Msft 10yr Osv Stock Valuation Spreadsheet
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Jae Jun Old School Value | http://www.oldschoolvalue.com [email protected]
Jae Jun | Old School Value Author
All spreadsheet related questions and support is now handled only through the forum. http://www.oldschoolvalue.com/forum/spreadsheet-installation/
Disclaimer Nothing on Old School Value, related pages, emails, or other communications by the author, either written or oral, are intended to be a recommendation to either buy, hold, or sell any specific security or group of securities. Likewise, nothing herein should be construed as an endorsement of any financial adviser, investment manager, commercial information provider, transaction service, or brokerage firm. The findings from this spreadsheet is merely a start to a means of further research and uncovering a great business and investment. Old School Value holds no responsibility for any investment whatsoever.
Spreadsheet Installation Related - Refer to the manual and ask for help on the forums to reduce repetitive questions and answers.The manual contains every possible problem related to the spreadsheet. - When requesting help, please try to find out whether it is a spreadsheet issue or excel issue. PDF: http://www.oldschoolvalue.com/intrinsic-value-spreadsheets/installation-troubleshooting-guide/ Forum: http://www.oldschoolvalue.com/forum/spreadsheet-installation/
How to Use - Yellow highlighted fields are user input fields. Enter ticker in the Summary tab only. - Use yellow fields to override the default values without messing up formulas and accidently saving incorrect values - If a graph is squashed or looks out of place, zoom in and zoom out to refresh the view. - Press F9 to start calculations. Automatic formula calculations have been turned off in the excel menu to improve start speed and convenience. - Protected sheets do not have any passwords. Simply unprotect it. - Summary page provides a quick overview of all valuation methods and important graphs and numbers. Easy to add more or less yourself. - DCF Valuation is based on discounted cash flow. Important company fundamental metrics included. - Useful for companies with either 5yr or 10yrs of operating history - Use 5yr version if there has been a recent turnaround or a major event changing the fundamentals of the business - Use 10yr version for stable, cash cows such as KO or JNJ. You can even use it for stable consistent small caps - Adjust user growth, discount rate, FCF override, terminal rate (default 3%) - Price vs Value tab displays only the DCF intrinsic value compared to the historical stock price. (Thinking of how to add Graham intrinsic value and EPV to the graph) - Graham Intrinsic Value is based on Ben Graham's formula defined in the Intelligent Investor Intrisic Value = "normal" earnings x (8.5 + (2 x expected 5 yr growth)) x (4.4/20yr A corp bond) - Use for companies where FCF is erratic such as cyclicals or short history companies. - Remember that earnings are usually inflated. Companies may overstate earnings by hiding some numbers in there but they will never understate earnings on purpose. - Which means that the value you get with the Graham equation will be higher than normal. - Use high margin of safety (MOS) - Adjust user growth - EPV is based on Bruce Greenwald's book. http://www.oldschoolvalue.com/book-reviews/greenwald-earnings-power-value-investing-epv/ - Detailed instructions on how to use the spreadsheet with a rundown of Microsoft http://www.oldschoolvalue.com/stock-analysis/earnings-power-value-epv-valuation-microsoft/ - To explain it here, I would have to write out the entire book again. Please read it yourself to fully understand it. - "Adjust +/-" column is for adding or subtracting values from the stated numbers - "Multiplier" is to select what % you want to consider it. e.g. intangibles usually = 0% - Select the pinkish cell to select either data from MSN or ADVFN - Cell P47, select either 3 or 4 years of R&D you want to include into the valuation - EPV section row 66, include or exclude extraordinary items to EBIT - Read the comments to see references and explanations from the book - Competitors tab allows you to view 6 companies side by side - Charts tab shows different performance graphs of the companies
Company Name
ticker
Microsoft Corp
MSFT
www.oldschoolvalue.com
10/1/2009
Figures in Millions except per share values
Microsoft Corporation is engaged in developing, manufacturing, licensing, and supporting a range of software products and services for different types of computing devices. The Company operates in five business segments: Client, Server and Tools, Online Services Business, Microsoft Business Division, and Entertainment and Devices Division. The software products and services include operating systems for servers, personal computers, and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business solutions applications; computing applications; software development tools, and video games. The Company provide consulting and product and solution support services, and trains and certifies computer system integrators and developers. It also designs and sells hardware, including Xbox 360 video game console, the Zune digital music and entertainment device, and peripherals.
Asset Valuation
Total Net Reprod. Cost Reprod. Cost of Assets BV Tangible BV NNWC
EPV Valuation
$ $ $ $
4.93
EPV
7.69 Normalized Income 2.84 Discount Rate 0.56 Margin of Safety
Key Statistics Market Cap (millions)
DCF Valuation
$
24.36 DCF Price
$
$
19,259.53 Growth Rate 9% Discount Rate 0% Margin of Safety
9% Growth Rate 9% Normalized EPS 11% Margin of Safety
Financial Strength 1.8
Gross (TTM)
27.47
Current Ratio (MRQ)
1.82
Gross - 5 Yr. Avg.
52-Week Low
14.87
LT Debt to Equity (MRQ)
9.47
% off 52-Week Low
67.8%
Total Debt to Equity (MRQ)
P/E Ratio (TTM)
15.88
Sales (MRQ) vs Qtr. 1 Yr. Ago
-17.29
Price to Sales (TTM)
3.93
Sales (TTM) vs TTM 1 Yr. Ago
Price to Book (MRQ)
5.79
Sales - 5 Yr. Growth Rate
Price to Tangible Book (MRQ)
9.08
EPS (MRQ) vs Qtr. 1 Yr. Ago
Price to Cash Flow (TTM)
13.4
Price to Free Cash Flow (TTM)
222,760
Valuation Ratios
$
Current Price
29.89
$
24.95
14% 1.01 17%
$
Margins & Profitability
Quick Ratio (MRQ)
52-Week High
Graham Valuation
27.91 Graham Price
14.53
Growth Stats
Operating (TTM)
33.56
Net Profit (TTM)
81.06
Operating - 5 Yr. Avg.
36.03
Net Profit - 5 Yr. Avg.28.01
EBITD (TTM)
37.94
Pre-Tax (TTM)
33.92
EBITD - 5 Yr. Avg.
38.98
Pre-Tax - 5 Yr. Avg.
38.82
79.2
Management Effective
24.93
Efficiency
ROA (TTM)
19.34
Revenue/Employee (TTM) 628355
3.93
ROA - 5 Yr. Avg.
19.63
Net Income/Employee (TTM) 156656
9.67
ROI (TTM)
31.08
Receivable Turnover (TTM) 4.72
-25.55
ROI - 5 Yr Avg
28.63
Inventory Turnover (TTM)
14.28
EPS (TTM) vs TTM 1 Yr. Ago
-13.36
ROE (TTM)
38.42
Asset Turnover (TTM)
0.78
20.06
EPS - 5 Yr. Growth Rate
16.65
ROE - 5 Yr. Avg.
33.44
Enterprise Value/Revenue (TTM)
3.51
Capital Spending - 5 Yr. Grwth
22.98
Enterprise Value/EBITDA (TTM)
8.812
Historical Stock Price Vs Intrinsic Value Per Share 60
50
Historical Price
40
30
Intrinsic Value
20
Buy Price 10
0 10/12/1998
10/12/1999
10/12/2000
10/12/2001
10/12/2002
10/12/2003
10/12/2004
10/12/2005
10/12/2006
10/12/2007
10/12/2008
Multi-Year Performance Shareholder Equity Free Cash Flow CROIC FCF/Sales ROA ROE Revenue Growth Gross Margin Operating Margin Net Margin Earnings Growth Cash from Ops Growth
2000-2007 -6.7% 5.2% 19.4% 29.7% 14.3% 18.8% 12.1% 82.5% 39.1% 28.7% 7.6% 3.5%
2001-2008 -10.2% 11.4% 20.8% 28.1% 14.3% 18.8% 13.2% 82.1% 37.2% 28.7% 16.0% 7.0%
2002-2009 -9.4% 8.1% 26.2% 27.2% 16.5% 24.2% 10.9% 81.7% 36.9% 28.0% 12.5% 4.0%
2000-2005 1.4% 5.8% 16.6% 30.8% 13.4% 17.1% 11.6% 83.4% 41.5% 29.9% 5.7% 3.5%
2001-2006 -5.5% 8.9% 16.6% 29.7% 13.4% 17.1% 11.8% 82.5% 39.1% 28.7% 12.7% 1.4%
2002-2007 -12.8% 10.2% 20.8% 27.8% 14.3% 18.8% 12.5% 82.1% 36.9% 28.0% 14.9% 4.2%
2003-2008 -17.3% 9.4% 26.2% 27.2% 16.5% 24.2% 13.4% 82.1% 36.9% 28.9% 15.2% 6.5%
2004-2009 -18.7% 11.2% 33.1% 26.4% 18.6% 33.5% 9.7% 81.3% 36.4% 28.0% 16.7% 5.4%
Median -9.8% 9.2% 20.8% 27.9% 14.3% 18.8% 12.0% 82.1% 37.1% 28.7% 13.8% 4.1%
Margin Percentages 100.0%
86.9%
90.0%
86.3%
81.7%
82.3%
42.0%
41.1%
84.4%
81.8%
82.7%
79.1%
80.8%
79.2%
37.2%
36.2%
37.2%
34.8%
28.5%
27.5%
29.3%
2006
2007
2008
80.0% 70.0% 60.0% 47.6% 41.0%
50.0%
46.3%
40.0%
29.0%
27.6%
2001
2002
30.0%
Gross Margin
36.6% 30.8%
31.0% 24.5% 22.2%
Operating Margin Net Margin
24.9%
20.0% 10.0% 0.0% 2000
2003
2004
2005
Free Cash Flow vs Tangible Shareholder Equity Trend
2009
Efficiency & Profitability
$80,000.0
70.0%
$70,000.0
60.0%
$60,000.0
50.0%
$50,000.0
CROIC
40.0%
$40,000.0
FCF
$30,000.0
Shareholder Equity
FCF/Sales
30.0%
ROA
ROE
20.0%
$20,000.0
10.0%
$10,000.0 $-
0.0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2000
Sales vs Accounts Receivables
2001
2002
2003
2004
2005
2006
2007
2008
2009
CAPEX vs PPE
$70,000.0
$10,000.0 $9,000.0
$60,000.0
$8,000.0 $50,000.0
Last 6 yrs
$7,000.0
Last 5 yrs
$6,000.0
$40,000.0
Sales Accts Receivable
$30,000.0
Inventory
$20,000.0
Last 4 yrs
$5,000.0
Last 3 yrs
$4,000.0
Last 2 yrs
$3,000.0
Last 1 yr
$2,000.0 $10,000.0
PPE
$1,000.0
$-
$2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
TTM
2003
2004
2005
2006
2007
2008
2009
TTM
Company Name
ticker
Microsoft Corp
MSFT
10/1/2009
Figures in Millions except per share values Financial Data
MSFT
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
TTM
Income Statement Revenue % change from last year COGS COGS (%) Gross Profit
$ $
$
Gross Profit (%)
22,956.0 3,002.0 13.1% 19,954.0
$ $
$
86.9%
25,296.0 9.3% 3,455.0 13.7% 21,841.0
$ $
$
86.3%
28,365.0 10.8% 5,191.0 18.3% 23,174.0
$ $
$
81.7%
32,187.0 11.9% 5,686.0 17.7% 26,501.0
$ $
$
82.3%
36,835.0 12.6% 6,716.0 18.2% 30,119.0
$ $
$
39,788.0 7.4% 6,200.0 15.6% 33,588.0
$ $
$
44,282.0 $ 10.1% 7,650.0 $ 17.3%
51,122.0 $ 13.4% 10,693.0 $ 20.9%
60,420.0 $ 15.4% 11,598.0 $ 19.2%
58,437.0 $ -3.4% 12,155.0 $ 20.8%
58,437.0 0.0% 12,155.0 20.8%
36,632.0
40,429.0
48,822.0
46,282.0
46,282.0
$
$
$
$
81.8%
84.4%
82.7%
79.1%
80.8%
79.2%
79.2%
13,306.0 $ 36.1% 7,779.0 $ 21.1% $ 0.0%
12,843.0 $ 32.3% 6,184.0 $ 15.5% $ 0.0%
13,576.0 $ 30.7% 6,584.0 $ 14.9% $ 0.0%
14,784.0 $ 28.9% 7,121.0 $ 13.9% $ 0.0%
18,166.0 $ 30.1% 8,164.0 $ 13.5% $ 0.0%
16,909.0 $ 28.9% 9,010.0 $ 15.4% $ 0.0%
Operating Expenses SG&A SG&A (%) R&D R&D (%) Other Other (%) Operating Income
$ $ $
$
Operating Income (%)
5,150.0 $ 22.4% 3,775.0 $ 16.4% 92.0 $ 0.4% 10,937.0
$
47.6%
5,742.0 $ 22.7% 4,379.0 $ 17.3% $ 0.0% 11,720.0
$
46.3%
6,957.0 $ 24.5% 4,307.0 $ 15.2% $ 0.0% 11,910.0
$
42.0%
8,625.0 $ 26.8% 4,659.0 $ 14.5% $ 0.0% 13,217.0
$
41.1%
9,034.0
$
24.5%
14,561.0
$
36.6%
16,472.0
$
37.2%
18,524.0
$
36.2%
22,492.0
$
37.2%
20,363.0
$
34.8%
16,909.0 28.9% 9,010.0 15.4% 0.0% 20,363.0 34.8%
Other Income and Expense Net Int Inc & Other
$
3,338.0
$
(195.0)
$
(397.0)
$
1,509.0
$
3,162.0
$
2,067.0
$
1,790.0
$
1,577.0
$
1,322.0
$
(542.0)
$
(542.0)
Earnings Before Taxes Income Taxes Tax Rate %
$ $
14,275.0 4,854.0 34.0%
$ $
11,525.0 3,804.0 33.0%
$ $
11,513.0 3,684.0 32.0%
$ $
14,726.0 4,733.0 32.1%
$ $
12,196.0 4,028.0 33.0%
$ $
16,628.0 4,374.0 26.3%
$ $
18,262.0 5,663.0 31.0%
$ $
20,101.0 6,036.0 30.0%
$ $
23,814.0 6,133.0 25.8%
$ $
19,821.0 5,252.0 26.5%
$ $
19,821.0 5,252.0 26.5%
Earnings After Taxes Acctg Changes Disc Operations Ext Items
$ $ $ $
9,421.0 -
$ $ $ $
7,721.0 $ (375.0) $ $ $
7,829.0 -
$ $ $ $
9,993.0 -
$ $ $ $
8,168.0 -
$ $ $ $
12,254.0 -
$ $ $ $
12,599.0 -
$ $ $ $
14,065.0 -
$ $ $ $
17,681.0 -
$ $ $ $
14,569.0 -
$ $ $ $
14,569.0 -
Net Income
$
9,421.0
$
7,346.0
7,829.0
$
9,993.0
$
8,168.0
$
12,254.0
$
12,599.0
$
14,065.0
$
17,681.0
$
14,569.0
$
14,569.0
Net Income (%) Diluted EPS, Cont Ops$ Diluted EPS$ Shares
$ $
41.0% 0.9 $ 0.9 $ 11072
$
29.0% 0.7 $ 0.7 $ 11148
27.6% 0.7 $ 0.7 $ 11106
31.0% 0.9 $ 0.9 $ 10882
22.2% 0.8 $ 0.8 $ 10894
30.8% 1.1 $ 1.1 $ 10906
28.5% 1.2 $ 1.2 $ 10531
27.5% 1.4 $ 1.4 $ 9886
29.3% 1.9 $ 1.9 $ 9470
24.9% 1.6 $ 1.6 $ 8996
24.9% 1.6 1.6 8910
3,922.0 $ 27,678.0 $ 3,671.0 $ 11.5% $
3,016.0 $ 35,636.0 $ 5,129.0 $ 28.4% 673.0 $ 100.0% 4,122.0 $
6,438.0 $ 42,610.0 $ 5,196.0 $ 1.3% 640.0 $ -5.2% 4,089.0 $
15,982.0 $ 44,610.0 $ 5,890.0 $ 11.8% 421.0 $ -52.0% 3,663.0 $
4,851.0 $ 32,900.0 $ 7,180.0 $ 18.0% 491.0 $ 14.3% 3,315.0 $
6,714.0 $ 27,447.0 $ 9,316.0 $ 22.9% 1,478.0 $ 66.8% 4,055.0 $
6,111.0 $ 17,300.0 $ 11,338.0 $ 17.8% 1,127.0 $ -31.1% 4,292.0 $
10,339.0 $ 13,323.0 $ 13,589.0 $ 16.6% 985.0 $ -14.4% 5,006.0 $
6,076.0 $ 25,371.0 $ 11,192.0 $ -21.4% 717.0 $ -37.4% 5,924.0 $
6,076.0 25,371.0 11,192.0 0.0% 717.0 0.0% 5,924.0
Balance Sheet Assets Cash and Equiv Short-Term Investments Accts Rec % change from last year Inventory % change from last year Other Current Assets
$ $ $
$
3,260.0
$
4,366.0
$
Total Current Assets Net PP&E Intangibles Other Long-Term Assets
$ $ $ $
30,308.0 1,903.0 19,939.0
$ $ $ $
39,637.0 2,309.0 17,311.0
$ $ $ $
48,576.0 2,268.0 1,669.0 15,133.0
$ $ $ $
58,973.0 2,223.0 3,512.0 14,863.0
$ $ $ $
70,566.0 2,326.0 3,684.0 15,813.0
$ $ $ $
48,737.0 2,346.0 3,808.0 15,924.0
$ $ $ $
49,010.0 3,044.0 4,405.0 13,138.0
$ $ $ $
40,168.0 4,350.0 5,638.0 13,015.0
$ $ $ $
43,242.0 6,242.0 14,081.0 9,228.0
$ $ $ $
49,280.0 7,535.0 14,262.0 6,811.0
$ $ $ $
49,280.0 7,535.0 14,262.0 6,811.0
Total Assets
$
52,150.0
$
59,257.0
$
67,646.0
$
79,571.0
$
92,389.0
$
70,815.0
$
69,597.0
$
63,171.0
$
72,793.0
$
77,888.0
$
77,888.0
$
4,846.0 18,952.0 3,250.0 -
$ $ $ $
Liabilities & Stockholders' Equity Accts Payable Short-Term Debt Taxes Payable Accrued Liabilities
$ $ $ $
1,083.0 585.0 557.0
$ $ $ $
1,188.0 1,468.0 742.0
$ $ $ $
1,208.0 2,022.0 7,065.0
$ $ $ $
1,573.0 2,044.0 8,641.0
$ $ $ $
1,717.0 3,478.0 7,853.0
$ $ $ $
2,086.0 2,020.0 9,164.0
$ $ $ $
2,909.0 1,557.0 11,076.0
$ $ $ $
3,247.0 1,040.0 2,325.0
$ $ $ $
4,034.0 3,248.0 2,934.0
$ $ $ $
3,324.0 2,000.0 725.0 3,156.0
$ $ $ $
3,324.0 2,000.0 725.0 3,156.0
Other Short-Term Liabilities
$
7,530.0
$
7,734.0
$
2,449.0
$
1,716.0
$
1,921.0
$
3,607.0
$
6,900.0
$
17,142.0
$
19,670.0
$
17,829.0
$
17,829.0
Total Current Liabilities Long-Term Debt
$ $
9,755.0 -
$ $
11,132.0 -
$ $
12,744.0 -
$ $
13,974.0 -
$ $
14,969.0 -
$ $
16,877.0 -
$ $
22,442.0 -
$ $
23,754.0 -
$ $
29,886.0 -
$ $
27,034.0 3,746.0
$ $
27,034.0 3,746.0
Other Long-Term Liabilities
$
1,027.0
$
836.0
$
2,722.0
$
4,577.0
$
2,595.0
$
5,823.0
$
7,051.0
$
8,320.0
$
6,621.0
$
7,550.0
$
7,550.0
Total Liabilities
$
10,782.0
$
11,968.0
$
15,466.0
$
18,551.0
$
17,564.0
$
22,700.0
$
29,493.0
$
32,074.0
$
36,507.0
$
38,330.0
$
38,330.0
Total Equity
$
41,368.0
$
47,289.0
$
52,180.0
$
61,020.0
$
74,825.0
$
48,115.0
$
40,104.0
$
31,097.0
$
36,286.0
$
39,558.0
$
39,558.0
Total Liabilities & Equity
$
52,150.0
$
59,257.0
$
67,646.0
$
79,571.0
$
92,389.0
$
70,815.0
$
69,597.0
$
63,171.0
$
72,793.0
$
77,888.0
$
77,888.0
Cash Flows Statement Cash Flows From Operating Activities Net Income Depr & Amort Deferred Taxes Other
$ $ $ $
9,421.0 748.0 3,792.0
$ $ $ $
Cash from Operations
$
13,961.0
$
7,346.0 1,536.0 (420.0) 4,960.0 13,422.0
$ $ $ $ $
7,829.0 1,084.0 (416.0) 6,012.0
$ $ $ $
9,993.0 1,439.0 336.0 4,029.0
$ $ $ $
8,168.0 $ 1,186.0 $ (1,479.0) $ 6,751.0 $
14,509.0
$
15,797.0
$
(770.0) (10,075.0)
$ $ $
(891.0) $ (1,063.0) $ (5,259.0) $
(1,109.0) $ (4.0) $ (1,632.0) $
(10,845.0)
$
(7,213.0)
(2,745.0)
14,626.0
$
12,254.0 $ 855.0 $ (179.0) $ 3,675.0 $ 16,605.0
$
12,599.0 903.0 219.0 683.0
$ $ $ $
14,065.0 1,440.0 421.0 1,870.0
$ $ $ $
17,681.0 2,056.0 935.0 940.0
$ $ $ $
14,569.0 2,562.0 762.0 1,144.0
$ $ $ $
14,569.0 2,562.0 762.0 1,144.0
14,404.0
$
17,796.0
$
21,612.0
$
19,037.0
$
19,037.0
Cash Flows From Investing Activities Cap Ex Purchase of Business Other
$ $ $
Cash from Investing
$
(879.0) $ $ (11,048.0) $ (11,927.0)
$
(1,103.0) $ $ (7,631.0) $ (8,734.0)
$
$
$
(812.0) $ (207.0) $ 16,046.0 $ 15,027.0
$
(1,578.0) (649.0) 10,230.0
$ $ $
(2,264.0) (1,150.0) 9,503.0
$ $ $
(3,182.0) (8,053.0) 6,648.0
$ $ $
(3,119.0) (868.0) (11,783.0)
$ $ $
(3,119.0) (868.0) (11,783.0)
8,003.0
$
6,089.0
$
(4,587.0)
$
(15,770.0)
$
(15,770.0)
(20,793.0) $ $ (3,805.0) $ 54.0 $
(9,039.0) (4,015.0) 120.0
$ $ $ $
(8,722.0) 5,974.0 (4,468.0) (247.0)
$ $ $ $
(8,722.0) 5,974.0 (4,468.0) (247.0)
Cash Flows From Financing Activities Net Issuance of Stock Net Issuance of Debt Dividends Other
$ $ $ $
(2,651.0) $ $ (13.0) $ 472.0 $
(4,454.0) $ $ $ (1,132.0) $
(4,572.0) $ $ $ $
(4,366.0) $ $ (857.0) $ $
(635.0) $ $ (1,729.0) $ $
Cash from Financing Currency Adj Change in Cash
$ $ $
(2,192.0) $ 29.0 $ (158.0) $
(5,586.0) $ (26.0) $ (898.0) $
(4,572.0) 2.0 (908.0)
(5,223.0) 61.0 3,361.0
$ $ $
(2,364.0) $ 27.0 $ 9,517.0 $
Cash from Operations Cap Ex
$ $
13,961.0 $ (879.0) $
13,422.0 $ (1,103.0) $
14,509.0 $ (770.0) $
15,797.0 $ (891.0) $
14,626.0 $ (1,109.0) $
Free Cash Flow Book Value Per Share
$ $
9,290.0 3.74
7,779.0 4.24
8,143.0 4.70
$ $ $
(4,948.0) $ $ (36,112.0) $ (18.0) $ (41,078.0) (7.0) (9,446.0)
$ $ $
(17,106.0) $ $ (3,545.0) $ 89.0 $ (20,562.0) 18.0 1,845.0
$ $ $
(24,544.0) 56.0 (659.0)
$ $ $
(12,934.0) $ 137.0 $ 4,228.0 $
(7,463.0) $ (67.0) $ (4,263.0) $
(7,463.0) (67.0) (4,263.0)
17,796.0 $ (2,264.0) $
21,612.0 $ (3,182.0) $
19,037.0 $ (3,119.0) $
19,037.0 (3,119.0)
Free Cash Flow
$ $
$ $
$ $
10,541.0 5.61
$ $
8,245.0 6.87
$ $
16,605.0 $ (812.0) $ 12,297.0 4.41
$ $
14,404.0 $ (1,578.0) $ 11,924.0 3.81
$ $
13,241.0 3.15
$ $
16,555.0 3.83
$ $
14,012.0 4.40
$ $
14,012.0 4.44
Company Name
ticker
Microsoft Corp 10/1/2009
User Growth
User Input Params
MSFT
www.oldschoolvalue.com
Figures in Millions except per share values
Desired MOS 50%
Growth 9.2%
Discount % 9.0%
2000
2001
2002
$
Price 24.95
Share Value Buy under Actual D/C % $ 27.91 $ 13.95 11% Financial Data 2004 2005 2006
2003
52Wk High $27.47
52Wk Low $14.87
2007
2008
2009
Income Sheet Data Revenue Gross Profit Operating Income Net Income Diluted EPS
$ $ $ $ $
22,956.0 19,954.0 10,937.0 9,421.0 0.9
$ $ $ $ $
25,296.0 21,841.0 11,720.0 7,346.0 0.7
$ $ $ $ $
28,365.0 23,174.0 11,910.0 7,829.0 0.7
$ 32,187.0 $ 26,501.0 $ 13,217.0 $ 9,993.0 $ 0.9
$ 36,835.0 $ 30,119.0 $ 9,034.0 $ 8,168.0 $ 0.8
$ $ $ $ $
39,788.0 33,588.0 14,561.0 12,254.0 1.1
$ $ $ $ $
44,282.0 36,632.0 16,472.0 12,599.0 1.2
$ $ $ $ $
51,122.0 40,429.0 18,524.0 14,065.0 1.4
$ $ $ $ $
60,420.0 48,822.0 22,492.0 17,681.0 1.9
$ $ $ $ $
58,437.0 46,282.0 20,363.0 14,569.0 1.6
$ $ $
13,961.0 9,290.0 879.0
$ $ $
13,422.0 7,779.0 1,103.0
$ $ $
14,509.0 8,143.0 770.0
$ 15,797.0 $ 10,541.0 $ 891.0
$ 14,626.0 $ 8,245.0 $ 1,109.0
$ $ $
16,605.0 12,297.0 812.0
$ 14,404.0 $ 11,924.0 $ 1,578.0
$ 17,796.0 $ 13,241.0 $ 2,264.0
$ 21,612.0 $ 16,555.0 $ 3,182.0
$ 19,037.0 $ 14,012.0 $ 3,119.0
$ $ $ $
30,308.0 9,755.0 10,782.0 41,368.0
$ $ $ $
39,637.0 11,132.0 11,968.0 47,289.0
$ $ $ $
48,576.0 12,744.0 15,466.0 50,511.0
$ $ $ $
$ $ $ $
$ $ $ $
48,737.0 16,877.0 22,700.0 44,307.0
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
Cash Flow Data Cash from Operations Free Cash Flow Capex
Balance Sheet Data Current Assets Current Liabilities Total Liabilities Tangible Shareholder Equity
58,973.0 13,974.0 18,551.0 57,508.0
70,566.0 14,969.0 17,564.0 71,141.0
49,010.0 22,442.0 29,493.0 35,699.0
40,168.0 23,754.0 32,074.0 25,459.0
43,242.0 29,886.0 36,507.0 22,205.0
49,280.0 27,034.0 38,330.0 25,296.0
Margins Gross Margin Operating Margin Net Margin Current Assets>1.5 times
86.9% 47.6% 41.0% 310.7%
86.3% 46.3% 29.0% 356.1%
81.7% 42.0% 27.6% 381.2%
82.3% 41.1% 31.0% 422.0%
81.8% 24.5% 22.2% 471.4%
84.4% 36.6% 30.8% 288.8%
82.7% 37.2% 28.5% 218.4%
79.1% 36.2% 27.5% 169.1%
80.8% 37.2% 29.3% 144.7%
79.2% 34.8% 24.9% 182.3%
21.9% 40.5%
16.2% 30.8%
21.1% 27.4%
13.2% 16.6%
15.3% 28.7% 7.7 12.3% 15.7%
17.0% 32.7% 8.9 13.6% 17.7%
11.2% 22.4% 16.0 9.5% 12.0%
24.5% 30.9% 12.6 15.0% 19.9%
27.9% 26.9% 5.2 18.0% 28.6%
39.2% 25.9% 9.5 21.2% 39.5%
57.4% 27.4% 11.8 26.0% 52.5%
38.3% 24.0% 17.0 19.3% 38.4%
26.1% 0.0% 86.2%
25.3% 0.0% 65.0%
29.6% 0.0% 52.7%
30.4% 0.0% 56.8%
23.5% 0.0% 46.9%
47.2% 0.0% 54.2%
73.5% 0.0% 40.4%
103.1% 0.0% 41.3%
100.6% 0.0% 45.3%
96.9% 8.7% 36.6%
2000-2007 -6.7% 5.2% 19.4% 29.7% 14.3% 18.8% 12.1% 82.5% 39.1% 28.7% 7.6% 3.5%
2001-2008 -10.2% 11.4% 20.8% 28.1% 14.3% 18.8% 13.2% 82.1% 37.2% 28.7% 16.0% 7.0%
2002-2009 -9.4% 8.1% 26.2% 27.2% 16.5% 24.2% 10.9% 81.7% 36.9% 28.0% 12.5% 4.0%
2002-2007 -12.8% 10.2% 20.8% 27.8% 14.3% 18.8% 12.5% 82.1% 36.9% 28.0% 14.9% 4.2%
2003-2008 -17.3% 9.4% 26.2% 27.2% 16.5% 24.2% 13.4% 82.1% 36.9% 28.9% 15.2% 6.5%
2004-2009 -18.7% 11.2% 33.1% 26.4% 18.6% 33.5% 9.7% 81.3% 36.4% 28.0% 16.7% 5.4%
2016 $24,429.44 2026 $ 35,315
2017 $24,875.75 2027 $ 36,374
Efficiency & Profitability CROIC FCF/Sales Inventory Turnover Return On Assets (ROA) Retun On Equity (ROE)
Debt Related Debt to Equity Capitalization Ratio FCF to Debt
Multi-Year Performance Shareholder Equity Free Cash Flow CROIC FCF/Sales ROA ROE Revenue Growth Gross Margin Operating Margin Net Margin Earnings Growth Cash from Ops Growth
2000-2005 1.4% 5.8% 16.6% 30.8% 13.4% 17.1% 11.6% 83.4% 41.5% 29.9% 5.7% 3.5%
2001-2006 -5.5% 8.9% 16.6% 29.7% 13.4% 17.1% 11.8% 82.5% 39.1% 28.7% 12.7% 1.4%
Median -9.8% 9.2% 20.8% 27.9% 14.3% 18.8% 12.0% 82.1% 37.1% 28.7% 13.8% 4.1%
Projection of future Free Cash Flow Growing at 9% Terminal Value 3%
$ $
2010 15,299 2020 29,576
$ $
2011 16,704 2021 30,463
$ $
2012 18,238 2022 31,377
2013 $19,250.88 2023 $ 32,318
Company Valuation Total Value Shares Outstanding Per Share Value Margin of Safety Purchase Price Current Price Actual Discount Enterprise Value Enterprise Value/EBITDA
$ $ $ $ $
2014 $20,841.94 2024 $ 33,288
2015 $22,564.51 2025 $ 34,286
2018 $26,726.11 2028 $ 37,465
2019 $28,714.11 2029 $ 38,589
Free Cash Flow and Tangible Shareholder Equity Trend 248,410 8901 27.91 50% 13.95 24.95 11% 205,030.00 8.812
$80,000.0
8901
$70,000.0
$60,000.0 $50,000.0
FCF
Shareholder Equity
$71,141.0
$57,508.0 $50,511.0 $47,289.0 $41,368.0
$44,307.0 $35,699.0
$40,000.0 $30,000.0 $20,000.0
$9,290.0 $7,779.0 $8,143.0 $10,541.0 $8,245.0
$25,459.0 $25,296.0 $22,205.0 $16,555.0 $14,012.0 $12,297.0$11,924.0$13,241.0
$10,000.0 $2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Multi-Year Performance Graph 250.0%
Gross Margin
Operating Margin
Net Margin
Earnings Growth
ROA
ROE
200.0%
18.8% 14.3% 7.6%
150.0%
18.8%
24.2%
14.3%
16.5%
16.0%
12.5%
33.5%
24.2%
17.1%
17.1%
18.8%
13.4% 5.7%
13.4%
14.3%
16.5%
18.6%
12.7%
14.9%
15.2%
16.7%
29.9%
28.7%
28.0%
28.9%
28.0%
28.7%
28.7%
28.0%
39.1%
37.2%
36.9%
41.5%
39.1%
36.9%
36.9%
36.4%
82.5%
82.1%
81.7%
83.4%
82.5%
82.1%
82.1%
81.3%
2000-2007
2001-2008
2002-2009
2000-2005
2001-2006
2002-2007
2003-2008
2004-2009
100.0%
50.0%
0.0%
Margin Percentages 100.0% 90.0%
86.9%
86.3%
82.3%
81.7%
84.4%
81.8%
82.7%
80.8%
79.1%
79.2%
80.0% Gross Margin
70.0% 60.0% 50.0%
47.6% 41.0%
46.3%
40.0%
42.0%
29.0%
41.1%
30.0%
36.6% 30.8%
31.0%
27.6%
24.5% 22.2%
37.2%
36.2%
28.5%
27.5%
37.2% 29.3%
Operating Margin
34.8% 24.9%
20.0%
Net Margin
10.0% 0.0% 2000
2001
2002
2003
2004
2005
2006
2007
2008
Efficiency & Profitability
Debt
70.0% CROIC
FCF/Sales
ROA
2009
120.0%
ROE
60.0%
Debt to Equity
Capitalization Ratio
FCF to Debt
100.0%
50.0% 80.0% 40.0% 60.0%
30.0%
40.0%
20.0%
20.0%
10.0%
0.0%
0.0% 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sales, Receivables, Inventory $70,000.0
Sales
Accts Receivable
Inventory
$60,000.0
$50,000.0 $40,000.0 $30,000.0 $20,000.0 $10,000.0
$2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
TTM
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Company Name
ticker
Microsoft Corp
MSFT
10/1/2009
Figures in Millions except per share values
www.oldschoolvalue.com Desired MOS
Growth
Discount %
50%
9.2%
9%
Price $
24.95
Share Value $
27.91
Buy under $
Actual D/C % 52Wk High
13.95
11%
$
27.47
52Wk Low $
14.87
Historical Stock Price Vs Intrinsic Value Per Share 60
Historical Price
Intrinsic Value
Buy Price
Linear (Historical Price)
50
40
30
20
10
0 10/12/1998
10/12/1999
10/12/2000
10/12/2001
10/12/2002
10/12/2003
10/12/2004
10/12/2005
10/12/2006
10/12/2007
10/12/2008
Company Name
ticker
Microsoft Corp
MSFT
10/1/2009
User Growth
Figures in Millions except per share values
www.oldschoolvalue.com User Input Params
Desired MOS
Growth
66%
13.8%
2000 0.85 2010 $ 1.62 $
Diluted EPS
Earnings Growth EPS Weighted Average Earnings Growth EPS Weighted Average
2001 0.66 2011 $ 1.85 $
Price $
Actual DC% Share Value
24.95
2002 0.71 2012 $ 1.86 $
17% 2003 0.92 2013 $ 2.15 $
29.89
Buy under $
P/B Ratio
10.16
Earnings 2004 2005 $ 0.75 $ 1.12
$
Net Net Working Capital
5.67
$
2006 1.20
$
0.21 2007 1.42
$
2008 1.87
$
2009 1.62
Multi-Year Performance 2000-2005 2001-2006 2002-2007 2003-2008 2004-2009 2000-2003 2001-2004 2002-2005 5.7% 12.7% 14.9% 15.2% 16.7% 2.7% 4.4% 16.4% $ 0.84 $ 0.89 $ 1.02 $ 1.21 $ 1.33 $ 0.79 $ 0.76 $ 0.88 2003-2006 2004-2007 2005-2008 2006-2009 Median (1998-2007) 13.8% 9.26% 23.71% 18.63% 10.52% $1.01 $ 1.00 $ 1.12 $ 1.40 $ 1.53
Company Stats Normal Earnings Expected 5 Year Growth 20 yr A Corp Bond Rate Book Value Per Share Price to Book Ratio Enterprise Value Per Share
$
1.01 13.79% 5.74 4.40 5.67 23.03
$2.00
$1.87
$1.80
EPS
Linear (EPS)
$1.60 $1.12
$1.20 $1.00
$1.85 $1.62
$1.62
2009
2010
$1.42
$1.40
$1.20
$0.92
$0.85
$0.80
Company Valuation Per Share Value Desired MOS Purchase Price Current Price Actual Discount
$
$0.66
$0.71
2001
2002
$0.75
$0.60
$ $ $
29.89 66.00% 10.16 24.95 17%
$0.40 $0.20 $2000
2003
2004
2005
2006
2007
2008
2011
Old School Value | http://www.oldschoolvalue.com Company Company Name Name
ticker
Microsoft Corp
MSFT
10/1/2009
User Discount %
Figures in Millions except per share values
9% Discount Rate %
Net Reprod. Cost
EPV
$
9%
24.36
$4.93
Current Price
$
MOS %
24.95
Tangible BV
0%
$
2.84
NNWC
$
0.56
Reproduction Asset Value Quarterly numbers based on: 2009 Q4 Statement Source Date: 30-Jul-09
Assets Cash & Equivalents Marketable Securities Accounts Receivable - Gross Other Receivable
Receivables Inventories: Raw Materials Inventories: Work in Progress Inventories: Purchased Components Inventories: Finished Goods Inventories: Other Inventories -- Total Prepaid Expenses Current Defered Income Taxes Other Current Assets
Total Current Assets Goodwill, Net Intangibles, Net
Intangibles Property/Plant/Equipment - Net Long Term Investments Note Receivable - Long Term Other Long Term Assets, Total
Total Assets
Book Value
Data Source Adjust +/-
Multiplier
$ 31,447.0 $ 25,371.0 $ 11,192.0 $ $ 11,192.0 Error Error Error Error Error $ 717.0 $ Error $ 5,924.0 $ 49,280.0 $ 12,503.0 $ 1,759.0 $ 14,262.0
MSN Reproduction Asset Value
$
31,447.0
$ $ $
25,371.0 11,192.0 -
$
11,192.0
PPE Sales R&D
$ $ Error $ 50%
$ 7,535.0 $ 4,933.0 $ $ 1,878.0 $ 77,888.0
717.0 -
$ $
6,251.5 1,759.0
$
8,010.5
$ $ $ $
7,535.0 4,933.0 1,878.0
$
71,636.5
$2,000.0
Reproduction Asset Value
$1,000.0
$
3,324.0
$
3,324.0
Accrued Expenses Accrued Liabilities Notes Payable/Short Term Debt Current Port. of LT Debt/Capital Leases Other Current Liabilities
$ $ $
3,156.0 2,000.0
$ $ $
3,156.0 2,000.0
$ $
18,554.0
Total Current Liabilities
$ $ 18,554.0 $ 27,034.0
$
27,034.0
Long-Term Debt
$
$
3,746.0
Capital Lease Obligations
Error
Error
Deferred Income Taxes
$ $ $
7,550.0
$
38,330.0
Common Stock Equity Retained Earnings
$ $ $ 7,550.0 $ 38,330.0 Error Error
Total Capitalization Total Equity Total Liabilities & Stock Equity
Error $ 39,558.0 $ 77,888.0
Error
Total Liabilities
2007
2008
2009
TTM
$
891.0
$
1,109.0
$
812.0
$
1,578.0
$
2,264.0
$
3,182.0
$
3,119.0
$
3,119.0
$ $ $
2,764.0 1,661.0 891.0
$ $ $
2,770.0 2,000.0 1,109.0
$ $ $
2,812.0 1,921.0 812.0
$ $ $
3,499.0 2,390.0 1,578.0
$ $ $
4,654.0 3,842.0 2,264.0
$ $ $
7,024.0 5,446.0 3,182.0
$ $ $
8,565.0 6,301.0 3,119.0
$ $ $
9,420.0 6,238.0 3,119.0
$ $ $
2,223.0 32,187.0 4,659.0
$ $ $
2,326.0 36,835.0 7,779.0
$ $ $
2,346.0 39,788.0 6,184.0
$ $ $
3,044.0 44,282.0 6,584.0
$ $ $
4,350.0 51,122.0 7,121.0
$ 6,242.0 $ 60,420.0 $ 8,164.0
$ $ $
7,535.0 58,437.0 9,010.0
$ $ $
7,535.0 58,437.0 9,010.0
$7,000.0
Last 6 yrs
$6,000.0
Last 5 yrs
Error Error
39,558.0 77,888.0
Last 4 yrs
$5,000.0
Last 3 yrs
$4,000.0
Last 2 yrs
$3,000.0
Last 1 yr PPE
$-
2003
2004
2005
Asset Valuation Tangible BV
$ $
2006
$8,000.0
49,280.0
Book Value Corrected BV
3,746.0
2005
$10,000.0
$
Accounts Payable
Multiplier
2004
$9,000.0
5,924.0
Liabilities & Equity
Minority Interest Total Other Liabilities
2003 CAPEX (statements) Last 6 yrs Last 5 yrs Last 4 yrs Last 3 yrs Last 2 yrs Last 1 yr
Adjusted BV NNWC Reprod. Cost of Assets Reprod. Cost of Assets BV Total Net Reprod. Cost
Total $
2006
2007
2008
2009
TTM
Asset Valuation Data
Per Share 25,296 $ 2.84
Shares Outstanding
8901.0
$ $
33,307 5,026
$ $
3.74 0.56
Balance Sheet Assets Adjusted Assets Total Liabilities
$ $ $
77,888.0 71,636.5 38,330.0
$
106,763
$
11.99
Total Equity
$
39,558.0
$
68,433
$
7.69
$
43,901
$
4.93
Marketing/Brand Value R&D Value
$ $
17,631.3 17,495.2
Cash Needed for Business Interest Bearing Debt Non Interest Bearing Debt
$ $ $
584.4 5,746.0 32,584.0
Excess Cash
$
30,278.3
8901
Old School Value | http://www.oldschoolvalue.com
Earnings Power Value (EPV) 5 Year Annual Data Period End Date Period Length Statement Source
30-Jun-05 12 Months 10-K
30-Jun-06 12 Months 10-K
30-Jun-07 12 Months 10-K
Income Statement Sales EBIT Add back one time charges EBIT Margin EBIT at user defined % of sales EBIT User Defined % Margin Normalized EBITDA Normalized EBIT SG&A R&D
2005 $ 39,788 $ $ 16,628.0 $
Adjusted EBIT Adjusted EBIT %
$ 20,849.5 $ 52.4%
22,972.0 $ 51.9%
Income Before Tax Income Tax - Total Tax Rate
$ 16,628.0 $ $ 4,374.0 $ 26.3%
Adjusted Earnings After tax Depreciation & Amortization Add user defined % of D&A
$ 15,365.0 $ 884.0 $ 176.8
Income as Adjusted Income as Adjusted % Operating Income as Reported
$ 15,541.8 $ 39.1% $ 14,561.0 $
PPE as a % of Sales Sales Growth (decrease) to Prior Year Capex Maintenance Capex Depr & Amort
Past 4 Quarterly Data 30-Jun-08 12 Months 10-K
30-Jun-09 12 Months 10-K
2006 44,282 $ 18,262.0 $
2007 51,122 $ 20,101.0 $
2008 60,420 $ 23,814.0 $
41.8%
41.2%
39.3%
39.4%
41.8% 17,755.0 16,871.0 2,697.3 1,524.3
41.2% 18,782.0 17,792.0 3,064.0 1,646.0
39.3% 19,874.0 18,438.0 3,717.5 1,780.3
39.4% 24,143.0 22,271.0 4,596.8 2,041.0
2009 58,437 19,821.0
31-Dec-08 3 Months 10-Q
31-Mar-09 3 Months 10-Q
30-Jun-09 3 Months 10-K
2009 Q1 $15,061.0 $ $5,927.0
2009 Q2 16,629.0 $ $5,690.0
2009 Q3 13,648.0 $ $3,999.0
2009 Q4 13,099.0 $ $3,937.0 $
TTM 58,437.0
33.9%
39.4%
34.2%
29.3%
30.1%
$ $ $ $
33.9% 22,984.0 20,693.0 4,144.8 2,252.5
39.4% $6,584.0 $5,999.0 $982.8 $570.8
34.2% 6,571.0 5,939.0 982.8 570.8
29.3% 5,392.0 4,728.0 1,123.3 572.5
30.1% 4,708.0 4,027.0 973.5 553.0
$ $ $ $
33.5% 33.5% 23,255.0 20,693.0 4,062.3 2,267.0
25,598.8 $ 50.1%
30,451.8 $ 50.4%
26,218.3 44.9%
$7,480.5 $ 49.7%
7,243.5 $ 43.6%
5,694.8 $ 41.7%
5,463.5 $ 41.7%
25,882.3 44.3%
18,262.0 $ 5,663.0 $ 31.0%
20,101.0 $ 6,036.0 $ 30.0%
23,814.0 $ 6,133.0 $ 25.8%
19,821.0 5,252.0 26.5%
$5,927.0 $ $1,618.0 $ 27.3%
5,690.0 $ 1,464.0 $ 25.7%
3,999.0 $ 1,073.0 $ 26.8%
3,937.0 $ 1,097.0 $ 27.9%
19,553.0 5,252.0 26.9%
15,848.4 990.0 198.0
17,911.9 1,436.0 287.2
22,609.3 1,872.0 374.4
19,271.2 2,291.0 458.2
$5,438.4 $585.0 $117.0
19,729.4 33.8% 20,363.0
$5,555.4 $ 36.9% $5,927.0 $
$ $ $ $ $
$ $ $ $
$ $ $
2005 5.9% $ $ $ $
2,953.0 812.0 637.9 855.0
$ $ $ $
$ $ $
16,046.4 $ 36.2% 16,472.0 $ 2006 6.9%
$ $ $ $
4,494.0 1,578.0 1,269.1 903.0
$ $ $ $
$ $ $ $
$ $ $
$ $ $
18,199.1 $ 35.6% 18,524.0 $
22,983.7 $ 38.0% 22,492.0 $
2007 8.5%
2008 10.3%
6,840.0 2,264.0 1,682.0 1,440.0
$ $ $ $
9,298.0 3,182.0 2,221.4 2,056.0
2009 12.9% $ $ $ $
(1,983.0) 3,119.0 3,119.0 2,562.0
2005-2006 2006-2007 2007-2008 2008-2009 2009-TTM 3.2% 13.4% 26.3% -14.2% -1.5% $ 15,794.1 $ 17,122.8 $ 20,591.4 $ 21,356.5 $ 19,583.9
Multiyear Timeframe Adjusted Income & Growth
30-Sep-08 3 Months 10-Q
$ $ $ $
$ $ $
TTM 12.9% $ $ $ $
3,119.0 3,119.0 2,562.0
5,379.79 632.0 126.4
$ $ $ $
$ $ $
5,506.2 $ 33.1% 5,677.0 $
$ $ $
4.5%
$ $
Per Share $ 38.76 $ 27.69
9%
$ 191,682.9
$
21.53
11% 13%
$ $
$ $
17.62 14.91
156,831.5 132,703.6
4,077.4 $ 31.1% 3,987.0 $
EPV Data Cost of Capital Normalized Adjusted Income Average Maintenance Capex Interest Bearing Debt 1% of sales Cash & Equiv Cash - Debt Shares
Normal. Adj. Income Growth
EPV 345,029.3 246,449.5
$ $ $
18,926.1 2,562.0 512.4 19,438.5 33.3% 19,609.0
Possible Values for Override Box Normalized Income $ 19,259.5 Avg Adj. Income 5 yrs $ 18,500.1 TTM Adjusted Income $ 19,438.5
2005-2009 2006-TTM 6.1% 4.9% $ 18,500.1 $ 19,279.4
Cost of Capital Rates 5% 7%
4,299.6 $ 31.5% 4,018.0 $
3,941.16 681.0 136.2
2,191.0 2,008.1 1,729.7
$19,259.5
2005-2008 2006-2009 2007-TTM 12.7% 2.7% -5.4% $ 18,192.8 $ 19,239.6 $ 20,087.7
$ $ $
Average
Normalized Adjusted Income
2005-2007 2006-2008 2007-2009 2008-TTM 8.2% 19.7% 4.1% -8.0% $ 16,595.8 $ 19,076.4 $ 20,304.0 $ 20,717.2
4,166.75 664.0 132.8
$ $ $ $
19,553.0
+Cash-Debt Adjustment $ 370,145.9 $ 271,566.1
$ $
Per Share 41.58 30.51
$ 216,799.6
$
24.36
$ $
$ $
20.44 17.73
181,948.1 157,820.2
$ $ $ $ $ $
9% 19,259.5 2,008.1 5,746 584.37 31,447 25,116.63 8901
User Input
Company Name
ticker
Microsoft Corp
MSFT
10/1/2009
Enter Competitor Tickers Into Boxes Below
all figures in $Mil
MSFT
AAPL
HPQ
DELL
Industry
Ranking
24.95
183.62
46.33
15.25
NA
NA
222,760
164,490
109,850
29,820
NA
NA
52-Week High
27.47
188.90
48.00
17.26
NA
NA
52-Week Low
14.87
78.20
25.39
7.84
NA
NA
% off 52-Week Low
67.8%
134.8%
82.5%
94.5%
NA
NA
15.88 3.93 5.79 9.08 13.4 20.06 3.51 8.812
32.39 4.8 6.41 6.56 28.55 16.31 4.1 18.859
15.9 0.96 2.71 82.55 9.36 12.9 0.99 7.481
16.22 0.56 6.45 13.38 11.81 14.04 0.4 5.71
14.5 0.74 3.72 10.72 4.61 71.55 NA NA
4 2 3 3 2 1 NA NA
2.01 3.96 26.58 31.71
NA 0 0 0
0.68 0.91 0 10.46
NA 0 0 0
0.13 1.96 14.67 31.02
1 1 1 1
-17.29 3.93 9.67 -25.55 -13.36 16.65 22.98
11.7 4.8 39.23 13.89 11.88 124.7 48.87
-2.07 0.96 10.13 -15.77 -7.71 31.39 8.43
-22.33 0.56 8.07 -21.85 -29.72 4.32 -14.54
-9.99 0.74 9.14 0.11 0 3.4 30.23
3 2 3 4 3 3 2
1.8 1.82 9.47 14.53
2.09 2.11 0 0
1.03 1.17 33.45 41.36
1.41 1.46 73.38 74.44
2.27 2.44 12.11 18.21
2 2 3 3
79.2 81.06 37.94 38.98 33.56 36.03 33.92 38.82 24.93 28.01
35.49 31.83 21.84 16.82 19.98 15.4 21.2 17.24 14.97 12.15
23.35 24 12.23 9.65 8.27 6.92 7.69 7.19 6.25 5.76
18.11 17.94 6.04 7.33 4.76 6.43 4.66 6.86 3.43 5.14
16.63 54.11 0 25.11 4.42 21 4.16 22.22 2.78 13.49
1 1 1 1 1 1 1 1
19.34 19.63 31.08 28.63 38.42 33.44
12.96 13.96 19.18 21.57 22.74 24
7.08 6.62 11.88 11.36 18.3 14.59
6.29 11.93 15.34 33.97 48.86 60.76
2.14 10.01 3.14 14.65 3.81 16.08
1 1 1 2 2 2
628355 156656 4.72 14.28 0.78
1080063 161719 16.12 48.21 0.87
365125 22816 6.97 12.82 1.13
701908 24052 9.06 45.26 1.84
11391701 337100 2.76 3.21 0.29
NA NA NA NA 4
Stock Price Market Cap (millions)
Valuation Ratios P/E Ratio (TTM) Price to Sales (TTM) Price to Book (MRQ) Price to Tangible Book (MRQ) Price to Cash Flow (TTM) Price to Free Cash Flow (TTM) Enterprise Value/Revenue (TTM) Enterprise Value/EBITDA (TTM)
Dividends Dividend Yield Dividend Yield - 5 Year Avg. Dividend 5 Year Growth Rate Payout Ratio (TTM)
Growth Rates Sales (MRQ) vs Qtr. 1 Yr. Ago Sales (TTM) vs TTM 1 Yr. Ago Sales - 5 Yr. Growth Rate EPS (MRQ) vs Qtr. 1 Yr. Ago EPS (TTM) vs TTM 1 Yr. Ago EPS - 5 Yr. Growth Rate Capital Spending - 5 Yr. Growth Rate
Financial Strength Quick Ratio (MRQ) Current Ratio (MRQ) LT Debt to Equity (MRQ) Total Debt to Equity (MRQ)
Profitability Gross Margin (TTM) Gross Margin - 5 Yr. Avg. EBITD Margin (TTM) EBITD - 5 Yr. Avg. Operating Margin (TTM) Operating Margin - 5 Yr. Avg. Pre-Tax Margin (TTM) Pre-Tax Margin - 5 Yr. Avg. Net Profit Margin (TTM) Net Profit Margin - 5 Yr. Avg.
1 1
Management Effectiveness Return Return Return Return Return Return
On On On On On On
Assets (TTM) Assets - 5 Yr. Avg. Investment (TTM) Investment - 5 Yr Avg Equity (TTM) Equity - 5 Yr. Avg.
Efficiency Revenue/Employee (TTM) Net Income/Employee (TTM) Receivable Turnover (TTM) Inventory Turnover (TTM) Asset Turnover (TTM)
Company Name
ticker
Microsoft Corp
MSFT
www.oldschoolvalue.com
10/1/2009
Figures in Millions except per share values
Net Profit Margin
0%
0%
Cash Flow (Continuing Operations)
0%
0%
0%
0%
0%
0%
0%
0%
0%
TTM Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
0 0 0 0 0 0 0 0 0 0 TTM Error Error Error Error Error Error Error Error Error #VALUE! Error Error Error Error Error Error Error Error Error % Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Magic Formula Investing -- Return on Capital
Magic Formula Investing -- Earnings Yield
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0 Error Error --
0.0%
Now Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Now Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Return on Assets (ROA)
Return on Equity (ROE)
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Error Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Error Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Current Ratio
Quick Ratio
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Error Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Error Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Company Name
ticker
Microsoft Corp
MSFT
10/1/2009
Figures in Millions except per share values
www.oldschoolvalue.com
Company Assessment: Quantitative Valuation
Criteria over 10yrs
DCF Valuation Discount
> 25% or 50% depending on moat
11%
0
Graham Intrinsic Value Discount
> 66%
17%
0
Criteria over 10yrs
Margins, Profit and Growth Median Revenue growth Median Gross Margin Median Operating Margin Median Net Margin Median EPS growth
Points
10%
Criteria over 10yrs
Value
Points
30% 15% 10%
15% 13% 10% 7% Consistent over 10yrs Consistent over 10yrs
Criteria for TTM
Balance Sheet
Points
Value 12.0% 82.1% 37.1% 28.7% 13.8%
10%
Business and Management Performance Cash growth from Operations CROIC is postive and capable of paying off financing Median FCF growth positive and consistent Median FCF/Sales Consistent ROE (manually check) Consistent ROA (manually check)
Value
Current assets > 1.5 x current liabilities
> 1.5 x current liabilities
Price to Book ratio < 2 Debt to Equity FCF to Debt Capitalization Ratio Intangibles % of assets
4.1% 20.8% 9.2% 27.9% N/A N/A
N/A N/A
1
N/A
5.67
< 100%
96.9%
> 10%
36.6%
N/A 1 2 2 0
9%
< 15% of assets
18.3%
User Points
0 2 0 2
1.8
< 30%
User Points
1 2 2 2 1
Points
Value
User Points
User Points N/A
Company Assessment: Qualitative Microsoft Corporation is engaged in developing, manufacturing, licensing, and supporting a range of software products and services for different types of computing devices. The Company operates in five business segments: Client, Server and Tools, Online Services Business, Microsoft Business Division, and Entertainment and Devices Division. The software products and services include operating systems for servers, personal computers, and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business solutions applications; computing applications; software development tools, and video games. The Company provide consulting and product and solution support services, and trains and certifies computer system integrators and developers. It also designs and sells hardware, including Xbox 360 video game console, the Zune digital music and entertainment device, and peripherals.
Competitive Advantage Stable market share? Dominant company in industry, segment? Low barriers to entry and exit? Experience goods (brand effect, trademarks) High switching costs? Network effect? E.g. eBay
Comment
User Points
Max Points max 2 max 2 max 2 max 2 max 2 max 2
Business Model
Comment
User Points
Max Points
Growth due to: a) existing product / existing market b) existing product / new market c) new product / existing market d) new product / new market
(yes/no) (yes/no) (yes/no) (yes/no)
Able to increase prices and retain customers? Compete on price? (1 for no, 0 for yes) Barriers of entry to the business? Diverse customers? (1 for diverse, 0 for concentrated) Involved in competition? Monopoly, duopoly, crowded Company has a recurring revenue stream? Capital intensive company? (1 for no, 0 for yes)
a) Yes b) Yes c) Yes d) No
max 2
max max max max max max max
1 1 1 1 2 1 1
Management High insider ownership? Candid management on positives and negatives? Management performance at previous jobs? Compensation levels compared to sales?
Comment
User Points
Max Points max 1 max 1 max 1 max 1
Industry Boring industry? (1 for slow, 0 for fast industry) Can company adapt to changing industry environment? Industry leader or lagger? (1 for leader, 0 for lagger)
Comment
User Points
Max Points max 1 max 1 max 1
Psychological Factors to Consider. Not Weighted. Recency bias? Hindsight bias? Framing issues correctly and in different manners? Is there a data framing bias? Am I too overconfident on the situation? Performed probability analysis for -ve factors? Too much loss aversion? Sunk cost mentality? Slow in changing opinion? Psychological denial ? Bias from commitment and consistency tendency? Pavlovian association? Social proof bias? Status quo bias? False consensus bias? Do I have an exit plan? Category
Total Points out of 5
Valuation Margins, Profit and Growth Business and Management Performance Balance Sheet Competitive Advantage Business Model Management
Low Risk 3.7 3.7
Comment no no DCF, graham, compare to peers maybe no no no no no no no no no no no
High Growth 2.0 2.0
Under Valued 2.5 2.5
0.0 4.0 2.0 3.0 0.0 0.0 0.0
Well Managed 3.5 3.5
Good Financial Health 3.5 3.5
Low Risk 5.0
4.0 Strong Moat
3.0
High Growth
2.0 1.0 0.0
Good Financial Health
Under Valued
Well Managed
Strong Moat 4.0 4.0
Jae Jun | Old School Value Author
All spreadsheet related questions and support is now handled only through the forum. http://www.oldschoolvalue.com/forum/spreadsheet-installation/
Disclaimer Nothing on Old School Value, related pages, emails, or other communications by the author, either written or oral, are intended to be a recommendation to either buy, hold, or sell any specific security or group of securities. Likewise, nothing herein should be construed as an endorsement of any financial adviser, investment manager, commercial information provider, transaction service, or brokerage firm. The findings from this spreadsheet is merely a start to a means of further research and uncovering a great business and investment. Old School Value holds no responsibility for any investment whatsoever.
Spreadsheet Installation Related - Refer to the manual and ask for help on the forums to reduce repetitive questions and answers.The manual contains every possible problem related to the spreadsheet. - When requesting help, please try to find out whether it is a spreadsheet issue or excel issue. PDF: http://www.oldschoolvalue.com/intrinsic-value-spreadsheets/installation-troubleshooting-guide/ Forum: http://www.oldschoolvalue.com/forum/spreadsheet-installation/
How to Use - Yellow highlighted fields are user input fields. Enter ticker in the Summary tab only. - Use yellow fields to override the default values without messing up formulas and accidently saving incorrect values - If a graph is squashed or looks out of place, zoom in and zoom out to refresh the view. - Press F9 to start calculations. Automatic formula calculations have been turned off in the excel menu to improve start speed and convenience. - Protected sheets do not have any passwords. Simply unprotect it. - Summary page provides a quick overview of all valuation methods and important graphs and numbers. Easy to add more or less yourself. - DCF Valuation is based on discounted cash flow. Important company fundamental metrics included. - Useful for companies with either 5yr or 10yrs of operating history - Use 5yr version if there has been a recent turnaround or a major event changing the fundamentals of the business - Use 10yr version for stable, cash cows such as KO or JNJ. You can even use it for stable consistent small caps - Adjust user growth, discount rate, FCF override, terminal rate (default 3%) - Price vs Value tab displays only the DCF intrinsic value compared to the historical stock price. (Thinking of how to add Graham intrinsic value and EPV to the graph) - Graham Intrinsic Value is based on Ben Graham's formula defined in the Intelligent Investor Intrisic Value = "normal" earnings x (8.5 + (2 x expected 5 yr growth)) x (4.4/20yr A corp bond) - Use for companies where FCF is erratic such as cyclicals or short history companies. - Remember that earnings are usually inflated. Companies may overstate earnings by hiding some numbers in there but they will never understate earnings on purpose. - Which means that the value you get with the Graham equation will be higher than normal. - Use high margin of safety (MOS) - Adjust user growth - EPV is based on Bruce Greenwald's book. http://www.oldschoolvalue.com/book-reviews/greenwald-earnings-power-value-investing-epv/ - Detailed instructions on how to use the spreadsheet with a rundown of Microsoft http://www.oldschoolvalue.com/stock-analysis/earnings-power-value-epv-valuation-microsoft/ - To explain it here, I would have to write out the entire book again. Please read it yourself to fully understand it. - "Adjust +/-" column is for adding or subtracting values from the stated numbers - "Multiplier" is to select what % you want to consider it. e.g. intangibles usually = 0% - Select the pinkish cell to select either data from MSN or ADVFN - Cell P47, select either 3 or 4 years of R&D you want to include into the valuation - EPV section row 66, include or exclude extraordinary items to EBIT - Read the comments to see references and explanations from the book - Competitors tab allows you to view 6 companies side by side - Charts tab shows different performance graphs of the companies
Company Name
ticker
Microsoft Corp
MSFT
www.oldschoolvalue.com
10/1/2009
Figures in Millions except per share values
Microsoft Corporation is engaged in developing, manufacturing, licensing, and supporting a range of software products and services for different types of computing devices. The Company operates in five business segments: Client, Server and Tools, Online Services Business, Microsoft Business Division, and Entertainment and Devices Division. The software products and services include operating systems for servers, personal computers, and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business solutions applications; computing applications; software development tools, and video games. The Company provide consulting and product and solution support services, and trains and certifies computer system integrators and developers. It also designs and sells hardware, including Xbox 360 video game console, the Zune digital music and entertainment device, and peripherals.
Asset Valuation
Total Net Reprod. Cost Reprod. Cost of Assets BV Tangible BV NNWC
EPV Valuation
$ $ $ $
4.93
EPV
7.69 Normalized Income 2.84 Discount Rate 0.56 Margin of Safety
Key Statistics Market Cap (millions)
DCF Valuation
$
24.36 DCF Price
$
$
19,259.53 Growth Rate 9% Discount Rate 0% Margin of Safety
9% Growth Rate 9% Normalized EPS 11% Margin of Safety
Financial Strength 1.8
Gross (TTM)
27.47
Current Ratio (MRQ)
1.82
Gross - 5 Yr. Avg.
52-Week Low
14.87
LT Debt to Equity (MRQ)
9.47
% off 52-Week Low
67.8%
Total Debt to Equity (MRQ)
P/E Ratio (TTM)
15.88
Sales (MRQ) vs Qtr. 1 Yr. Ago
-17.29
Price to Sales (TTM)
3.93
Sales (TTM) vs TTM 1 Yr. Ago
Price to Book (MRQ)
5.79
Sales - 5 Yr. Growth Rate
Price to Tangible Book (MRQ)
9.08
EPS (MRQ) vs Qtr. 1 Yr. Ago
Price to Cash Flow (TTM)
13.4
Price to Free Cash Flow (TTM)
222,760
Valuation Ratios
$
Current Price
29.89
$
24.95
14% 1.01 17%
$
Margins & Profitability
Quick Ratio (MRQ)
52-Week High
Graham Valuation
27.91 Graham Price
14.53
Growth Stats
Operating (TTM)
33.56
Net Profit (TTM)
81.06
Operating - 5 Yr. Avg.
36.03
Net Profit - 5 Yr. Avg.28.01
EBITD (TTM)
37.94
Pre-Tax (TTM)
33.92
EBITD - 5 Yr. Avg.
38.98
Pre-Tax - 5 Yr. Avg.
38.82
79.2
Management Effective
24.93
Efficiency
ROA (TTM)
19.34
Revenue/Employee (TTM) 628355
3.93
ROA - 5 Yr. Avg.
19.63
Net Income/Employee (TTM) 156656
9.67
ROI (TTM)
31.08
Receivable Turnover (TTM) 4.72
-25.55
ROI - 5 Yr Avg
28.63
Inventory Turnover (TTM)
14.28
EPS (TTM) vs TTM 1 Yr. Ago
-13.36
ROE (TTM)
38.42
Asset Turnover (TTM)
0.78
20.06
EPS - 5 Yr. Growth Rate
16.65
ROE - 5 Yr. Avg.
33.44
Enterprise Value/Revenue (TTM)
3.51
Capital Spending - 5 Yr. Grwth
22.98
Enterprise Value/EBITDA (TTM)
8.812
Historical Stock Price Vs Intrinsic Value Per Share 60
50
Historical Price
40
30
Intrinsic Value
20
Buy Price 10
0 10/12/1998
10/12/1999
10/12/2000
10/12/2001
10/12/2002
10/12/2003
10/12/2004
10/12/2005
10/12/2006
10/12/2007
10/12/2008
Multi-Year Performance Shareholder Equity Free Cash Flow CROIC FCF/Sales ROA ROE Revenue Growth Gross Margin Operating Margin Net Margin Earnings Growth Cash from Ops Growth
2000-2007 -6.7% 5.2% 19.4% 29.7% 14.3% 18.8% 12.1% 82.5% 39.1% 28.7% 7.6% 3.5%
2001-2008 -10.2% 11.4% 20.8% 28.1% 14.3% 18.8% 13.2% 82.1% 37.2% 28.7% 16.0% 7.0%
2002-2009 -9.4% 8.1% 26.2% 27.2% 16.5% 24.2% 10.9% 81.7% 36.9% 28.0% 12.5% 4.0%
2000-2005 1.4% 5.8% 16.6% 30.8% 13.4% 17.1% 11.6% 83.4% 41.5% 29.9% 5.7% 3.5%
2001-2006 -5.5% 8.9% 16.6% 29.7% 13.4% 17.1% 11.8% 82.5% 39.1% 28.7% 12.7% 1.4%
2002-2007 -12.8% 10.2% 20.8% 27.8% 14.3% 18.8% 12.5% 82.1% 36.9% 28.0% 14.9% 4.2%
2003-2008 -17.3% 9.4% 26.2% 27.2% 16.5% 24.2% 13.4% 82.1% 36.9% 28.9% 15.2% 6.5%
2004-2009 -18.7% 11.2% 33.1% 26.4% 18.6% 33.5% 9.7% 81.3% 36.4% 28.0% 16.7% 5.4%
Median -9.8% 9.2% 20.8% 27.9% 14.3% 18.8% 12.0% 82.1% 37.1% 28.7% 13.8% 4.1%
Margin Percentages 100.0%
86.9%
90.0%
86.3%
81.7%
82.3%
42.0%
41.1%
84.4%
81.8%
82.7%
79.1%
80.8%
79.2%
37.2%
36.2%
37.2%
34.8%
28.5%
27.5%
29.3%
2006
2007
2008
80.0% 70.0% 60.0% 47.6% 41.0%
50.0%
46.3%
40.0%
29.0%
27.6%
2001
2002
30.0%
Gross Margin
36.6% 30.8%
31.0% 24.5% 22.2%
Operating Margin Net Margin
24.9%
20.0% 10.0% 0.0% 2000
2003
2004
2005
Free Cash Flow vs Tangible Shareholder Equity Trend
2009
Efficiency & Profitability
$80,000.0
70.0%
$70,000.0
60.0%
$60,000.0
50.0%
$50,000.0
CROIC
40.0%
$40,000.0
FCF
$30,000.0
Shareholder Equity
FCF/Sales
30.0%
ROA
ROE
20.0%
$20,000.0
10.0%
$10,000.0 $-
0.0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2000
Sales vs Accounts Receivables
2001
2002
2003
2004
2005
2006
2007
2008
2009
CAPEX vs PPE
$70,000.0
$10,000.0 $9,000.0
$60,000.0
$8,000.0 $50,000.0
Last 6 yrs
$7,000.0
Last 5 yrs
$6,000.0
$40,000.0
Sales Accts Receivable
$30,000.0
Inventory
$20,000.0
Last 4 yrs
$5,000.0
Last 3 yrs
$4,000.0
Last 2 yrs
$3,000.0
Last 1 yr
$2,000.0 $10,000.0
PPE
$1,000.0
$-
$2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
TTM
2003
2004
2005
2006
2007
2008
2009
TTM
Company Name
ticker
Microsoft Corp
MSFT
10/1/2009
Figures in Millions except per share values Financial Data
MSFT
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
TTM
Income Statement Revenue % change from last year COGS COGS (%) Gross Profit
$ $
$
Gross Profit (%)
22,956.0 3,002.0 13.1% 19,954.0
$ $
$
86.9%
25,296.0 9.3% 3,455.0 13.7% 21,841.0
$ $
$
86.3%
28,365.0 10.8% 5,191.0 18.3% 23,174.0
$ $
$
81.7%
32,187.0 11.9% 5,686.0 17.7% 26,501.0
$ $
$
82.3%
36,835.0 12.6% 6,716.0 18.2% 30,119.0
$ $
$
39,788.0 7.4% 6,200.0 15.6% 33,588.0
$ $
$
44,282.0 $ 10.1% 7,650.0 $ 17.3%
51,122.0 $ 13.4% 10,693.0 $ 20.9%
60,420.0 $ 15.4% 11,598.0 $ 19.2%
58,437.0 $ -3.4% 12,155.0 $ 20.8%
58,437.0 0.0% 12,155.0 20.8%
36,632.0
40,429.0
48,822.0
46,282.0
46,282.0
$
$
$
$
81.8%
84.4%
82.7%
79.1%
80.8%
79.2%
79.2%
13,306.0 $ 36.1% 7,779.0 $ 21.1% $ 0.0%
12,843.0 $ 32.3% 6,184.0 $ 15.5% $ 0.0%
13,576.0 $ 30.7% 6,584.0 $ 14.9% $ 0.0%
14,784.0 $ 28.9% 7,121.0 $ 13.9% $ 0.0%
18,166.0 $ 30.1% 8,164.0 $ 13.5% $ 0.0%
16,909.0 $ 28.9% 9,010.0 $ 15.4% $ 0.0%
Operating Expenses SG&A SG&A (%) R&D R&D (%) Other Other (%) Operating Income
$ $ $
$
Operating Income (%)
5,150.0 $ 22.4% 3,775.0 $ 16.4% 92.0 $ 0.4% 10,937.0
$
47.6%
5,742.0 $ 22.7% 4,379.0 $ 17.3% $ 0.0% 11,720.0
$
46.3%
6,957.0 $ 24.5% 4,307.0 $ 15.2% $ 0.0% 11,910.0
$
42.0%
8,625.0 $ 26.8% 4,659.0 $ 14.5% $ 0.0% 13,217.0
$
41.1%
9,034.0
$
24.5%
14,561.0
$
36.6%
16,472.0
$
37.2%
18,524.0
$
36.2%
22,492.0
$
37.2%
20,363.0
$
34.8%
16,909.0 28.9% 9,010.0 15.4% 0.0% 20,363.0 34.8%
Other Income and Expense Net Int Inc & Other
$
3,338.0
$
(195.0)
$
(397.0)
$
1,509.0
$
3,162.0
$
2,067.0
$
1,790.0
$
1,577.0
$
1,322.0
$
(542.0)
$
(542.0)
Earnings Before Taxes Income Taxes Tax Rate %
$ $
14,275.0 4,854.0 34.0%
$ $
11,525.0 3,804.0 33.0%
$ $
11,513.0 3,684.0 32.0%
$ $
14,726.0 4,733.0 32.1%
$ $
12,196.0 4,028.0 33.0%
$ $
16,628.0 4,374.0 26.3%
$ $
18,262.0 5,663.0 31.0%
$ $
20,101.0 6,036.0 30.0%
$ $
23,814.0 6,133.0 25.8%
$ $
19,821.0 5,252.0 26.5%
$ $
19,821.0 5,252.0 26.5%
Earnings After Taxes Acctg Changes Disc Operations Ext Items
$ $ $ $
9,421.0 -
$ $ $ $
7,721.0 $ (375.0) $ $ $
7,829.0 -
$ $ $ $
9,993.0 -
$ $ $ $
8,168.0 -
$ $ $ $
12,254.0 -
$ $ $ $
12,599.0 -
$ $ $ $
14,065.0 -
$ $ $ $
17,681.0 -
$ $ $ $
14,569.0 -
$ $ $ $
14,569.0 -
Net Income
$
9,421.0
$
7,346.0
7,829.0
$
9,993.0
$
8,168.0
$
12,254.0
$
12,599.0
$
14,065.0
$
17,681.0
$
14,569.0
$
14,569.0
Net Income (%) Diluted EPS, Cont Ops$ Diluted EPS$ Shares
$ $
41.0% 0.9 $ 0.9 $ 11072
$
29.0% 0.7 $ 0.7 $ 11148
27.6% 0.7 $ 0.7 $ 11106
31.0% 0.9 $ 0.9 $ 10882
22.2% 0.8 $ 0.8 $ 10894
30.8% 1.1 $ 1.1 $ 10906
28.5% 1.2 $ 1.2 $ 10531
27.5% 1.4 $ 1.4 $ 9886
29.3% 1.9 $ 1.9 $ 9470
24.9% 1.6 $ 1.6 $ 8996
24.9% 1.6 1.6 8910
3,922.0 $ 27,678.0 $ 3,671.0 $ 11.5% $
3,016.0 $ 35,636.0 $ 5,129.0 $ 28.4% 673.0 $ 100.0% 4,122.0 $
6,438.0 $ 42,610.0 $ 5,196.0 $ 1.3% 640.0 $ -5.2% 4,089.0 $
15,982.0 $ 44,610.0 $ 5,890.0 $ 11.8% 421.0 $ -52.0% 3,663.0 $
4,851.0 $ 32,900.0 $ 7,180.0 $ 18.0% 491.0 $ 14.3% 3,315.0 $
6,714.0 $ 27,447.0 $ 9,316.0 $ 22.9% 1,478.0 $ 66.8% 4,055.0 $
6,111.0 $ 17,300.0 $ 11,338.0 $ 17.8% 1,127.0 $ -31.1% 4,292.0 $
10,339.0 $ 13,323.0 $ 13,589.0 $ 16.6% 985.0 $ -14.4% 5,006.0 $
6,076.0 $ 25,371.0 $ 11,192.0 $ -21.4% 717.0 $ -37.4% 5,924.0 $
6,076.0 25,371.0 11,192.0 0.0% 717.0 0.0% 5,924.0
Balance Sheet Assets Cash and Equiv Short-Term Investments Accts Rec % change from last year Inventory % change from last year Other Current Assets
$ $ $
$
3,260.0
$
4,366.0
$
Total Current Assets Net PP&E Intangibles Other Long-Term Assets
$ $ $ $
30,308.0 1,903.0 19,939.0
$ $ $ $
39,637.0 2,309.0 17,311.0
$ $ $ $
48,576.0 2,268.0 1,669.0 15,133.0
$ $ $ $
58,973.0 2,223.0 3,512.0 14,863.0
$ $ $ $
70,566.0 2,326.0 3,684.0 15,813.0
$ $ $ $
48,737.0 2,346.0 3,808.0 15,924.0
$ $ $ $
49,010.0 3,044.0 4,405.0 13,138.0
$ $ $ $
40,168.0 4,350.0 5,638.0 13,015.0
$ $ $ $
43,242.0 6,242.0 14,081.0 9,228.0
$ $ $ $
49,280.0 7,535.0 14,262.0 6,811.0
$ $ $ $
49,280.0 7,535.0 14,262.0 6,811.0
Total Assets
$
52,150.0
$
59,257.0
$
67,646.0
$
79,571.0
$
92,389.0
$
70,815.0
$
69,597.0
$
63,171.0
$
72,793.0
$
77,888.0
$
77,888.0
$
4,846.0 18,952.0 3,250.0 -
$ $ $ $
Liabilities & Stockholders' Equity Accts Payable Short-Term Debt Taxes Payable Accrued Liabilities
$ $ $ $
1,083.0 585.0 557.0
$ $ $ $
1,188.0 1,468.0 742.0
$ $ $ $
1,208.0 2,022.0 7,065.0
$ $ $ $
1,573.0 2,044.0 8,641.0
$ $ $ $
1,717.0 3,478.0 7,853.0
$ $ $ $
2,086.0 2,020.0 9,164.0
$ $ $ $
2,909.0 1,557.0 11,076.0
$ $ $ $
3,247.0 1,040.0 2,325.0
$ $ $ $
4,034.0 3,248.0 2,934.0
$ $ $ $
3,324.0 2,000.0 725.0 3,156.0
$ $ $ $
3,324.0 2,000.0 725.0 3,156.0
Other Short-Term Liabilities
$
7,530.0
$
7,734.0
$
2,449.0
$
1,716.0
$
1,921.0
$
3,607.0
$
6,900.0
$
17,142.0
$
19,670.0
$
17,829.0
$
17,829.0
Total Current Liabilities Long-Term Debt
$ $
9,755.0 -
$ $
11,132.0 -
$ $
12,744.0 -
$ $
13,974.0 -
$ $
14,969.0 -
$ $
16,877.0 -
$ $
22,442.0 -
$ $
23,754.0 -
$ $
29,886.0 -
$ $
27,034.0 3,746.0
$ $
27,034.0 3,746.0
Other Long-Term Liabilities
$
1,027.0
$
836.0
$
2,722.0
$
4,577.0
$
2,595.0
$
5,823.0
$
7,051.0
$
8,320.0
$
6,621.0
$
7,550.0
$
7,550.0
Total Liabilities
$
10,782.0
$
11,968.0
$
15,466.0
$
18,551.0
$
17,564.0
$
22,700.0
$
29,493.0
$
32,074.0
$
36,507.0
$
38,330.0
$
38,330.0
Total Equity
$
41,368.0
$
47,289.0
$
52,180.0
$
61,020.0
$
74,825.0
$
48,115.0
$
40,104.0
$
31,097.0
$
36,286.0
$
39,558.0
$
39,558.0
Total Liabilities & Equity
$
52,150.0
$
59,257.0
$
67,646.0
$
79,571.0
$
92,389.0
$
70,815.0
$
69,597.0
$
63,171.0
$
72,793.0
$
77,888.0
$
77,888.0
Cash Flows Statement Cash Flows From Operating Activities Net Income Depr & Amort Deferred Taxes Other
$ $ $ $
9,421.0 748.0 3,792.0
$ $ $ $
Cash from Operations
$
13,961.0
$
7,346.0 1,536.0 (420.0) 4,960.0 13,422.0
$ $ $ $ $
7,829.0 1,084.0 (416.0) 6,012.0
$ $ $ $
9,993.0 1,439.0 336.0 4,029.0
$ $ $ $
8,168.0 $ 1,186.0 $ (1,479.0) $ 6,751.0 $
14,509.0
$
15,797.0
$
(770.0) (10,075.0)
$ $ $
(891.0) $ (1,063.0) $ (5,259.0) $
(1,109.0) $ (4.0) $ (1,632.0) $
(10,845.0)
$
(7,213.0)
(2,745.0)
14,626.0
$
12,254.0 $ 855.0 $ (179.0) $ 3,675.0 $ 16,605.0
$
12,599.0 903.0 219.0 683.0
$ $ $ $
14,065.0 1,440.0 421.0 1,870.0
$ $ $ $
17,681.0 2,056.0 935.0 940.0
$ $ $ $
14,569.0 2,562.0 762.0 1,144.0
$ $ $ $
14,569.0 2,562.0 762.0 1,144.0
14,404.0
$
17,796.0
$
21,612.0
$
19,037.0
$
19,037.0
Cash Flows From Investing Activities Cap Ex Purchase of Business Other
$ $ $
Cash from Investing
$
(879.0) $ $ (11,048.0) $ (11,927.0)
$
(1,103.0) $ $ (7,631.0) $ (8,734.0)
$
$
$
(812.0) $ (207.0) $ 16,046.0 $ 15,027.0
$
(1,578.0) (649.0) 10,230.0
$ $ $
(2,264.0) (1,150.0) 9,503.0
$ $ $
(3,182.0) (8,053.0) 6,648.0
$ $ $
(3,119.0) (868.0) (11,783.0)
$ $ $
(3,119.0) (868.0) (11,783.0)
8,003.0
$
6,089.0
$
(4,587.0)
$
(15,770.0)
$
(15,770.0)
(20,793.0) $ $ (3,805.0) $ 54.0 $
(9,039.0) (4,015.0) 120.0
$ $ $ $
(8,722.0) 5,974.0 (4,468.0) (247.0)
$ $ $ $
(8,722.0) 5,974.0 (4,468.0) (247.0)
Cash Flows From Financing Activities Net Issuance of Stock Net Issuance of Debt Dividends Other
$ $ $ $
(2,651.0) $ $ (13.0) $ 472.0 $
(4,454.0) $ $ $ (1,132.0) $
(4,572.0) $ $ $ $
(4,366.0) $ $ (857.0) $ $
(635.0) $ $ (1,729.0) $ $
Cash from Financing Currency Adj Change in Cash
$ $ $
(2,192.0) $ 29.0 $ (158.0) $
(5,586.0) $ (26.0) $ (898.0) $
(4,572.0) 2.0 (908.0)
(5,223.0) 61.0 3,361.0
$ $ $
(2,364.0) $ 27.0 $ 9,517.0 $
Cash from Operations Cap Ex
$ $
13,961.0 $ (879.0) $
13,422.0 $ (1,103.0) $
14,509.0 $ (770.0) $
15,797.0 $ (891.0) $
14,626.0 $ (1,109.0) $
Free Cash Flow Book Value Per Share
$ $
9,290.0 3.74
7,779.0 4.24
8,143.0 4.70
$ $ $
(4,948.0) $ $ (36,112.0) $ (18.0) $ (41,078.0) (7.0) (9,446.0)
$ $ $
(17,106.0) $ $ (3,545.0) $ 89.0 $ (20,562.0) 18.0 1,845.0
$ $ $
(24,544.0) 56.0 (659.0)
$ $ $
(12,934.0) $ 137.0 $ 4,228.0 $
(7,463.0) $ (67.0) $ (4,263.0) $
(7,463.0) (67.0) (4,263.0)
17,796.0 $ (2,264.0) $
21,612.0 $ (3,182.0) $
19,037.0 $ (3,119.0) $
19,037.0 (3,119.0)
Free Cash Flow
$ $
$ $
$ $
10,541.0 5.61
$ $
8,245.0 6.87
$ $
16,605.0 $ (812.0) $ 12,297.0 4.41
$ $
14,404.0 $ (1,578.0) $ 11,924.0 3.81
$ $
13,241.0 3.15
$ $
16,555.0 3.83
$ $
14,012.0 4.40
$ $
14,012.0 4.44
Company Name
ticker
Microsoft Corp 10/1/2009
User Growth
User Input Params
MSFT
www.oldschoolvalue.com
Figures in Millions except per share values
Desired MOS 50%
Growth 9.2%
Discount % 9.0%
2000
2001
2002
$
Price 24.95
Share Value Buy under Actual D/C % $ 27.91 $ 13.95 11% Financial Data 2004 2005 2006
2003
52Wk High $27.47
52Wk Low $14.87
2007
2008
2009
Income Sheet Data Revenue Gross Profit Operating Income Net Income Diluted EPS
$ $ $ $ $
22,956.0 19,954.0 10,937.0 9,421.0 0.9
$ $ $ $ $
25,296.0 21,841.0 11,720.0 7,346.0 0.7
$ $ $ $ $
28,365.0 23,174.0 11,910.0 7,829.0 0.7
$ 32,187.0 $ 26,501.0 $ 13,217.0 $ 9,993.0 $ 0.9
$ 36,835.0 $ 30,119.0 $ 9,034.0 $ 8,168.0 $ 0.8
$ $ $ $ $
39,788.0 33,588.0 14,561.0 12,254.0 1.1
$ $ $ $ $
44,282.0 36,632.0 16,472.0 12,599.0 1.2
$ $ $ $ $
51,122.0 40,429.0 18,524.0 14,065.0 1.4
$ $ $ $ $
60,420.0 48,822.0 22,492.0 17,681.0 1.9
$ $ $ $ $
58,437.0 46,282.0 20,363.0 14,569.0 1.6
$ $ $
13,961.0 9,290.0 879.0
$ $ $
13,422.0 7,779.0 1,103.0
$ $ $
14,509.0 8,143.0 770.0
$ 15,797.0 $ 10,541.0 $ 891.0
$ 14,626.0 $ 8,245.0 $ 1,109.0
$ $ $
16,605.0 12,297.0 812.0
$ 14,404.0 $ 11,924.0 $ 1,578.0
$ 17,796.0 $ 13,241.0 $ 2,264.0
$ 21,612.0 $ 16,555.0 $ 3,182.0
$ 19,037.0 $ 14,012.0 $ 3,119.0
$ $ $ $
30,308.0 9,755.0 10,782.0 41,368.0
$ $ $ $
39,637.0 11,132.0 11,968.0 47,289.0
$ $ $ $
48,576.0 12,744.0 15,466.0 50,511.0
$ $ $ $
$ $ $ $
$ $ $ $
48,737.0 16,877.0 22,700.0 44,307.0
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
Cash Flow Data Cash from Operations Free Cash Flow Capex
Balance Sheet Data Current Assets Current Liabilities Total Liabilities Tangible Shareholder Equity
58,973.0 13,974.0 18,551.0 57,508.0
70,566.0 14,969.0 17,564.0 71,141.0
49,010.0 22,442.0 29,493.0 35,699.0
40,168.0 23,754.0 32,074.0 25,459.0
43,242.0 29,886.0 36,507.0 22,205.0
49,280.0 27,034.0 38,330.0 25,296.0
Margins Gross Margin Operating Margin Net Margin Current Assets>1.5 times
86.9% 47.6% 41.0% 310.7%
86.3% 46.3% 29.0% 356.1%
81.7% 42.0% 27.6% 381.2%
82.3% 41.1% 31.0% 422.0%
81.8% 24.5% 22.2% 471.4%
84.4% 36.6% 30.8% 288.8%
82.7% 37.2% 28.5% 218.4%
79.1% 36.2% 27.5% 169.1%
80.8% 37.2% 29.3% 144.7%
79.2% 34.8% 24.9% 182.3%
21.9% 40.5%
16.2% 30.8%
21.1% 27.4%
13.2% 16.6%
15.3% 28.7% 7.7 12.3% 15.7%
17.0% 32.7% 8.9 13.6% 17.7%
11.2% 22.4% 16.0 9.5% 12.0%
24.5% 30.9% 12.6 15.0% 19.9%
27.9% 26.9% 5.2 18.0% 28.6%
39.2% 25.9% 9.5 21.2% 39.5%
57.4% 27.4% 11.8 26.0% 52.5%
38.3% 24.0% 17.0 19.3% 38.4%
26.1% 0.0% 86.2%
25.3% 0.0% 65.0%
29.6% 0.0% 52.7%
30.4% 0.0% 56.8%
23.5% 0.0% 46.9%
47.2% 0.0% 54.2%
73.5% 0.0% 40.4%
103.1% 0.0% 41.3%
100.6% 0.0% 45.3%
96.9% 8.7% 36.6%
2000-2007 -6.7% 5.2% 19.4% 29.7% 14.3% 18.8% 12.1% 82.5% 39.1% 28.7% 7.6% 3.5%
2001-2008 -10.2% 11.4% 20.8% 28.1% 14.3% 18.8% 13.2% 82.1% 37.2% 28.7% 16.0% 7.0%
2002-2009 -9.4% 8.1% 26.2% 27.2% 16.5% 24.2% 10.9% 81.7% 36.9% 28.0% 12.5% 4.0%
2002-2007 -12.8% 10.2% 20.8% 27.8% 14.3% 18.8% 12.5% 82.1% 36.9% 28.0% 14.9% 4.2%
2003-2008 -17.3% 9.4% 26.2% 27.2% 16.5% 24.2% 13.4% 82.1% 36.9% 28.9% 15.2% 6.5%
2004-2009 -18.7% 11.2% 33.1% 26.4% 18.6% 33.5% 9.7% 81.3% 36.4% 28.0% 16.7% 5.4%
2016 $24,429.44 2026 $ 35,315
2017 $24,875.75 2027 $ 36,374
Efficiency & Profitability CROIC FCF/Sales Inventory Turnover Return On Assets (ROA) Retun On Equity (ROE)
Debt Related Debt to Equity Capitalization Ratio FCF to Debt
Multi-Year Performance Shareholder Equity Free Cash Flow CROIC FCF/Sales ROA ROE Revenue Growth Gross Margin Operating Margin Net Margin Earnings Growth Cash from Ops Growth
2000-2005 1.4% 5.8% 16.6% 30.8% 13.4% 17.1% 11.6% 83.4% 41.5% 29.9% 5.7% 3.5%
2001-2006 -5.5% 8.9% 16.6% 29.7% 13.4% 17.1% 11.8% 82.5% 39.1% 28.7% 12.7% 1.4%
Median -9.8% 9.2% 20.8% 27.9% 14.3% 18.8% 12.0% 82.1% 37.1% 28.7% 13.8% 4.1%
Projection of future Free Cash Flow Growing at 9% Terminal Value 3%
$ $
2010 15,299 2020 29,576
$ $
2011 16,704 2021 30,463
$ $
2012 18,238 2022 31,377
2013 $19,250.88 2023 $ 32,318
Company Valuation Total Value Shares Outstanding Per Share Value Margin of Safety Purchase Price Current Price Actual Discount Enterprise Value Enterprise Value/EBITDA
$ $ $ $ $
2014 $20,841.94 2024 $ 33,288
2015 $22,564.51 2025 $ 34,286
2018 $26,726.11 2028 $ 37,465
2019 $28,714.11 2029 $ 38,589
Free Cash Flow and Tangible Shareholder Equity Trend 248,410 8901 27.91 50% 13.95 24.95 11% 205,030.00 8.812
$80,000.0
8901
$70,000.0
$60,000.0 $50,000.0
FCF
Shareholder Equity
$71,141.0
$57,508.0 $50,511.0 $47,289.0 $41,368.0
$44,307.0 $35,699.0
$40,000.0 $30,000.0 $20,000.0
$9,290.0 $7,779.0 $8,143.0 $10,541.0 $8,245.0
$25,459.0 $25,296.0 $22,205.0 $16,555.0 $14,012.0 $12,297.0$11,924.0$13,241.0
$10,000.0 $2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Multi-Year Performance Graph 250.0%
Gross Margin
Operating Margin
Net Margin
Earnings Growth
ROA
ROE
200.0%
18.8% 14.3% 7.6%
150.0%
18.8%
24.2%
14.3%
16.5%
16.0%
12.5%
33.5%
24.2%
17.1%
17.1%
18.8%
13.4% 5.7%
13.4%
14.3%
16.5%
18.6%
12.7%
14.9%
15.2%
16.7%
29.9%
28.7%
28.0%
28.9%
28.0%
28.7%
28.7%
28.0%
39.1%
37.2%
36.9%
41.5%
39.1%
36.9%
36.9%
36.4%
82.5%
82.1%
81.7%
83.4%
82.5%
82.1%
82.1%
81.3%
2000-2007
2001-2008
2002-2009
2000-2005
2001-2006
2002-2007
2003-2008
2004-2009
100.0%
50.0%
0.0%
Margin Percentages 100.0% 90.0%
86.9%
86.3%
82.3%
81.7%
84.4%
81.8%
82.7%
80.8%
79.1%
79.2%
80.0% Gross Margin
70.0% 60.0% 50.0%
47.6% 41.0%
46.3%
40.0%
42.0%
29.0%
41.1%
30.0%
36.6% 30.8%
31.0%
27.6%
24.5% 22.2%
37.2%
36.2%
28.5%
27.5%
37.2% 29.3%
Operating Margin
34.8% 24.9%
20.0%
Net Margin
10.0% 0.0% 2000
2001
2002
2003
2004
2005
2006
2007
2008
Efficiency & Profitability
Debt
70.0% CROIC
FCF/Sales
ROA
2009
120.0%
ROE
60.0%
Debt to Equity
Capitalization Ratio
FCF to Debt
100.0%
50.0% 80.0% 40.0% 60.0%
30.0%
40.0%
20.0%
20.0%
10.0%
0.0%
0.0% 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sales, Receivables, Inventory $70,000.0
Sales
Accts Receivable
Inventory
$60,000.0
$50,000.0 $40,000.0 $30,000.0 $20,000.0 $10,000.0
$2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
TTM
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Company Name
ticker
Microsoft Corp
MSFT
10/1/2009
Figures in Millions except per share values
www.oldschoolvalue.com Desired MOS
Growth
Discount %
50%
9.2%
9%
Price $
24.95
Share Value $
27.91
Buy under $
Actual D/C % 52Wk High
13.95
11%
$
27.47
52Wk Low $
14.87
Historical Stock Price Vs Intrinsic Value Per Share 60
Historical Price
Intrinsic Value
Buy Price
Linear (Historical Price)
50
40
30
20
10
0 10/12/1998
10/12/1999
10/12/2000
10/12/2001
10/12/2002
10/12/2003
10/12/2004
10/12/2005
10/12/2006
10/12/2007
10/12/2008
Company Name
ticker
Microsoft Corp
MSFT
10/1/2009
User Growth
Figures in Millions except per share values
www.oldschoolvalue.com User Input Params
Desired MOS
Growth
66%
13.8%
2000 0.85 2010 $ 1.62 $
Diluted EPS
Earnings Growth EPS Weighted Average Earnings Growth EPS Weighted Average
2001 0.66 2011 $ 1.85 $
Price $
Actual DC% Share Value
24.95
2002 0.71 2012 $ 1.86 $
17% 2003 0.92 2013 $ 2.15 $
29.89
Buy under $
P/B Ratio
10.16
Earnings 2004 2005 $ 0.75 $ 1.12
$
Net Net Working Capital
5.67
$
2006 1.20
$
0.21 2007 1.42
$
2008 1.87
$
2009 1.62
Multi-Year Performance 2000-2005 2001-2006 2002-2007 2003-2008 2004-2009 2000-2003 2001-2004 2002-2005 5.7% 12.7% 14.9% 15.2% 16.7% 2.7% 4.4% 16.4% $ 0.84 $ 0.89 $ 1.02 $ 1.21 $ 1.33 $ 0.79 $ 0.76 $ 0.88 2003-2006 2004-2007 2005-2008 2006-2009 Median (1998-2007) 13.8% 9.26% 23.71% 18.63% 10.52% $1.01 $ 1.00 $ 1.12 $ 1.40 $ 1.53
Company Stats Normal Earnings Expected 5 Year Growth 20 yr A Corp Bond Rate Book Value Per Share Price to Book Ratio Enterprise Value Per Share
$
1.01 13.79% 5.74 4.40 5.67 23.03
$2.00
$1.87
$1.80
EPS
Linear (EPS)
$1.60 $1.12
$1.20 $1.00
$1.85 $1.62
$1.62
2009
2010
$1.42
$1.40
$1.20
$0.92
$0.85
$0.80
Company Valuation Per Share Value Desired MOS Purchase Price Current Price Actual Discount
$
$0.66
$0.71
2001
2002
$0.75
$0.60
$ $ $
29.89 66.00% 10.16 24.95 17%
$0.40 $0.20 $2000
2003
2004
2005
2006
2007
2008
2011
Old School Value | http://www.oldschoolvalue.com Company Company Name Name
ticker
Microsoft Corp
MSFT
10/1/2009
User Discount %
Figures in Millions except per share values
9% Discount Rate %
Net Reprod. Cost
EPV
$
9%
24.36
$4.93
Current Price
$
MOS %
24.95
Tangible BV
0%
$
2.84
NNWC
$
0.56
Reproduction Asset Value Quarterly numbers based on: 2009 Q4 Statement Source Date: 30-Jul-09
Assets Cash & Equivalents Marketable Securities Accounts Receivable - Gross Other Receivable
Receivables Inventories: Raw Materials Inventories: Work in Progress Inventories: Purchased Components Inventories: Finished Goods Inventories: Other Inventories -- Total Prepaid Expenses Current Defered Income Taxes Other Current Assets
Total Current Assets Goodwill, Net Intangibles, Net
Intangibles Property/Plant/Equipment - Net Long Term Investments Note Receivable - Long Term Other Long Term Assets, Total
Total Assets
Book Value
Data Source Adjust +/-
Multiplier
$ 31,447.0 $ 25,371.0 $ 11,192.0 $ $ 11,192.0 Error Error Error Error Error $ 717.0 $ Error $ 5,924.0 $ 49,280.0 $ 12,503.0 $ 1,759.0 $ 14,262.0
MSN Reproduction Asset Value
$
31,447.0
$ $ $
25,371.0 11,192.0 -
$
11,192.0
PPE Sales R&D
$ $ Error $ 50%
$ 7,535.0 $ 4,933.0 $ $ 1,878.0 $ 77,888.0
717.0 -
$ $
6,251.5 1,759.0
$
8,010.5
$ $ $ $
7,535.0 4,933.0 1,878.0
$
71,636.5
$2,000.0
Reproduction Asset Value
$1,000.0
$
3,324.0
$
3,324.0
Accrued Expenses Accrued Liabilities Notes Payable/Short Term Debt Current Port. of LT Debt/Capital Leases Other Current Liabilities
$ $ $
3,156.0 2,000.0
$ $ $
3,156.0 2,000.0
$ $
18,554.0
Total Current Liabilities
$ $ 18,554.0 $ 27,034.0
$
27,034.0
Long-Term Debt
$
$
3,746.0
Capital Lease Obligations
Error
Error
Deferred Income Taxes
$ $ $
7,550.0
$
38,330.0
Common Stock Equity Retained Earnings
$ $ $ 7,550.0 $ 38,330.0 Error Error
Total Capitalization Total Equity Total Liabilities & Stock Equity
Error $ 39,558.0 $ 77,888.0
Error
Total Liabilities
2007
2008
2009
TTM
$
891.0
$
1,109.0
$
812.0
$
1,578.0
$
2,264.0
$
3,182.0
$
3,119.0
$
3,119.0
$ $ $
2,764.0 1,661.0 891.0
$ $ $
2,770.0 2,000.0 1,109.0
$ $ $
2,812.0 1,921.0 812.0
$ $ $
3,499.0 2,390.0 1,578.0
$ $ $
4,654.0 3,842.0 2,264.0
$ $ $
7,024.0 5,446.0 3,182.0
$ $ $
8,565.0 6,301.0 3,119.0
$ $ $
9,420.0 6,238.0 3,119.0
$ $ $
2,223.0 32,187.0 4,659.0
$ $ $
2,326.0 36,835.0 7,779.0
$ $ $
2,346.0 39,788.0 6,184.0
$ $ $
3,044.0 44,282.0 6,584.0
$ $ $
4,350.0 51,122.0 7,121.0
$ 6,242.0 $ 60,420.0 $ 8,164.0
$ $ $
7,535.0 58,437.0 9,010.0
$ $ $
7,535.0 58,437.0 9,010.0
$7,000.0
Last 6 yrs
$6,000.0
Last 5 yrs
Error Error
39,558.0 77,888.0
Last 4 yrs
$5,000.0
Last 3 yrs
$4,000.0
Last 2 yrs
$3,000.0
Last 1 yr PPE
$-
2003
2004
2005
Asset Valuation Tangible BV
$ $
2006
$8,000.0
49,280.0
Book Value Corrected BV
3,746.0
2005
$10,000.0
$
Accounts Payable
Multiplier
2004
$9,000.0
5,924.0
Liabilities & Equity
Minority Interest Total Other Liabilities
2003 CAPEX (statements) Last 6 yrs Last 5 yrs Last 4 yrs Last 3 yrs Last 2 yrs Last 1 yr
Adjusted BV NNWC Reprod. Cost of Assets Reprod. Cost of Assets BV Total Net Reprod. Cost
Total $
2006
2007
2008
2009
TTM
Asset Valuation Data
Per Share 25,296 $ 2.84
Shares Outstanding
8901.0
$ $
33,307 5,026
$ $
3.74 0.56
Balance Sheet Assets Adjusted Assets Total Liabilities
$ $ $
77,888.0 71,636.5 38,330.0
$
106,763
$
11.99
Total Equity
$
39,558.0
$
68,433
$
7.69
$
43,901
$
4.93
Marketing/Brand Value R&D Value
$ $
17,631.3 17,495.2
Cash Needed for Business Interest Bearing Debt Non Interest Bearing Debt
$ $ $
584.4 5,746.0 32,584.0
Excess Cash
$
30,278.3
8901
Old School Value | http://www.oldschoolvalue.com
Earnings Power Value (EPV) 5 Year Annual Data Period End Date Period Length Statement Source
30-Jun-05 12 Months 10-K
30-Jun-06 12 Months 10-K
30-Jun-07 12 Months 10-K
Income Statement Sales EBIT Add back one time charges EBIT Margin EBIT at user defined % of sales EBIT User Defined % Margin Normalized EBITDA Normalized EBIT SG&A R&D
2005 $ 39,788 $ $ 16,628.0 $
Adjusted EBIT Adjusted EBIT %
$ 20,849.5 $ 52.4%
22,972.0 $ 51.9%
Income Before Tax Income Tax - Total Tax Rate
$ 16,628.0 $ $ 4,374.0 $ 26.3%
Adjusted Earnings After tax Depreciation & Amortization Add user defined % of D&A
$ 15,365.0 $ 884.0 $ 176.8
Income as Adjusted Income as Adjusted % Operating Income as Reported
$ 15,541.8 $ 39.1% $ 14,561.0 $
PPE as a % of Sales Sales Growth (decrease) to Prior Year Capex Maintenance Capex Depr & Amort
Past 4 Quarterly Data 30-Jun-08 12 Months 10-K
30-Jun-09 12 Months 10-K
2006 44,282 $ 18,262.0 $
2007 51,122 $ 20,101.0 $
2008 60,420 $ 23,814.0 $
41.8%
41.2%
39.3%
39.4%
41.8% 17,755.0 16,871.0 2,697.3 1,524.3
41.2% 18,782.0 17,792.0 3,064.0 1,646.0
39.3% 19,874.0 18,438.0 3,717.5 1,780.3
39.4% 24,143.0 22,271.0 4,596.8 2,041.0
2009 58,437 19,821.0
31-Dec-08 3 Months 10-Q
31-Mar-09 3 Months 10-Q
30-Jun-09 3 Months 10-K
2009 Q1 $15,061.0 $ $5,927.0
2009 Q2 16,629.0 $ $5,690.0
2009 Q3 13,648.0 $ $3,999.0
2009 Q4 13,099.0 $ $3,937.0 $
TTM 58,437.0
33.9%
39.4%
34.2%
29.3%
30.1%
$ $ $ $
33.9% 22,984.0 20,693.0 4,144.8 2,252.5
39.4% $6,584.0 $5,999.0 $982.8 $570.8
34.2% 6,571.0 5,939.0 982.8 570.8
29.3% 5,392.0 4,728.0 1,123.3 572.5
30.1% 4,708.0 4,027.0 973.5 553.0
$ $ $ $
33.5% 33.5% 23,255.0 20,693.0 4,062.3 2,267.0
25,598.8 $ 50.1%
30,451.8 $ 50.4%
26,218.3 44.9%
$7,480.5 $ 49.7%
7,243.5 $ 43.6%
5,694.8 $ 41.7%
5,463.5 $ 41.7%
25,882.3 44.3%
18,262.0 $ 5,663.0 $ 31.0%
20,101.0 $ 6,036.0 $ 30.0%
23,814.0 $ 6,133.0 $ 25.8%
19,821.0 5,252.0 26.5%
$5,927.0 $ $1,618.0 $ 27.3%
5,690.0 $ 1,464.0 $ 25.7%
3,999.0 $ 1,073.0 $ 26.8%
3,937.0 $ 1,097.0 $ 27.9%
19,553.0 5,252.0 26.9%
15,848.4 990.0 198.0
17,911.9 1,436.0 287.2
22,609.3 1,872.0 374.4
19,271.2 2,291.0 458.2
$5,438.4 $585.0 $117.0
19,729.4 33.8% 20,363.0
$5,555.4 $ 36.9% $5,927.0 $
$ $ $ $ $
$ $ $ $
$ $ $
2005 5.9% $ $ $ $
2,953.0 812.0 637.9 855.0
$ $ $ $
$ $ $
16,046.4 $ 36.2% 16,472.0 $ 2006 6.9%
$ $ $ $
4,494.0 1,578.0 1,269.1 903.0
$ $ $ $
$ $ $ $
$ $ $
$ $ $
18,199.1 $ 35.6% 18,524.0 $
22,983.7 $ 38.0% 22,492.0 $
2007 8.5%
2008 10.3%
6,840.0 2,264.0 1,682.0 1,440.0
$ $ $ $
9,298.0 3,182.0 2,221.4 2,056.0
2009 12.9% $ $ $ $
(1,983.0) 3,119.0 3,119.0 2,562.0
2005-2006 2006-2007 2007-2008 2008-2009 2009-TTM 3.2% 13.4% 26.3% -14.2% -1.5% $ 15,794.1 $ 17,122.8 $ 20,591.4 $ 21,356.5 $ 19,583.9
Multiyear Timeframe Adjusted Income & Growth
30-Sep-08 3 Months 10-Q
$ $ $ $
$ $ $
TTM 12.9% $ $ $ $
3,119.0 3,119.0 2,562.0
5,379.79 632.0 126.4
$ $ $ $
$ $ $
5,506.2 $ 33.1% 5,677.0 $
$ $ $
4.5%
$ $
Per Share $ 38.76 $ 27.69
9%
$ 191,682.9
$
21.53
11% 13%
$ $
$ $
17.62 14.91
156,831.5 132,703.6
4,077.4 $ 31.1% 3,987.0 $
EPV Data Cost of Capital Normalized Adjusted Income Average Maintenance Capex Interest Bearing Debt 1% of sales Cash & Equiv Cash - Debt Shares
Normal. Adj. Income Growth
EPV 345,029.3 246,449.5
$ $ $
18,926.1 2,562.0 512.4 19,438.5 33.3% 19,609.0
Possible Values for Override Box Normalized Income $ 19,259.5 Avg Adj. Income 5 yrs $ 18,500.1 TTM Adjusted Income $ 19,438.5
2005-2009 2006-TTM 6.1% 4.9% $ 18,500.1 $ 19,279.4
Cost of Capital Rates 5% 7%
4,299.6 $ 31.5% 4,018.0 $
3,941.16 681.0 136.2
2,191.0 2,008.1 1,729.7
$19,259.5
2005-2008 2006-2009 2007-TTM 12.7% 2.7% -5.4% $ 18,192.8 $ 19,239.6 $ 20,087.7
$ $ $
Average
Normalized Adjusted Income
2005-2007 2006-2008 2007-2009 2008-TTM 8.2% 19.7% 4.1% -8.0% $ 16,595.8 $ 19,076.4 $ 20,304.0 $ 20,717.2
4,166.75 664.0 132.8
$ $ $ $
19,553.0
+Cash-Debt Adjustment $ 370,145.9 $ 271,566.1
$ $
Per Share 41.58 30.51
$ 216,799.6
$
24.36
$ $
$ $
20.44 17.73
181,948.1 157,820.2
$ $ $ $ $ $
9% 19,259.5 2,008.1 5,746 584.37 31,447 25,116.63 8901
User Input
Company Name
ticker
Microsoft Corp
MSFT
10/1/2009
Enter Competitor Tickers Into Boxes Below
all figures in $Mil
MSFT
AAPL
HPQ
DELL
Industry
Ranking
24.95
183.62
46.33
15.25
NA
NA
222,760
164,490
109,850
29,820
NA
NA
52-Week High
27.47
188.90
48.00
17.26
NA
NA
52-Week Low
14.87
78.20
25.39
7.84
NA
NA
% off 52-Week Low
67.8%
134.8%
82.5%
94.5%
NA
NA
15.88 3.93 5.79 9.08 13.4 20.06 3.51 8.812
32.39 4.8 6.41 6.56 28.55 16.31 4.1 18.859
15.9 0.96 2.71 82.55 9.36 12.9 0.99 7.481
16.22 0.56 6.45 13.38 11.81 14.04 0.4 5.71
14.5 0.74 3.72 10.72 4.61 71.55 NA NA
4 2 3 3 2 1 NA NA
2.01 3.96 26.58 31.71
NA 0 0 0
0.68 0.91 0 10.46
NA 0 0 0
0.13 1.96 14.67 31.02
1 1 1 1
-17.29 3.93 9.67 -25.55 -13.36 16.65 22.98
11.7 4.8 39.23 13.89 11.88 124.7 48.87
-2.07 0.96 10.13 -15.77 -7.71 31.39 8.43
-22.33 0.56 8.07 -21.85 -29.72 4.32 -14.54
-9.99 0.74 9.14 0.11 0 3.4 30.23
3 2 3 4 3 3 2
1.8 1.82 9.47 14.53
2.09 2.11 0 0
1.03 1.17 33.45 41.36
1.41 1.46 73.38 74.44
2.27 2.44 12.11 18.21
2 2 3 3
79.2 81.06 37.94 38.98 33.56 36.03 33.92 38.82 24.93 28.01
35.49 31.83 21.84 16.82 19.98 15.4 21.2 17.24 14.97 12.15
23.35 24 12.23 9.65 8.27 6.92 7.69 7.19 6.25 5.76
18.11 17.94 6.04 7.33 4.76 6.43 4.66 6.86 3.43 5.14
16.63 54.11 0 25.11 4.42 21 4.16 22.22 2.78 13.49
1 1 1 1 1 1 1 1
19.34 19.63 31.08 28.63 38.42 33.44
12.96 13.96 19.18 21.57 22.74 24
7.08 6.62 11.88 11.36 18.3 14.59
6.29 11.93 15.34 33.97 48.86 60.76
2.14 10.01 3.14 14.65 3.81 16.08
1 1 1 2 2 2
628355 156656 4.72 14.28 0.78
1080063 161719 16.12 48.21 0.87
365125 22816 6.97 12.82 1.13
701908 24052 9.06 45.26 1.84
11391701 337100 2.76 3.21 0.29
NA NA NA NA 4
Stock Price Market Cap (millions)
Valuation Ratios P/E Ratio (TTM) Price to Sales (TTM) Price to Book (MRQ) Price to Tangible Book (MRQ) Price to Cash Flow (TTM) Price to Free Cash Flow (TTM) Enterprise Value/Revenue (TTM) Enterprise Value/EBITDA (TTM)
Dividends Dividend Yield Dividend Yield - 5 Year Avg. Dividend 5 Year Growth Rate Payout Ratio (TTM)
Growth Rates Sales (MRQ) vs Qtr. 1 Yr. Ago Sales (TTM) vs TTM 1 Yr. Ago Sales - 5 Yr. Growth Rate EPS (MRQ) vs Qtr. 1 Yr. Ago EPS (TTM) vs TTM 1 Yr. Ago EPS - 5 Yr. Growth Rate Capital Spending - 5 Yr. Growth Rate
Financial Strength Quick Ratio (MRQ) Current Ratio (MRQ) LT Debt to Equity (MRQ) Total Debt to Equity (MRQ)
Profitability Gross Margin (TTM) Gross Margin - 5 Yr. Avg. EBITD Margin (TTM) EBITD - 5 Yr. Avg. Operating Margin (TTM) Operating Margin - 5 Yr. Avg. Pre-Tax Margin (TTM) Pre-Tax Margin - 5 Yr. Avg. Net Profit Margin (TTM) Net Profit Margin - 5 Yr. Avg.
1 1
Management Effectiveness Return Return Return Return Return Return
On On On On On On
Assets (TTM) Assets - 5 Yr. Avg. Investment (TTM) Investment - 5 Yr Avg Equity (TTM) Equity - 5 Yr. Avg.
Efficiency Revenue/Employee (TTM) Net Income/Employee (TTM) Receivable Turnover (TTM) Inventory Turnover (TTM) Asset Turnover (TTM)
Company Name
ticker
Microsoft Corp
MSFT
www.oldschoolvalue.com
10/1/2009
Figures in Millions except per share values
Net Profit Margin
0%
0%
Cash Flow (Continuing Operations)
0%
0%
0%
0%
0%
0%
0%
0%
0%
TTM Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
0 0 0 0 0 0 0 0 0 0 TTM Error Error Error Error Error Error Error Error Error #VALUE! Error Error Error Error Error Error Error Error Error % Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Magic Formula Investing -- Return on Capital
Magic Formula Investing -- Earnings Yield
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0 Error Error --
0.0%
Now Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Now Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Return on Assets (ROA)
Return on Equity (ROE)
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Error Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Error Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Current Ratio
Quick Ratio
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Error Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Error Error Error Error Error Error Error Error Error Error Error #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! -% Change #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
Company Name
ticker
Microsoft Corp
MSFT
10/1/2009
Figures in Millions except per share values
www.oldschoolvalue.com
Company Assessment: Quantitative Valuation
Criteria over 10yrs
DCF Valuation Discount
> 25% or 50% depending on moat
11%
0
Graham Intrinsic Value Discount
> 66%
17%
0
Criteria over 10yrs
Margins, Profit and Growth Median Revenue growth Median Gross Margin Median Operating Margin Median Net Margin Median EPS growth
Points
10%
Criteria over 10yrs
Value
Points
30% 15% 10%
15% 13% 10% 7% Consistent over 10yrs Consistent over 10yrs
Criteria for TTM
Balance Sheet
Points
Value 12.0% 82.1% 37.1% 28.7% 13.8%
10%
Business and Management Performance Cash growth from Operations CROIC is postive and capable of paying off financing Median FCF growth positive and consistent Median FCF/Sales Consistent ROE (manually check) Consistent ROA (manually check)
Value
Current assets > 1.5 x current liabilities
> 1.5 x current liabilities
Price to Book ratio < 2 Debt to Equity FCF to Debt Capitalization Ratio Intangibles % of assets
4.1% 20.8% 9.2% 27.9% N/A N/A
N/A N/A
1
N/A
5.67
< 100%
96.9%
> 10%
36.6%
N/A 1 2 2 0
9%
< 15% of assets
18.3%
User Points
0 2 0 2
1.8
< 30%
User Points
1 2 2 2 1
Points
Value
User Points
User Points N/A
Company Assessment: Qualitative Microsoft Corporation is engaged in developing, manufacturing, licensing, and supporting a range of software products and services for different types of computing devices. The Company operates in five business segments: Client, Server and Tools, Online Services Business, Microsoft Business Division, and Entertainment and Devices Division. The software products and services include operating systems for servers, personal computers, and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business solutions applications; computing applications; software development tools, and video games. The Company provide consulting and product and solution support services, and trains and certifies computer system integrators and developers. It also designs and sells hardware, including Xbox 360 video game console, the Zune digital music and entertainment device, and peripherals.
Competitive Advantage Stable market share? Dominant company in industry, segment? Low barriers to entry and exit? Experience goods (brand effect, trademarks) High switching costs? Network effect? E.g. eBay
Comment
User Points
Max Points max 2 max 2 max 2 max 2 max 2 max 2
Business Model
Comment
User Points
Max Points
Growth due to: a) existing product / existing market b) existing product / new market c) new product / existing market d) new product / new market
(yes/no) (yes/no) (yes/no) (yes/no)
Able to increase prices and retain customers? Compete on price? (1 for no, 0 for yes) Barriers of entry to the business? Diverse customers? (1 for diverse, 0 for concentrated) Involved in competition? Monopoly, duopoly, crowded Company has a recurring revenue stream? Capital intensive company? (1 for no, 0 for yes)
a) Yes b) Yes c) Yes d) No
max 2
max max max max max max max
1 1 1 1 2 1 1
Management High insider ownership? Candid management on positives and negatives? Management performance at previous jobs? Compensation levels compared to sales?
Comment
User Points
Max Points max 1 max 1 max 1 max 1
Industry Boring industry? (1 for slow, 0 for fast industry) Can company adapt to changing industry environment? Industry leader or lagger? (1 for leader, 0 for lagger)
Comment
User Points
Max Points max 1 max 1 max 1
Psychological Factors to Consider. Not Weighted. Recency bias? Hindsight bias? Framing issues correctly and in different manners? Is there a data framing bias? Am I too overconfident on the situation? Performed probability analysis for -ve factors? Too much loss aversion? Sunk cost mentality? Slow in changing opinion? Psychological denial ? Bias from commitment and consistency tendency? Pavlovian association? Social proof bias? Status quo bias? False consensus bias? Do I have an exit plan? Category
Total Points out of 5
Valuation Margins, Profit and Growth Business and Management Performance Balance Sheet Competitive Advantage Business Model Management
Low Risk 3.7 3.7
Comment no no DCF, graham, compare to peers maybe no no no no no no no no no no no
High Growth 2.0 2.0
Under Valued 2.5 2.5
0.0 4.0 2.0 3.0 0.0 0.0 0.0
Well Managed 3.5 3.5
Good Financial Health 3.5 3.5
Low Risk 5.0
4.0 Strong Moat
3.0
High Growth
2.0 1.0 0.0
Good Financial Health
Under Valued
Well Managed
Strong Moat 4.0 4.0
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