- - Sunday, July 20, 2014

ANALYSIS/OPINION:

On Tuesday, tech giant Microsoft will explain how many jobs a cash-rich, uber-profitable enterprise will savage, staying ahead of cut-throat competition in the global marketplace.

Meanwhile, the debt-loving Obama Administration touts “success” in slashing the Federal Government deficit for the year ending Sept. 30, 2014, to $583 billion — an estimate that, even if achieved, still would be markedly higher than largest annual deficits produced before 2008.


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The contrast is striking — the reactions from the left and the right likely will prove even more so.

Are corporations evil?

Why does a thriving company like Microsoft eliminate employees now, when it is far more solvent than any government entity in America, well-positioned for the future, and generating profits? Surely, the cruel capitalists who own Microsoft and the fat-cats who oversee its greedy, overpaid managers can be shamed into “spreading some of their wealth around”?


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But the reality for companies like Microsoft is much more difficult than it is for the American government.

Unlike governments that force us to pay for services we may or may not need at prices we do not negotiate, Microsoft cannot make anyone buy their products and services. Customers have numerous alternatives — they exercise informed free will when they part with their hard-earned money.

Furthermore, when a business runs into financial trouble, someone must put cash into the company — Microsoft does not control a financial printing press, the way Team Obama seems to (at least for the moment).

Yes, Microsoft has achieved robust growth in revenues since 2008. In the 12 months ended June 30, 2008, Microsoft’s 91,000 employees sold $60.4 billion or $663,956 per employee.

In the most recent year for which Microsoft financial results are available (the one that ended June 30, 2013), the Company’s 99,000 employees achieved sales that were 28.8 percent higher at $ 77.8 billion. On a per-employee basis, Microsoft’s sales increased 18.4 percent to $786,354 per employee.

However, success building revenue growth came at cost to profits — on a pretax basis, these dropped from 39.4 cents for each dollar of revenue in 2008 to 34.7 cents per dollar of revenue in 2013.

Unlike profligate governments, companies such as Microsoft are held to account promptly when their financial performance deteriorates, even if they take in much more cash than they spend in a given fiscal year.

So Microsoft will correctly prune ahead of trouble, creating rich opportunities for opponents to squeal about inequities.

Is government noble?

Story Continues →