Company Profile of Microsoft

8/6/2019 Company Profile of Microsoft

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Company Profile of Microsoft

Introduction (History)

Microsoft is a multinational computer technology corporation. The history of Microsoft beganon April 4, 1975 and is headquartered in Redmond, Washington, when it was founded by BillGates and Paul Allen in Albuquerque. Its current best-selling products are the MicrosoftWindows operating system and the Microsoft Office suite of productivity software.

Starting in 1980, Microsoft formed an important partnership with IBM that allowed them to bundle Microsoft's operating system with computers that they sold, paying Microsoft a royaltyfor every sale. In 1985, IBM requested that Microsoft write a new operating system for their computers called OS/2; Microsoft wrote the operating system, but also continued to sell their own alternative, which proved to be in direct competition with OS/2. Microsoft Windowseventually overshadowed OS/2 in terms of sales. When Microsoft launched several versions of Microsoft Windows in the 1990s, they had captured over 90% market share of the world's

personal computers.

The company has now become largely successful. As of 2008, Microsoft has global annualrevenue of US$ 60.42 billion and nearly 90,000 employees in 105 countries. It develops,manufactures, licenses, and supports a wide range of software products for computing devices.

Microsoft has acquired 128 companies, purchased stakes in 60 companies, and made 24divestments. Of the companies that Microsoft has acquired, 99 were based in the United States.Microsoft's first acquisition was Forethought on June 29, 1987, which was founded in 1983 anddeveloped a presentation program that would later be known as Microsoft PowerPoint. Till nowMicrosoft’s last acquisition is in 10 December 2009, the Company acquired Opalis Software Incand Sentillion Inc.



Vision and Mission Statement

Microsoft is motivated and inspired every day by how its customers use our software to findcreative solutions to business problems, develop breakthrough ideas, and stay connected towhat's most important to them.

They are committed long term to the mission of helping our customers realize their full potential. They constantly update and improve their products; they want to continually evolvetheir company to be in the best position to accelerate new technologies as they emerge and to

better serve their customers.

To do so technological innovations is the foundation of their long-term growth and intend tomaintain their commitment to investment in research and development, engineering excellence,

and delivering high-quality products and services to customers and partners. They continue todevelop innovative software applications and solutions that they believe will enhanceinformation worker productivity, improve communication and collaboration in work groups, aid

business intelligence, and streamline processes for small and mid-sized businesses. To sustaingrowth in the face of competition from other vendors of proprietary and open source software,our goal is to deliver products that provide the best platform for network computing – softwarethat is easiest to deploy and manage, and that is most secure – with the lowest total cost of ownership.

In addition, they continue to invest in research and development in existing and new lines of business, including cloud computing, search, online solutions, business solutions, mobilecomputing, communication, entertainment, and other areas that they believe may contribute to

our long-term growth.

They also invest in research and development of advanced technologies for future software products. They believe that delivering innovative and high-value solutions through their integrated platform is the key to meeting customer needs and to their future growth.

This long-term focus on investment in research and development has enabled them to lay afoundation for future growth by delivering innovative products, creating opportunities for

partners, and improving customer satisfaction. They focus in fiscal year 2011 is to build on thisfoundation and to continue to execute well in key areas through ongoing innovation on their integrated software platform, by responding effectively to customer and partner needs, and byfocusing internally on product excellence, business efficacy, and accountability across the

company.

Corporate governance at Microsoft serves several purposes:

Establish and preserve management accountability to Microsoft's owners byappropriately distributing rights and responsibilities among Microsoft Board members,managers, and shareholders.



Provide a structure through which management and the Board set objectives and monitor performance.

Strengthen and safeguard their culture of business integrity and responsible business practices.

Encourage the efficient use of resources, and to require accountability for stewardship of

those resources.

Service/Product

Microsoft Corporation, incorporated in 1981, is engaged in developing, manufacturing, licensingand supporting a range of software products and services for different types of computingdevices. The Company’s software products and services include operating systems for personalcomputers, servers and intelligent devices; server applications for distributed computingenvironments; information worker productivity applications; business solutions applications;computing applications; software development tools, and video games. It operates in fivesegments:

Windows & Windows Live Division: Includes the Windows product family and is

responsible for our relationships with personal computer manufacturers as well as onlinesoftware and services through Windows Live.

Server and Tools: Software server products, services and solutions, including: WindowsServer operating system, Microsoft SQL Server, Visual Studio, Silverlight, SystemCenter products, Forefront security products, Biz Talk Server, and Microsoft ConsultingServices.

Online Services Division: Consists of an online advertising platform with offerings for publishers and advertisers, and online information offerings such as Bing and the MSN portals and channels.



Microsoft Business Division: Includes the Microsoft Office suites, desktop programs,servers, and services and solutions; Microsoft Dynamics; and Unified Communications

business solutions.

Entertainment and Devices Division: Consists of the Xbox video game system, including

consoles and accessories, Xbox Live operations, Zune digital music and entertainment device;Mediaroom, mobile and embedded device platforms, Surface computing platform, and

Windows Automotive.

Industry analysis

Stock Data: Recent Stock Performance:

Current Price (3/25/2011): 25.62

(Figures in U.S. Dollars)

1 Week 3.3% 13 Weeks -3.5%

4 Weeks -9.5% 52 Weeks -13.6%



Top Application Software Companies by Market Cap

Company Symbol Price Change Market Cap P/E

Microsoft Corporation MSFT 25.49 0.86% 213.34B 10.88

Oracle Corp. ORCL 33.53 1.16% 168.91B 25.21

SAP AG SAP 61.37 0.03% 72.83B 28.66

Adobe Systems Inc. ADBE 33.23 0.64% 16.72B 19.65

Salesforce.com CRM 133.28 0.68% 17.76B 283.57

Intuit Inc. INTU 52.76 1.78% 16.07B 31.98

MSFT vs. Industry Leaders

Statistic Industry Leader MSFT MSFT Rank

Market Capitalization MSFT 213.34B - 1 / 92

P/E Ratio (ttm) CRM 283.57 10.88 39 / 92

PEG Ratio (ttm, 5 yr expected) VTAL 14.23 0.98 34 / 92

Revenue Growth (Qtrly YoY) STV 140.00% 4.90% 52 / 92

EPS Growth (Qtrly YoY) QADA 860.00% 4.10% 27 / 92

Long-Term Growth Rate (5 yr) AMAP 35.00% 10.23% 46 / 92

Return on Equity (ttm) RNOW 47.38% 44.35% 2 / 92

Long-Term Debt/Equity (mrq) 19.960 N/A

Dividend Yield (annual) AMSWA 5.00% 2.50% 3 / 92



Abbreviation Guide:

MSFT = Microsoft Corporation

CRM = Salesforce.com Inc

VTAL = Vital Images, Inc

STV = China Digital TV Holding Co. Ltd.

QADA = QAD Inc.

AMAP = AutoNavi Holdings Limited.

RNOW = RightNow Technologies, Inc.

AMSWA = American Software, Inc.

Key Statistics

Data provided by Capital IQ , except where noted.

Valuation Measures

Market Cap (intraday)5: 213.34B

Enterprise Value (Mar 31, 2011)3: 184.30B

Trailing P/E (ttm, intraday): 10.84

Forward P/E (fye Jun 30, 2012)1: 9.20

PEG Ratio (5 yr expected)1: 0.98

Price/Sales (ttm): 3.23

Price/Book (mrq): 4.44

Enterprise Value/Revenue (ttm)3: 2.76

Enterprise Value/EBITDA (ttm)3: 6.23



Financial Highlights

Fiscal Year

Fiscal Year Ends: Jun 30

Most Recent Quarter (mrq): Dec 31, 2010

Profitability

Profit Margin (ttm): 30.84%

Operating Margin (ttm): 40.45%

Management Effectiveness

Return on Assets (ttm): 19.34%

Return on Equity (ttm): 44.35%

Income Statement

Revenue (ttm): 66.69B

Revenue Per Share (ttm): 7.71

Qtrly Revenue Growth (yoy): 4.90%

Gross Profit (ttm): 50.09B

EBITDA (ttm): 29.58B

Net Income Avl to Common (ttm): 20.57B

Diluted EPS (ttm): 2.34

Qtrly Earnings Growth (yoy): -0.40%



Balance Sheet

Total Cash (mrq): 39.98B

Total Cash Per Share (mrq): 4.76

Total Debt (mrq): 9.68B

Total Debt/Equity (mrq): 19.96

Current Ratio (mrq): 2.46

Book Value Per Share (mrq): 5.77

Cash Flow Statement

Operating Cash Flow (ttm): 25.38B

Levered Free Cash Flow (ttm): 17.55B

Trading Information

Stock Price History

Beta: 0.95

52-Week Change3: -12.56%

S&P500 52-Week Change3: 13.58%

52-Week High (Apr 23, 2010)3: 31.58

52-Week Low (Jul 1, 2010)3: 22.73

50-Day Moving Average3: 26.17

200-Day Moving Average3: 26.49



Share Statistics

Avg Vol (3 month)3: 59,822,000

Avg Vol (10 day)3: 43,650,600

Shares Outstanding5: 8.40B

Float: 7.41B

% Held by Insiders6: 12.01%

% Held by Institutions6: 64.70%

Shares Short (as of Feb 28, 2011)3: 86.23M

Short Ratio (as of Feb 28, 2011)

3

: 1.40

Short % of Float (as of Feb 28, 2011)3: 1.10%

Shares Short (prior month)3: 87.86M

Dividends & Splits

Forward Annual Dividend Rate4

: 0.64

Forward Annual Dividend Yield4: 2.50%

Trailing Annual Dividend Yield3: 0.58

Trailing Annual Dividend Yield3: 2.30%

5 Year Average Dividend Yield4: 1.80%

Payout Ratio4: 23.00%

Dividend Date3: Jun 8, 2011

Ex-Dividend Date4: May 17, 2011

Last Split Factor (new per old)2: 2:1

Last Split Date3: Feb 18, 2003



Abbreviation Guide:

K = Thousands; M = Millions; B = Billions

mrq = Most Recent Quarter (as of Dec 31, 2010)ttm = Trailing Twelve Months (as of Dec 31, 2010)

yoy = Year Over Year (as of Dec 31, 2010)

lfy = Last Fiscal Year (as of Jun 30, 2010)

fye = Fiscal Year Ending1

Data provided by Thomson2

Data provided by EDGAR Online3

Data derived from multiple sources or calculated by Yahoo! Finance4

Data provided by Morningstar, Inc.5

Shares outstanding is taken from the most recently filed quarterly or annual report and Market Cap is calculated

using shares outstanding.6

Data provided by Computershare

Currency in USD.



Analyst Estimates

Earnings Estimated Current Qtr.Mar 11

Next Qtr.Jun 11

Current YearJun 11

Next YearJun 12

Avg. Estimate 0.56 0.60 2.55 2.76

No. of Analysts 29.00 29.00 34.00 32.00

Low Estimate 0.49 0.53 2.40 2.55

High Estimate 0.61 0.65 2.64 2.92

Year Ago EPS 0.45 0.51 2.10 2.55

Next Earnings Date: Apr 28, 2011

Revenue Estimated

Current Qtr.

Mar 11

Next Qtr.

Jun 11

Current Year

Jun 11

Next Year

Jun 12

Avg. Estimate 16.30B 17.52B 69.72B 74.15B

No. of Analysts 27 27 30 31

Low Estimate 15.84B 16.82B 68.68B 71.32B

High Estimate 17.44B 20.16B 70.85B 77.26B

Year Ago Sales 14.50B 16.04B 62.48B 69.72B

Sales Growth (year/est) 12.40% 9.20% 11.60% 6.40%



Earnings History Mar 10 Jun 10 Sep 10 Dec 10

EPS Est 0.42 0.46 0.55 0.68

EPS Actual 0.45 0.51 0.62 0.77

Difference 0.03 0.05 0.07 0.09

Surprise % 7.10% 10.90% 12.70% 13.20%

EPS Trends

Current Qtr.

Mar 11

Next Qtr.

Jun 11

Current Year

Jun 11

Next Year

Jun 12

Current Estimate 0.56 0.60 2.55 2.76

7 Days Ago 0.56 0.60 2.55 2.76

30 Days Ago 0.56 0.60 2.55 2.76

60 Days Ago 0.55 0.60 2.45 2.69

90 Days Ago 0.56 0.60 2.45 2.69

EPS Revisions

Current Qtr.

Mar 11

Next Qtr.

Jun 11

Current Year

Jun 11

Next Year

Jun 12

Up Last 7 Days 0 0 0 1

Up Last 30 Days 0 1 0 1

Down Last 30 Days 0 0 0 0

Down Last 90 Days N/A N/A N/A N/A



Growth Estimated MSFT Industry Sector S&P 500

Current Qtr. 24.40% 20.70% 32.30% 22.70%

Next Qtr. 17.60% 28.50% 31.40% 31.10%

This Year 21.40% 26.50% 25.90% 18.00%

Next Year 8.20% 25.30% 22.30% 12.90%

Past 5 Years (per annum) 13.62% N/A N/A N/A

Next 5 Years (per annum) 10.23% 18.78% 18.74% 10.18%

Price/Earnings (avg. for

comparison categories) 10.00 23.37 19.50 13.37

PEG Ratio (avg. for

comparison categories)0.98 1.29 1.36 1.20

Currency in USD.

Major Holders

Breakdown

% of Shares Held by All Insider and 5% Owners: 12%

% of Shares Held by Institutional & Mutual Fund Owners: 65%

% of Float Held by Institutional & Mutual Fund Owners: 74%

Number of Institutions Holding Shares: 1771



Major Direct Holders

Holder Shares Reported

GATES WILLIAM H III 580,976,087 Feb 15, 2011

BALLMER STEVEN A 333,252,990 Nov 23, 2010

MARQUARDT DAVID F 1,180,243 Feb 15, 2011

OZZIE RAYMOND E 998,739 Nov 18, 2009

SINOFSKY STEVEN J 737,951 Jan 27, 2011

Top Institutional Holders

Holder Shares % Out Value* Reported

Capital Research Global Investors 306,154,198 3.64 8,544,763,666 Dec 31, 2010

VANGUARD GROUP, INC. (THE) 286,630,111 3.41 7,999,846,398 Dec 31, 2010

BlackRock Institutional Trust Company,

N.A.

202,049,526 2.40 5,639,202,270 Dec 31, 2010

Capital World Investors 174,408,700 2.08 4,867,746,817 Dec 31, 2010

JP MORGAN CHASE & COMPANY 141,270,955 1.68 3,942,872,354 Dec 31, 2010

Bank of New York Mellon Corporation 115,986,472 1.38 3,237,182,433 Dec 31, 2010

NORTHERN TRUST CORPORATION 99,657,062 1.19 2,781,428,600 Dec 31, 2010

FRANKLIN RESOURCES, INC 90,767,250 1.08 2,533,313,947 Dec 31, 2010

Invesco Ltd. 89,260,254 1.06 2,491,253,689 Dec 31, 2010

GOLDMAN SACHS GROUP INC 87,226,881 1.04 2,434,502,248 Dec 31, 2010



Top Mutual Fund Holders

Holder Shares % Out Value* Reported

GROWTH FUND OF AMERICA INC 127,840,100 1.52 3,568,017,191 Dec 31, 2010

INVESTMENT COMPANY OF AMERICA 88,265,800 1.05 2,463,498,478 Dec 31, 2010

VANGUARD TOTAL STOCK MARKET

INDEX FUND82,156,540 0.98 2,292,989,031 Dec 31, 2010

VANGUARD 500 INDEX FUND 67,413,857 0.80 1,881,520,748 Dec 31, 2010

CAPITAL WORLD GROWTH AND

INCOME FUND67,005,000 0.80 1,870,109,550 Dec 31, 2010

VANGUARD INSTITUTIONAL INDEX

FUND-INSTITUTIONAL INDEX FD57,930,059 0.69 1,616,827,946 Dec 31, 2010

SPDR S&P 500 ETF Trust 57,576,043 0.69 1,410,037,293 Sep 30, 2010

COLLEGE RETIREMENT EQUITIES FUND-

STOCK ACCOUNT43,117,137 0.51 1,055,938,685 Sep 30, 2010

VANGUARD/WINDSOR II 35,593,640 0.42 949,282,378 Oct 31, 2010

Powershares Exhg Traded Fd Tr-

Powershares QQQ Tr, Series 1 34,619,884 0.41 847,840,959 Sep 30, 2010

Value shown is computed using the security's price on the report date given.

Currency in USD.



Insider Transactions

Net Share Purchase Activity

Insider Purchases - Last 6 Months

Shares Trans

Purchases N/A 0

Sales 62,875,300 40

Net Shares Purchased

(Sold)(62,875,300) 40

Total Insider Shares Held 1.01B N/A

% Net Shares Purchased

(Sold)(5.9%) N/A

Net Institutional Purchases - Prior Qtr to Latest Qtr

Shares

Net Shares Purchased

(Sold)(90,881,100)

% Change in Institutional Shares Held (1.7%)

Data provided by Thomson Financial



Competitor analysis

Top Microsoft Corporation Competitors

Google IBM Oracle ACCESS Adobe Apple

Industries Where Microsoft Corporation Competes

Development Tools, Operating Systems & Utilities Software Computer Hardware Computer Peripherals Computer Input Devices & Speakers Computer Services Information Technology Services



Software Companies Ranked By Sales

Company Symbol Price Change Market Cap P/E

Microsoft Corporation MSFT 25.47 -0.55% 214.01B 10.87

Oracle Corp. ORCL 33.35 0.89% 168.47B 25.07

SAP AG SAP 61.42 0.07% 72.91B 28.69

CA Technologies CA 24.01 0.63% 12.25B 16.74

SOWT analysis



Some of the key issues facing Microsoft as it aim to maintain past successes include thefollowing.

Synergies

In the past, Microsoft has been extremely successful in developing new products by promoting,or bundling, them with existing brands. The Windows operating system is perhaps the bestexample of this, where applications such as Internet Explorer and Media Player have becomeindustry benchmarks due to their out of the box availability. By exploiting the monopoly power it has on PC operating software, it is in a position to influence the success of strategic areas of future performance. In an industry where the battleground for future dominance in thetechnology industry is likely to be aggressively fought, as companies increasingly move towardswholly integrated media devices, the strategic advantage of such a means cannot be overstated.

Legal Lawsuits

Due to an observed monopoly Microsoft enjoys in the home PC market, it could be consideredinevitable that competitors will seek to undermine or diminish this power though legal means. Itis, however, stated in Microsoft’s 2004 annual report that major progress has been made to stemlegal action and improve relations with governments. Nevertheless, the threat of lawsuitsremains one of the greatest threats to Microsoft’s current monopoly of its market position.

Current examples:

Recent payment to RealNetworks, Inc. ($361 million)

Recent Novell settlement

Emerging Online Brands

The emergence of online global brands has led to strong competition, particularly within themedia market, a developing Microsoft market according to Hoover (2005). Google and othersare increasingly bringing a greater range of products to the market, many of which directlycompete with Microsoft’s own product portfolios.

What perhaps differentiates Microsoft from many of its more traditional competitors such asIBM is its globalised nature. Anholt (2000), as cited by Fill (2002) suggests that by usingtechnology in place of more traditional physical distribution channels Microsoft was able tonegate the inefficiencies associated with the latter. Upcoming online brands, on the other hand,do not suffer the same traditional barriers, and may in time create better conditions to competeeffectively with Microsoft.



Finance (Balance Sheet, Income Statement)

Microsoft Corporation Income Statement

Jun 10 Jun 09 Jun 08

Revenue 62,484.0 58,437.0 60,420.0

Cost of Goods Sold 12,395.0 12,155.0 11,598.0

Gross Profit 50,089.0 46,282.0 48,822.0

Gross Profit Margin 80.2% 79.2% 80.8%

SG&A Expense 17,277.0 16,909.0 18,166.0

Depreciation & Amortization 2,673.0 2,562.0 2,056.0

Operating Income 24,098.0 20,363.0 22,492.0

Operating Margin 38.6% 34.8% 37.2%

Non operating Income 223.0 (1,248.0) 434.0

Non operating Expenses 692.0 706.0 --

Income Before Taxes 25,013.0 19,821.0 23,814.0

Income Taxes 6,253.0 5,252.0 6,133.0

Net Income After Taxes 18,760.0 14,569.0 17,681.0

Continuing Operations 18,760.0 14,569.0 17,681.0



Discontinued Operations -- -- --

Total Operations 18,760.0 14,569.0 17,681.0

Total Net Income 18,760.0 14,569.0 17,681.0

Net Profit Margin 30% 24.9% 29.3%

Diluted EPS from Total Net Income 2.10 1.62 1.87

Dividends per Share 0.52 0.50 0.43

All amounts in millions of US Dollars except per share amounts.

Microsoft Corporation Balance Sheet

Assets Jun 10 Jun 09 Jun 08

Current Assets

Cash 5,505.0 6,076.0 10,339.0

Net Receivables 13,014.0 11,192.0 13,589.0

Inventories 740.0 717.0 985.0

Other Current Assets 36,417.0 31,295.0 18,329.0

Total Current Assets 55,676.0 49,280.0 43,242.0

Net Fixed Assets 7,630.0 7,535.0 6,242.0

Other Noncurrent Assets 22,807.0 21,073.0 23,309.0

Total Assets 86,113.0 77,888.0 72,793.0

Liabilities Jun 10 Jun 09 Jun 08

Current Liabilities

Accounts Payable 4,025.0 3,324.0 4,034.0

Short-Term Debt 1,000.0 2,000.0 --

Other Current Liabilities 21,122.0 21,710.0 25,852.0

Total Current Liabilities 26,147.0 27,034.0 29,886.0

Long-Term Debt 4,939.0 3,746.0 --



Other Noncurrent Liabilities 8,852.0 7,550.0 6,621.0

Total Liabilities 39,938.0 38,330.0 36,507.0

Shareholder's Equity

Preferred Stock Equity -- -- --

Common Stock Equity 46,175.0 39,558.0 36,286.0

Total Equity 46,175.0 39,558.0 36,286.0

Shares Outstanding (thou.) 8,668,000.0 8,908,000.0 9,313,293.0


Microsoft Corporation Cash Flow Statement

Jun 10 Jun 09 Jun 08

Net Operating Cash Flow 24,073 19,037 21,612

Net Investing Cash Flow (11,314.0) (15,770.0) (4,587.0)

Net Financing Cash Flow (13,291.0) (7,463.0) (12,934.0)

Net Change in Cash (571.0) (4,263.0) 4,228.0

Depreciation & Amortization 2,673.0 2,562.0 2,056.0

Capital Expenditures (1,977.0) (3,119.0) (3,182.0)

Cash Dividends Paid (4,578.0) (4,468.0) (4,015.0)


Financial Statements in another format



Income Statement

All numbers in thousands

Period Ending Jun 30, 2010 Jun 30, 2009 Jun 30, 2008

Total Revenue 62,484,000 58,437,000 60,420,000

Cost of Revenue 12,395,000 12,155,000 11,598,000

Gross Profit 50,089,000 46,282,000 48,822,000

Operating Expenses

Research Development 8,714,000 9,010,000 8,164,000

Selling General and Administrative 17,277,000 16,909,000 18,166,000

Non Recurring - 330,000 -

Others - - -

Total Operating Expenses - - -

Operating Income or Loss 24,098,000 20,363,000 22,492,000

Income from Continuing Operations

Total Other Income/Expenses Net 915,000 (542,000) 1,322,000

Earnings Before Interest And Taxes 25,013,000 19,821,000 23,814,000

Interest Expense - - -

Income Before Tax 25,013,000 19,821,000 23,814,000

Income Tax Expense 6,253,000 5,252,000 6,133,000

Minority Interest - - -

Net Income From Continuing Ops 18,760,000 14,569,000 17,681,000

Non-recurring Events

Discontinued Operations - - -



Extraordinary Items - - -

Effect Of Accounting Changes - - -

Other Items - - -

Net Income 18,760,000 14,569,000 17,681,000

Preferred Stock And Other Adjustments - - -

Net Income Applicable To Common Shares 18,760,000 14,569,000 17,681,000

Currency in USD.

Balance Sheet



Assets

Current Assets

Cash And Cash Equivalents 5,505,000 6,076,000 10,339,000

Short Term Investments 31,283,000 25,371,000 13,323,000

Net Receivables 15,198,000 13,405,000 15,606,000

Inventory 740,000 717,000 985,000

Other Current Assets 2,950,000 3,711,000 2,989,000

Total Current Assets 55,676,000 49,280,000 43,242,000

Long Term Investments 7,754,000 4,933,000 6,588,000

Property Plant and Equipment 7,630,000 7,535,000 6,242,000

Goodwill 12,394,000 12,503,000 12,108,000

Intangible Assets 1,158,000 1,759,000 1,973,000



Accumulated Amortization - - -

Other Assets 1,501,000 1,599,000 1,691,000

Deferred Long Term Asset Charges - 279,000 949,000

Total Assets 86,113,000 77,888,000 72,793,000

Liabilities

Current Liabilities

Accounts Payable 8,564,000 8,889,000 12,830,000

Short/Current Long Term Debt 1,000,000 2,000,000 -

Other Current Liabilities 16,583,000 16,145,000 17,056,000

Total Current Liabilities 26,147,000 27,034,000 29,886,000

Long Term Debt 4,939,000 3,746,000 -

Other Liabilities 7,445,000 6,269,000 6,621,000

Deferred Long Term Liability Charges 1,407,000 1,281,000 -

Minority Interest - - -

Negative Goodwill - - -

Total Liabilities 39,938,000 38,330,000 36,507,000

Stockholders' Equity

Misc Stocks Options Warrants - - -

Redeemable Preferred Stock - - -

Preferred Stock - - -

Common Stock 62,856,000 62,382,000 62,849,000

Retained Earnings (16,681,000) (22,824,000) (26,563,000)

Treasury Stock - - -

Capital Surplus - - -

Other Stockholder Equity - - -



Total Stockholder Equity 46,175,000 39,558,000 36,286,000

Net Tangible Assets 32,623,000 25,296,000 22,205,000

Currency in USD.

Cash Flow



Net Income 18,760,000 14,569,000 17,681,000

Operating Activities, Cash Flows Provided By or Used In

Depreciation 2,673,000 2,562,000 2,056,000

Adjustments To Net Income 1,979,000 2,084,000 1,722,000

Changes In Accounts Receivables (2,238,000) 2,215,000 (1,569,000)

Changes In Liabilities 2,702,000 (1,698,000) 1,667,000

Changes In Inventories - - -

Changes In Other Operating Activities 197,000 (695,000) 55,000

Total Cash Flow From Operating Activities 24,073,000 19,037,000 21,612,000

Investing Activities, Cash Flows Provided By or Used In

Capital Expenditures (1,977,000) (3,119,000) (3,182,000)

Investments (7,590,000) (10,853,000) 6,648,000

Other Cash flows from Investing Activities (1,747,000) (1,798,000) (8,053,000)

Total Cash Flows From Investing Activities (11,314,000) (15,770,000) (4,587,000)

Financing Activities, Cash Flows Provided By or Used In



Dividends Paid (4,578,000) (4,468,000) (4,015,000)

Sale Purchase of Stock (8,958,000) (8,774,000) (9,039,000)

Net Borrowings 190,000 5,746,000 -

Other Cash Flows from Financing Activities 10,000 (19,000) 120,000

Total Cash Flows From Financing Activities (13,291,000) (7,463,000) (12,934,000)

Effect Of Exchange Rate Changes (39,000) (67,000) 137,000

Change In Cash and Cash Equivalents (571,000) (4,263,000) 4,228,000

Currency in USD.

Current Event/News

Cloud Friendly' US Cities

Microsoft interviewed more than 2,000 IT decision-makers in 10 U.S. cities. The survey indicates that

cloud computing is helping to create new businesses and jobs in each city.

New Innovations in IT Support Environmental Sustainability in Africa

This piece of cutting-edge technology illustrates how it is possible to create sustainable 21stcentury work environments, and is at the center of Microsoft’s green IT strategy. Andimplementing green IT policies like the highly efficient ITPAC data center is not only ensuringthe building’s energy neutrality, but also demonstrating the crucial role that technology can playin environmental sustainability.

The ITPAC technology uses fans to create negative pressure, drawing outside air through thecontainer to cool equipment. As a result, the technology dramatically reduces typical data center carbon footprint and the consumption of materials such as water, concrete, steel, piping andcopper, along with the additional carbon footprint associated with the packaging andtransporting of servers, equipment and supplies.

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The building is the first of its kind for the UN in Africa and is a global showcase of sustainable design andtechnology

Microsoft Reports Record $0.77 Earnings Per Share in Second Quarter

Microsoft announced it has now sold over 300 million Windows 7 licenses, andWindows 7 is now running on over 20% of Internet-connected PCs.

Windows Phone 7 launched during the quarter in 30 countries and on 60 operators andnine different devices. Microsoft announced developers are adding Windows Phone 7applications to the marketplace at a rate of over 100 per day.

Bing completed the integration of Yahoo! search in the U.S. and Canada and continues

to gain share. Windows Azure developer momentum continued this quarter, with Pixar Animation

Studios, ADP with NVoicePay and others demonstrating compelling uses of the platform.

Internet Explorer 9 is Microsoft’s fastest downloaded beta browser of all time with over 20 million downloads to date.

At International CES 2011 in early January, Microsoft announced that the next versionof Windows will support System on Chip architectures.

The company announced that during the quarter, it bought back $5 billion in stock anddeclared $1.3 billion in dividends.



HR (Org chart)

The company is run by a board of directors made up of mostly company outsiders, as is customary for

publicly traded companies. Members of the board of directors as of June 2010 are: Steve Ballmer, Dina

Dublon, Bill Gates (chairman), Raymond Gilmartin, Reed Hastings, Maria Klawe, David Marquardt,

Charles Noski, and Helmut Panke. Board members are elected every year at the annual shareholders'

meeting using a majority vote system. There are five committees within the board which oversee more

specific matters. These committees include:

The Antitrust Compliance Committee, which attempts to prevent company practices from

violating antitrust laws.

The Audit Committee, which handles accounting issues with the company including auditing

and reporting;

The Compensation Committee, which approves compensation for the CEO and other employees

of the company;

The Finance Committee, which handles financial matters such as proposing mergers and

acquisitions;

The Governance and Nominating Committee, which handles various corporate matters

including nomination of the board;

Each committee performs its duties as assigned by the Board in compliance with Microsoft's Bylaws and

its charter.



Microsoft Corporation Corporate Governance Fact Sheet

Size of Board 9 Number of Independent Directors 7Annual Review of Independence of Board YesSeparate Chairman and CEO Yes

Lead Independent Director YesCharters for Board Committees YesIndependent Audit Committee Yes

Number of Financial Experts on Audit Committee 3Independent Finance Committee YesIndependent Governance and Nominating Committee YesIndependent Antitrust Compliance Committee YesIndependent Compensation Committee YesCompensation Consultant Independence Policy Yes

Number of Board Meetings Held in FY 2010 7Independent Directors Hold Meetings Without Management Present YesAnnual Board Elections Yes

Directors Elected by the Vote of a Majority of Votes Cast in Uncontested ElectionsYesAnnual Board Evaluation YesKey Committee Self Evaluations YesIndividual Director Evaluations YesAnnual Equity Grant to Non-Employee Directors YesDirector Stock Ownership Guidelines YesExecutive Stock Ownership and Holding Requirements YesCorporate Governance Guidelines Approved by Board YesCorporate Compliance Program YesStandards of Business Conduct YesFinance Code of Professional Conduct YesBoard Orientation and Education Program Yes

Microsoft Board of Directors Committee Structure and Membership

DirectorAntitrust

ComplianceAudit Compensation Finance

Governance

and

Nominating

Independent

Ms. Dublon M C

Mr. Gilmartin M C

Mr. Hastings M M MDr. Klawe M M

Mr. Marquardt C M

Mr. Noski C

Dr. Panke C M M

Non-Independent

Mr. Gates

Mr. Ballmer



Marketing (4ps)

Microsoft Business Division ("MBD") develops and markets software and services designed to increase

personal, team, and organization productivity. MBD offerings include the Microsoft Office system

(comprising mainly Office, SharePoint, Exchange and Lync), which generates over 90% of MBD revenue,

and Microsoft Dynamics business solutions. We evaluate MBD results based upon the nature of the end

user in two primary parts: business revenue, which includes Microsoft Office system revenue generated

through volume licensing agreements and Microsoft Dynamics revenue; and consumer revenue, which

includes revenue from retail packaged product sales and OEM revenue.

Global macroeconomic factors have a strong correlation to demand for their software, services,hardware, and online offerings. The current macroeconomic factors remain dynamic anduncertain. Irrespective of global economic conditions, they are positive about their relativemarket position, our current product portfolio, and future product pipeline. Because they offer awide range of products and services that enable companies to improve productivity and reducecosts, including cloud-based services, they believe that Microsoft is well-positioned to create

new opportunities to increase revenue as the global economy improves. They remain focused onexecuting in the areas we can control by continuing to provide high value products at the lowesttotal cost of ownership while managing our expenses.

1. Product:

“Product” refers to the goods and services that firm’s offer to their customers. Firms must placesufficient importance to the product/service as well as the other aspects associated with the

product that attract customer attention. At Microsoft, the product is the full bundle of goods andservices offered including software and after sales service. Product characteristics include thefunctionality, appearance, and support customers receive when Microsoft products are

purchased. Product also includes the unique features, functions, and characteristics of Microsoftsoftware that are not available from its competitors' products. It is important that Microsoft beable to continue to distinguish and differentiate its products from the competition. To that end,during fiscal years 2001, 2002, and 2003, research and development expenses were a staggering$4.38 billion, $4.31 billion, and $4.66 billion, respectively. Those amounts represented 17.3%,15.2%, and 14.5%, respectively, of revenue in each of those years. Most of Microsoft's productsare developed internally, but the company also purchases new technology, licenses intellectual

property rights, and oversees third-party development of certain products. Microsoft's productsinclude scalable operating systems for servers, personal computers, and intelligent devices;server applications

2. Price:

“Price” refers to the cost of a particular product or service. Price plays an important role incustomer’s buying decision. As far as price is concern Microsoft has global annual revenue of US$ 60.42 billion. Their product price helps them to achieve such huge revenue. Segmenting thehuge customers and valuing their demands and requirements Microsoft has a stack of different

product offering different price. Their price diversification leads their products to capture theglobal market.

Company Profile of Microsoft

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