Microsoft

Microsoft Corporation Prepared by – Tushar Seth Brief Overview of the Company: Microsoft Corporation (NASDAQ: MSFT) (SEHK: 4338), is an American multinational computer technology corporation with 79,000 employees in 102 countries and global annual revenue of US $51.12 billion as of 2007. It develops, manufactures, licenses and supports a wide range of software products for computing devices. Headquartered in Redmond, Washington, USA. Business Solutions: Platform Products and Services Division

Microsoft Windows Windows 3.1, Windows 95, Windows 98, Windows 2000, Windows 2000 server, Windows Me, Windows Server 2003, Windows XP and Windows Vista •

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The online service MSN, the cable television station MSNBC and the Microsoft online magazine Slate are all part of this division. (Slate was acquired by The Washington Post on December 21, 2004.)

MSN Messenger, MSN Hotmail (in 1997 Microsoft acquired Hotmail) •

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Microsoft Visual Studio • Visual Studio 2005 • Visual Basic (.NET) • Visual C++ • Visual C# • Visual J# • ASP.NET

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Visual Studio.Net 2003 Windows Live Windows Mobile

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The Company established a set of certification programs to recognize individuals who have expertise in its software and solutions: • Developers"Microsoft Certified Solution Developer") • System/network analysts ("Microsoft Certified Systems Engineer") • Trainers ("Microsoft Certified Trainers") • Administrators ("Microsoft Certified Systems Administrator" and "Microsoft Certified Database Administrator")

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SQL Server, a relational database management system; Exchange Server, for certain business-oriented e-mail features; Small Business Server, for messaging and other small business-oriented features; and BizTalk Server, for employee integration assistance and other functions

Business Division Microsoft Office Word (a word processor), Access (a personal relational database application), Excel (a spreadsheet program), Outlook (Windows-only groupware, frequently used with Exchange Server), PowerPoint (presentation software), and Publisher (desktop publishing software). A number of other products were added later with the release of Office 2003 including Visio, Project, MapPoint, InfoPath and OneNote Financial and business management software for companies The group markets Axapta and Solomon, catering to similar markets, which is scheduled to be combined with the Navision and Great Plains lines into a common platform called Microsoft Dynamics Entertainment and Devices Division • • • •

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Windows CE for PDAs Windows Mobile 6 MSN TV Computer games • Age of Empires • Halo • Microsoft Flight Simulator series • Xbox • Xbox 360 Computing-related hardware products as well, including mice, keyboards, joysticks, and gamepads, along with other game controllers Zune is the name of a brand of digital music products and services sold by Microsoft.

Major Customers: Everybody and anybody using the above products becomes the customer of Microsoft. The major industries they are into are mentioned below: • • • • •

Computer software Publishing Research and development Computer hardware Video games

Major Events in the company (M&A etc.):

2007 EU antitrust $ 613 million fine On September 17, 2007, EU Court of First Instance denied Microsoft's appeal versus an EU antitrust order to share communications code with rivals and sell a copy of Windows without Media Player. In upholding the $613 million fine, the court decided that European Commission did not err in finding Microsoft guilty of monopoly abuse. The 248-page judgment can be reviewed by the European Court of Justice, within 2 months. 2005–present: Vista and other transitions In 2006, Bill Gates announced a two year transition period from his role as Chief Software Architect, which would be taken by Ray Ozzie, and planned to remain the company's chairman, head of the Board of Directors and act as an adviser on key projects. As of July 2007, Windows Vista is Microsoft's latest operating system, released in January 2007. Microsoft Office 2007 was released at the same time; its "Ribbon" user interface is a significant departure from its predecessors. Hyperion Corporation (Hyperion) and Microsoft Corporation (Microsoft) announced a new partnership (http://hyperion.com/company/news/). The basic premise of the announcement related to interoperability. Hyperion's numerous business intelligence applications will be enhanced to leverage Microsoft's Analysis Services (Analysis Services) as an option for its backend database. Analysis Services is Microsoft's multidimensional database that has been in direct competition with the industry's longstanding market leader, Hyperion Essbase (Essbase). Microsoft acquired Great Plains in April 2001. Thursday morning's announcement that Microsoft Corp. is buying Great Plains Software in a stock deal worth $1.1 billion marks a significant departure for both the software giant's corporate strategy and the market for small business software. Navision was acquired to provide a similar entry into the European market, resulting in the planned release of Microsoft Dynamics NAV in 2006 Yahoo Chief: No Sale to Microsoft MindAlign will now become part of the Microsoft Office Communications Server platform. August 30, 2007 Microsoft Acquires Management Interoperability Specialist Engyro June 5, 2007 In May, the company made its biggest acquisition ever (BusinessWeek.com, 5/18/07), a $6 billion purchase of online marketing powerhouse aQuantive. In 2006, we also made a number of strategic acquisitions, including FrontBridge Technologies, a provider of security-enhanced managed messaging services; Teleo, which develops voice over Internet protocol (VoIP) software; mobile search technology provider MotionBridge; and Massive, a pioneer in delivering advertising within video games. Some other small acquisitions by Microsoft since 2003:

Nov. 3, 2005: FolderShare Nov. 3, 2005: media-streams.com AG Aug. 30, 2005: Teleo Inc. Jul. 20, 2005: FrontBridge Technologies Mar. 10, 2005: Groove Networks Inc. Feb. 8, 2005: Sybari Software Inc. December 16, 2004: GIANT Company Software April 26, 2004: ActiveViews April 30, 2003: PlaceWare Feb. 19, 2003: Connectix Financials: On July 20, 2006, we announced that our Board of Directors authorized two new share repurchase programs: a $20 billion tender offer which was completed on August 17, 2006; and authorization for up to an additional $20 billion ongoing share repurchase program with an expiration of June 30, 2011. Under the tender offer, we repurchased approximately 155 million shares of common stock, or 1.5% of our common shares outstanding, for approximately $3.8 billion at a price per share of $24.75.

Operating Income / (Loss) For the quarter ended

(In millions)

For the quarter ended

September 30 December 31 September 30 December 31 , , March 31, June 30, Fiscal Year , , March 31, June 30, Fiscal Year 2005 2005 2006 2006 2006 2004 2004 2005 2005 2005

Segments Client

$ 2,569 $2,638

Server and Tools Online Services Business Microsoft Business Division Entertainment and Devices CorporateLevel Activity Total operatin g income

$ 2,471 $ 2,504

$10,182

$ 2,387

$2,513

$ 2,331

$ 2,172

$ 9,403

3,017

455

660

515

479

2,109

79

130

101

101

411

2,160

2,355

2,316

2,285

9,116

606 762

746

903

58

(26)

(190)

81 (77)

2,251 2,466

2,414

2,544

9,675

(182 )

(296)

(422)

(437)

(1,337)

(202)

(1,279 )

(971)

(1,295)

(1,443)

(4,988)

(1,385)

$ 3,888 $ 3,881

$16,472

28 (937)

(198)

(235)

(607)

(1,736)

(1,813)

(5,871)

$ 4,046 $4,657

$ 3,494

$4,749

$ 3,329

$ 2,989

$14,561

Sources of Revenue: Revenue For the quarter ended

For the quarter ended

September 30 December 31 September 30 , ,March 31, June 30, Fiscal Year , December 31, March 31, June 30, Fiscal Year (In millions) 2005 2005 2006 2006 2006 2004 2004 2005 2005 2005 Segments Client

$3,187 $ 3,459 $ 3,187

Server and Tools Online Services Business Microsoft Business Division Entertainmen t and Devices Total reven ue

$ 3,376

$13,209

$2,980

$ 3,193

$ 2,964

$ 3,014

$12,151

2,127 2,438

2,398

2,690

9,653

1,906

2,161

2,058

2,245

8,370

594

561

580

2,299

559

606

581

598

2,344

3,689

3,608

3,908

14,488

3,086

3,413

3,384

3,637

13,520

1,657

1,146

1,250

4,633

658

1,445

633

667

3,403

$11,837 $ 10,900

$11,804

$44,282

$9,189

$10,818

$9,620

$10,161

$39,788

564 3,283 580

$9,741

Competitors: Company Strategy: Key market opportunities include: • Strengthening core businesses through new product launches, upgrades, making inroads against software piracy, and extending PC accessibility to new consumers in emerging markets.

• Succeeding in adjacent businesses by offering extensions of our technologies targeted towards specific customer needs – either as new products or as highervalue versions of existing products. • Entering new markets as we redefine how people create, deliver, and experience entertainment. • Delivering software services through online consumer services and services for businesses that enable workers to collaborate interactively.

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Enabling People-Ready Businesses by providing the right software that helps companies become people-ready businesses where employees are empowered and inspired to use technology to solve problems, collaborate with colleagues, serve customers, and seize new opportunities. A Focus on Long-Term Success

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A Strategic Foundation for Growth

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In the year ahead—and the years to come—Microsoft expect many of our longterm investments to show a significant return in areas ranging from online advertising to digital communications, entertainment, and Internet television, even as our more mature businesses continue to generate significant revenue growth

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Strengthening core businesses: Windows Client, Information Worker, and Server and Tools remain their largest businesses. The 2007 releases of new versions of Windows and Office will drive continued growth for each of these groups. With Windows Vista, growth will come from new PC shipments, upgrades across our installed base, and the availability of new premium versions.

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Entering new markets: Microsoft is excited by a number of important new opportunities that lie before us. With Xbox 360 and Xbox Live®, their online gaming and entertainment service, Microsoft is redefining how people create, deliver, and experience entertainment.

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Summary - Take aways: Fueled by strong demand for new and existing products Revenue in 2006 grew by $4.49 billion, an 11 percent increase, to $44.28 billion The successful launch of major products including Xbox 360™, Microsoft® SQL Server™ 2005, Visual Studio® 2005, Microsoft Dynamics™ CRM 3.0, and BizTalk® Server 2006. Readied Windows Vista™, the 2007 Microsoft Office system, and Exchange Server 2007 for launch in 2007. Focus on research and development, investing $6.6 billion—more than any other company in our industry Along the way, they received our 5,000th patent.

Overall the company is doing really good and although it has got threats from companies like Red Hat & Google, they are still the market leaders and with their diverse portfolio of products and services, it will take another 10 years for any company to overtake Microsoft as an organization. Insider Information: Oct. 2 at a media event in Paris, Chief Executive Steve Ballmer painted a surprisingly different picture of the company's future: Over the next 4 to 10 years, he said, as much as 25% of Microsoft's revenues are likely to come from advertising. Microsoft (MSFT) aims to stitch together its software, ad serving, and media properties to become a formidable online power with many of the marketing pieces that advertisers look for as they embark on Internet ad campaigns. Going forward Ballmer says he sees Microsoft's fastest growth coming from advertising and mobile Microsoft adCenter is Pay-per-click advertising for budgets of all sizes. Microsoft is also betting big on the healthcare sector and it has launched HealthVault. Microsoft announced today the beta of its awaited patient medical/health records system, HealthVault. It enters a corner of the medical industry that has been about as resistant to technology as possible with a plan to break through that barrier and make money at the same time. References: http://www.businessweek.com/globalbiz/content/oct2007/gb2007102_115679.htm http://en.wikipedia.org/wiki/Microsoft http://www.microsoft.com/msft/reports/default.mspx http://www.healthvault.com/ http://en.wikipedia.org/wiki/Visual_Studio_2005 http://en.wikipedia.org/wiki/British_Sky_Broadcasting http://en.wikipedia.org/wiki/Eat_one%27s_own_dog_food