I don’t have access to the actual sales trend data or the official Office group’s predictions.
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Not the point Robert. It is almost inconceivable (in my world) that anyone would make a takeup statement, whether a guess or not without some insight into how the numbers are anticipated to run out in varying scenarios. It certainly sends a message to the VAR community that maybe Office 12 will not give them the next boost in revs they’d otherwise anticipate. Any which way, as either an investor in the general sense or an investor in the sense of using/making money from MSFT products, I’d sure as heck want clarification.
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Courtesy of Vinnie Mirchandani’s latest blog I’ve just read the 404 section of SOX. The wording is so general as to be almost useless, IMO.What I can’t see is how you relate what Scoble said to what’s in the 404 requirements.
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The SEC wouldn’t agree with you there Simon. The more important but unexplained point is that US reporting is very much rules driven rather than being based on ideas around ‘fair value’ as is the case with UK GAAP (same in SA?.) It’s one of the reasons the Enron’s of this world could do what they were doing at the time.
They were working at the edges of legislation, bending and as seems now to be the case, breaking the rules. No amount of legislation will stop this but it should curtail the most obvious excesses in creative accounting.
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