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

• 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)

• Microsoft Visual Studio

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

• Visual Studio.Net 2003

• Windows Live
• Windows Mobile

• 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")
• 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

• 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 long-
standing 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 For the quarter ended
September 30 December 31 September 30 December 31
, , March 31, June 30, Fiscal Year , , March 31, June 30, Fiscal Year
(In millions) 2005 2005 2006 2006 2006 2004 2004 2005 2005 2005
Segments
Client $ 2,569
$2,638 $ 2,471 $ 2,504 $10,182 $ 2,387 $2,513 $ 2,331 $ 2,172 $ 9,403
Server and 606
Tools 762 746 903 3,017 455 660 515 479 2,109
Online Services 81
Business 58 (26) (190) (77) 79 130 101 101 411
Microsoft
Business 2,251
Division 2,466 2,414 2,544 9,675 2,160 2,355 2,316 2,285 9,116
Entertainment
and (182
Devices ) (296) (422) (437) (1,337) (202) 28 (198) (235) (607)
Corporate-
Level (1,279
Activity ) (971) (1,295) (1,443) (4,988) (1,385) (937) (1,736) (1,813) (5,871)
Total
operatin
g $ 4,046
income $4,657 $ 3,888 $ 3,881 $16,472 $ 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 $ 3,376 $13,209 $2,980 $ 3,193 $ 2,964 $ 3,014 $12,151
Server and 2,127
Tools 2,438 2,398 2,690 9,653 1,906 2,161 2,058 2,245 8,370
Online
Services 564
Business 594 561 580 2,299 559 606 581 598 2,344
Microsoft
Business 3,283
Division 3,689 3,608 3,908 14,488 3,086 3,413 3,384 3,637 13,520
Entertainmen
t and 580
Devices 1,657 1,146 1,250 4,633 658 1,445 633 667 3,403
Total
reven $9,741
ue $11,837 $ 10,900 $11,804 $44,282 $9,189 $10,818 $9,620 $10,161 $39,788

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 higher-
value 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.
• 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

• A Strategic Foundation for Growth

• In the year ahead—and the years to come—Microsoft expect many of our long-
term 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
• 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.
• 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.

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