$-$Greg Maffei, $CF{O}^1$ On June $30,1999,$ during a conference call with analysts, Microsoft Corporation announced that the company was under investigation by the Securities and Exchange Commission $($SEC$)$ for certain accounting practices. Although the exact focus of the investigation was not disclosed, the common belief was that the investigation involved the company's deferral of revenue and other undisclosed reserve accounts. ${?}^2$ Company Background ${?}^3$ As the developer and manufacturer of products such as the Windows operating system, the Internet Explorer web browser, and the Microsoft Office suite of applications, Microsoft was easily the most widely recognized software developer in the world. The company's history had been well documented$-$in articles, books, documentaries and even a made$-$for$-$television movie, "Pirates of Silicon Valley." Bill Gates and Paul Allen founded the company in $1975,$ with the idea that one day there would be "a computer on every desk and in every home." The company's big break came in $1980$ when it negotiated with IBM to provide the operating system for IBM's new personal computer. The result was MS$-$DOS and by the mid$-80$s$,$ Microsoft dominated the market for operating systems. The company went public on March $13,1986$ at $$25\mathrm{.}75$ per share. As of June $30,1999,$ one share of Microsoft purchased at the initial public offering was worth almost $$13,000.$ By this time, the company also had the highest market value of any U$.$S$.$ public company $($approximately $$460$ billion$)$ and its CEO, Bill Gates, was the world's wealthiest individual. Since going public in $1986,$ the company's financial performance had been nothing short of extraordinary $($see Exhibits $1$ and $2).$ Revenue and operating income grew an average of $43\%$ and $1$ "Microsoft Faces Investigation By SEC Over Its Accounting," Wall Street Journal, July $1,1999.{?}^2$ Ibid. ${?}^3$ This brief historical account of Microsoft's development borrows from "Microsoft, $1995($Abridged$),"$ Harvard case number $9-799-003,$ by Professors Tarun Khanna and David Yoffie.