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Comment by theogravity | Hacker News Reader

Wonder why the stock hasn't taken a huge hit after the news. $28.9bln sounds like a lot. Maybe investors think MS will find a way to reduce the amount or pull of an extremely long term repayment plan?

>As of September 30, 2023, we believe our allowances for income tax contingencies are adequate. We disagree with the proposed adjustments and will vigorously contest the NOPAs through the IRS’s administrative appeals office and, if necessary, judicial proceedings. We do not expect a final resolution of these issues in the next 12 months. Based on the information currently available, we do not anticipate a significant increase or decrease to our tax contingencies for these issues within the next 12 months.

Maybe it's because they won't face the music for at least a year.

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> Wonder why the stock hasn't taken a huge hit after the news. $28.9bln sounds like a lot. Maybe investors think MS will find a way to reduce the amount or pull of an extremely long term repayment plan?

It’s very simple, the market doesn’t expect that MSFT will have to pay $28.9B in back taxes.

Or the market already priced it in?

The back taxes add up to about 1.2% of Microsoft's current market cap, and it looks like the stock is down roughly 0.6% in after-hours trading. So I guess the market collectively estimates MS will end up owing about half of that amount.

Or, the number is only slightly higher than investors inspected. I assume this isn't the first news of this issue with the SEC and news like this was already priced-in to the stock.

Even if it is the first news of this particular issue, it doesn't surprise anyone when one of these big corps is hit with a big fine.

The announcement of back taxed for the years 2004-2013 at least places an upper bound on those past years. So this means that Microsoft investors now only have to worry about accounting failures over the years 2014-present! Less uncertainty = good news!

You're giving traders way too much credit for rationality here.

Partly (or maybe totally) because the 28.9 billion number is essentially the opening number in a negotiation (and there is even a chance the the figure is completely wrong and nothing additional is owed) and there is basically 0% chance MS ends up paying $28.9 billion.

Its not a final determination. If they do actually paying up that much money is when I expect investor sentiment to change.

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