More Videos:

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Why Is the SEC Silent on Microsoft?

Tickers in this article: AAPL BBRY FB MSFT NFLX
NEW YORK ( TheStreet) -- A quick glance at my article history reveals I'm not the biggest fan of Netflix's potential for long-term success, let alone survival, as a purveyor of original programming. That said, I tend to give Reed Hastings credit where it's due.

Nearly one year ago, I suggested investors buy NFLX stock "before it rises from the dead" because of, in part, a better-focused content strategy. The bet paid off; since July 30, 2012, NFLX shares have popped 358 percent. And, while I expect the business -- and, subsequently, the stock -- to implode (again) sooner or later, I have come around to the consensus: The SEC wasted its time policing Hastings' Facebook account only to make the right decision after a whole bunch of pomp and circumstance.

It's beyond dereliction of duty to take a public stance against Hastings, yet ignore acts that could, quite possibly, mislead investors and cost them money.

I can't help but go back to 2011, wondering where in the world the SEC was when the artist formerly known as RIM -- Blackberry -- led shareholders down the primrose path to destruction. Consider, via this October 2011 Seeking Alpha article I wrote, how former RIM CEO James Balsillie handled guidance and expectations for Playbook tablet sales as the overall business was unraveling.

You can draw similar comparisons between Microsoft CEO Steve Ballmer's public statements and the company's ugly reality.

It's not so much the EPS miss ( Microsoft earned 52 cents for Q4 on $19.9 billion in revenue, whereas Wall Street expected 75 cents and $20.73 billion ) as it is the company's $900 million charge on unsold Surface tablets .

In July 2012, Ballmer indicated Microsoft would sell a few million tablets within the year. In November 2012, Ballmer told MSFT shareholders about "a sea of upside" for Microsoft in the tablet market. In January 2013, UBS reported dismal surface sales, but a Microsoft spokesperson said:

We're pleased with the strong customer reception of Surface ... We've recently increased production and expanded distribution to additional retailer partners given the growing demand . We look forward to more customers getting hands-on time with the product as we continue to expand its availability in the coming months .

I added the bold emphasis to that passage.

In February 2013, Ballmer refuses to talk sales numbers, but calls Surface "a real business." In May 2013, Surface owned, for want of a better word, 1.8 percent tablet market share ( Apple's iPad was at 39.6 percent).

Circle back to October 2012 when Ballmer said this to pump Surface: I don't think anyone has done a product that I see consumers wanting .

Mind you, the aforementioned May 2013 data shows that Microsoft shipped 900,000 tablets in Q12013, while Apple shipped 19.5 million. Last week, Microsoft had to write down nearly $1 billion worth of inventory for a device that, just six months ago (and three months before to this abysmal quarter) was, based on official company statements, seeing strong consumer reception with growing demand that spurred company plans to expand its availability . Now, according to IBT's David Gilbert, Ballmer sits on about six million unsold tablets.