Microsoft Corp.

Company Overview
(All numbers are in USD Millions, except per share data)
(Red for assumptions and Black for Calculations)

Company Information Investor Relations

Company Name Microsoft Corp. Site:
Industry IT Products
Sector Information Technology
Current Market Price $ 25.01 Management Team
Ticker MSFT Chairman:
Market Capitalization ($MM) 214,436 CEO:
Relative Index S&P 500
Year end 30-Sep
Reporting currency USD Company Description
Microsoft Corporation develops, licenses, and sup
Consensus Estimates worldwide. The company’s Windows & Windows Li
2012 E 2013 E
and Windows Vista operating systems; Windows liv
Revenue - Model 77,350 88,503
Revenue - Consensus 74,940 80,340 Microsoft’s Server and Tools segment provides Win
EPS - Model $ 2.73 $ 3.12 Windows Intune, Windows Embedded, Visual Stud
EPS - Consensus $ 2.87 $ 3.17 support services.

Per Share Data & Key Ratios

1Q11 A 2Q11 A 3Q11 A 4Q11 A 2011 A 1Q12 E 2Q12 E

EPS diluted (reported) Rs. 0.62 Rs. 0.77 Rs. 0.61 Rs. 0.69 Rs. 2.70 Rs. 0.64 Rs. 0.66
EBIT/sales (%) 44% 41% 35% 36% 39% 39% 39%
Net income/sales (%) 33% 33% 32% 34% 33% 30% 30%
ROE 46% 56% 41% 43% 41% 37% 35%
EV/Sales 3.0 x 2.9 x
EV/EBITDA 4.5 x 4.4 x
P/E 9.8 x 9.4 x
P/Sales 2.9 x 2.8 x

Revenue Forecast

120,000 16.0% $60.00

14.0%
100,000 $50.00
12.0%
80,000 $40.00
10.0%
$30.00
60,000 8.0%

6.0% $20.00
40,000
4.0% $10.00
20,000
2.0%
$-
- 0.0%
2010 A 2011 A Revenue 2012 Ey/y Growth2013
% E 2014 E
 6.0% $20.00
40,000
4.0% $10.00
20,000
2.0%
$-
- 0.0%
2010 A 2011 A Revenue 2012 Ey/y Growth2013
% E 2014 E

2010 A 2011 A 2012 E 2013 E 2014 E

Revenue 62,484 69,943 77,350 88,503 98,604
y/y Growth % 12% 11% 14% 11%
 Reccomendation
www.microsoft.com Target Price $ 52.68
Current Market Price $ 25.01
Upside/Downside (%) 110.6%
Rating Buy
Bill Gates
Steve Balmer M Cap @ Target Price 451,685

evelops, licenses, and supports a range of software products and services for various computing devices
y’s Windows & Windows Live Division segment offers PC operating system that primarily includes Windows 7
ating systems; Windows live suite of applications and Web services; and Microsoft PC hardware products. Its
ools segment provides Windows Server operating systems, Windows Azure, Microsoft SQL Server, SQL Azure,
ws Embedded, Visual Studio, Silverlight, system center products, Microsoft consulting services, and product

3Q12 E 4Q12 E 2012 E 1Q13 E 2Q13 E 3Q13 E 4Q13 E 2013 E

Rs. 0.70 Rs. 0.73 Rs. 2.73 Rs. 0.75 Rs. 0.77 Rs. 0.79 Rs. 0.81 Rs. 3.12
39% 39% 39% 39% 39% 39% 39% 39%
30% 30% 30% 30% 30% 30% 30% 30%
34% 33% 30% 32% 31% 29% 28% 26%
2.7 x 2.6 x 2.8 x 2.5 x 2.5 x 2.4 x 2.4 x 2.4 x
4.2 x 4.0 x 4.3 x 3.9 x 3.8 x 3.7 x 3.6 x 3.8 x
9.0 x 8.6 x 9.2 x 8.3 x 8.1 x 7.9 x 7.7 x 8.0 x
2.7 x 2.6 x 2.8 x 2.5 x 2.4 x 2.4 x 2.3 x 2.4 x

Enterprise Value Added

$60.00

$50.00

$40.00
$32.01
$30.00
$52.95
$20.00
$14.26
$10.00
$6.68
$-
Explicit Forecast First Stage of Terminal Year Total Value
Period Valuation
 $20.00
$14.26
$10.00
$6.68
$-
Explicit Forecast First Stage of Terminal Year Total Value
Period Valuation

Explicit For $ 6.68

First Stage $ 6.68 $ 14.26
Terminal Ye $ 6.68 $ 14.26 $ 32.01
Total Value $ 52.95
Microsoft Corp.
Income Statement
(All numbers are in USD Millions, except per share data)
(Red for assumptions and Black for Calculations)
1Q09 A 2Q09 A 3Q09 A 4Q09 A 2009 A 1Q10 A
Sep-08 Dec-08 Mar-09 Jun-09 Jun-09 Sep-09

Revenue 12,920

Operating expenses:
Cost of revenue 2,842
Research and development 2,065
Sales and marketing 2,790
General and administrative 741
Total operating expenses 8,438

Operating income 4,482

Other income 283

Income before income taxes 4,765

Provision for income taxes 1,191

Net income 3,574

Earnings per share:

Basic $ 0.40
Diluted $ 0.40

Weighted average shares outstanding:

Basic 8,914
Diluted 8,983

Cash dividends declared per common share $ 0.13

 2Q10 A 3Q10 A 4Q10 A 2010 A 1Q11 A 2Q11 A 3Q11 A 4Q11 A
Dec-09 Mar-10 Jun-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11

19,022 14,503 16,039 62,484 16,195 19,953 16,428 17,367

3,628 2,755 3,170 12,395 3,139 4,833 3,897 3,708

2,079 2,220 2,350 8,714 2,196 2,185 2,269 2,393
3,619 3,203 3,602 13,214 2,806 3,825 3,393 3,916
1,183 1,152 987 4,063 938 945 1,160 1,179
10,509 9,330 10,109 38,386 9,079 11,788 10,719 11,196

8,513 5,173 5,930 24,098 7,116 8,165 5,709 6,171

370 168 94 915 114 332 316 148

8,883 5,341 6,024 25,013 7,230 8,497 6,025 6,319

2,221 1,335 1,506 6,253 1,820 1,863 793 445

6,662 4,006 4,518 18,760 5,410 6,634 5,232 5,874

$ 0.75 $ 0.46 $ 0.52 $ 2.13 $ 0.63 $ 0.78 $ 0.62 $ 0.70

$ 0.74 $ 0.45 $ 0.51 $ 2.11 $ 0.62 $ 0.77 $ 0.61 $ 0.69

8,856 8,767 8,712 8,812 8,614 8,497 8,420 8,429

8,951 8,876 8,821 8,908 8,695 8,570 8,510 8,521

$ 0.13 $ 0.13 $ 0.13 $ 0.52 $ 0.16 $ 0.16 $ 0.16 $ 0.16

2011 A 1Q12 E 2Q12 E 3Q12 E 4Q12 E 2012 E 1Q13 E 2Q13 E 3Q13 E 4Q13 E
Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13

69,943 18,081 18,843 19,713 20,712 77,350 21,257 21,822 22,408 23,016

15,577 4,008 4,177 4,370 4,592 17,148 4,713 4,838 4,968 5,102
9,043 2,355 2,454 2,568 2,698 10,075 2,769 2,842 2,919 2,998
13,940 3,603 3,754 3,928 4,127 15,412 4,235 4,348 4,465 4,586
4,222 1,102 1,148 1,201 1,262 4,714 1,296 1,330 1,366 1,403
42,782 11,068 11,535 12,067 12,679 47,348 13,012 13,358 13,717 14,089

27,161 7,013 7,309 7,646 8,034 30,001 8,245 8,464 8,691 8,927

910 232 242 253 266 995 273 281 288 296
28,071 7,245 7,551 7,899 8,300 30,996 8,518 8,745 8,979 9,223

4,921 1,811 1,888 1,975 2,075 7,749 2,130 2,186 2,245 2,306
23,150 5,434 5,663 5,925 6,225 23,247 6,389 6,558 6,735 6,917

$ 2.73 $ 0.64 $ 0.67 $ 0.70 $ 0.74 $ 2.76 $ 0.76 $ 0.78 $ 0.80 $ 0.82
$ 2.70 $ 0.64 $ 0.66 $ 0.70 $ 0.73 $ 2.73 $ 0.75 $ 0.77 $ 0.79 $ 0.81

8,490 8,429 8,429 8,429 8,429 8,429 8,429 8,429 8,429 8,429
8,574 8,521 8,521 8,521 8,521 8,521 8,521 8,521 8,521 8,521

$ 0.64 $ 0.16 $ 0.16 $ 0.16 $ 0.16 $ 0.64 $ 0.16 $ 0.16 $ 0.16 $ 0.16
2013 E 1Q14 E 2Q14 E 3Q14 E 4Q14 E 2014 E
Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Jun-14

88,503 23,646 24,299 24,978 25,681 98,604

19,621 5,242 5,387 5,537 5,693 21,860

11,528 3,080 3,165 3,253 3,345 12,843
17,634 4,711 4,842 4,977 5,117 19,646
5,394 1,441 1,481 1,522 1,565 6,009
54,176 14,474 14,875 15,290 15,720 60,359

34,327 9,171 9,425 9,688 9,961 38,245

1,138 304 312 321 330 1,268

35,465 9,475 9,737 10,009 10,291 39,513

8,866 2,369 2,434 2,502 2,573 9,878

26,599 7,107 7,303 7,507 7,718 29,635

$ 3.16 $ 0.84 $ 0.87 $ 0.89 $ 0.92 $ 3.52

$ 3.12 $ 0.83 $ 0.86 $ 0.88 $ 0.91 $ 3.48

8,429 8,429 8,429 8,429 8,429 8,429

8,521 8,521 8,521 8,521 8,521 8,521

$ 0.64 $ 0.16 $ 0.16 $ 0.16 $ 0.16 $ 0.64

Microsoft Corp.
Balance Sheet
(All numbers are in USD Millions, except per share data)
(Red for assumptions and Black for Calculations)
1Q09 A 2Q09 A 3Q09 A 4Q09 A 2009 A
Sep-08 Dec-08 Mar-09 Jun-09 Jun-09

Assets
Current assets:
Cash and cash equivalents
Short-term investments
Total cash, cash equivalents, and short-term investments
Accounts receivable, net
Inventories
Deferred income taxes
Other
Total current assets

Property and equipment, net

Equity and other investments
Goodwill
Intangible assets, net
Other long-term assets
Total assets

Liabilities and stockholders' equity

Current liabilities:
Accounts payable
Short-term debt
Accrued compensation
Income taxes
Short-term unearned revenue
Securities lending payable
Other
Total current liabilities

Long-term debt
Long-term unearned revenue
Deferred income taxes
Other long-term liabilities
Total liabilities

Stockholders' equity:
 Common Stock
Accumulated Other Comprehensive Income
Total stockholders' equity
Total liabilities and stockholders' equity

Checksum

Balance Sheet Metrics

Current Ratio
Cash Ratio
DSO
DOH
Payable Days
Total Debt
ROE %
1Q10 A 2Q10 A 3Q10 A 4Q10 A 2010 A 1Q11 A 2Q11 A 3Q11 A
Sep-09 Dec-09 Mar-10 Jun-10 Jun-10 Sep-10 Dec-10 Mar-11

8,823 9,422 8,155 5,505 5,505 8,161 4,023 7,021

27,905 26,677 31,511 31,283 31,283 36,012 37,229 43,129
36,728 36,099 39,666 36,788 36,788 44,173 41,252 50,150
8,587 11,196 9,137 13,014 13,014 9,646 12,874 10,033
1,150 589 501 740 740 1,242 861 1,056
2,441 2,056 2,222 2,184 2,184 2,344 2,548 2,586
3,325 2,547 2,992 2,950 2,950 2,176 2,149 2,438
52,231 52,487 54,518 55,676 55,676 59,581 59,684 66,263

7,512 7,402 7,372 7,630 7,630 7,771 7,799 7,969

6,006 6,976 7,797 7,754 7,754 9,211 10,022 10,748
12,582 12,368 12,463 12,394 12,394 12,471 12,502 12,554
1,653 1,346 1,282 1,158 1,158 1,077 992 840
1,628 1,517 1,478 1,501 1,501 1,429 1,307 1,353
81,612 82,096 84,910 86,113 86,113 91,540 92,306 99,727

3,287 3,171 3,279 4,025 4,025 3,654 3,863 3,829

2,250 2,249 2,249 1,000 1,000 1,000 - -
2,224 2,417 2,885 3,283 3,283 2,252 2,402 2,917
847 721 901 1,074 1,074 2,136 1,439 839
13,567 11,361 11,171 13,652 13,652 12,767 12,063 11,887
3,534 2,911 2,794 182 182 909 1,355 1,245
3,052 2,885 3,145 2,931 2,931 3,139 3,190 3,325
28,761 25,715 26,424 26,147 26,147 25,857 24,312 24,042

3,746 3,746 3,746 4,939 4,939 9,665 9,671 11,915

1,201 1,167 1,089 1,178 1,178 1,152 1,354 1,132
155 377 828 229 229 540 826 1,185
6,537 6,808 7,113 7,445 7,445 7,384 7,662 8,001
40,400 37,813 39,200 39,938 39,938 44,598 43,825 46,275
 62,293 62,566 62,517 62,856 62,856 61,935 61,646 63,234
(21,081) (18,283) (16,807) (16,681) (16,681) (14,993) (13,165) (9,782)
41,212 44,283 45,710 46,175 46,175 46,942 48,481 53,452
81,612 82,096 84,910 86,113 86,113 91,540 92,306 99,727

- - - - - - - -

1.82 2.04 2.06 2.13 2.13 2.30 2.45 2.76

1.28 1.40 1.50 1.41 1.41 1.71 1.70 2.09
60.48 47.32 63.79 62.84 18.95 63.66 51.35 63.44
36.82 21.81 18.00 17.81 5.43 28.73 19.80 22.38
105.25 80.99 106.52 104.84 29.55 111.31 70.77 89.81
5,996 5,995 5,995 5,939 5,939 10,665 9,671 11,915
35% 62% 36% 39% 41% 46% 56% 41%
4Q11 A 2011 A 1Q12 E 2Q12 E 3Q12 E 4Q12 E 2012 E 1Q13 E
Jun-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Jun-12 Sep-12

9,610 9,610 20,976 19,768 31,548 30,817 30,817 43,563

43,162 43,162 43,162 43,162 43,162 43,162 43,162 43,162
52,772 52,772 64,138 62,930 74,710 73,979 73,979 86,725
14,987 14,987 9,254 16,009 10,420 17,349 17,349 11,151
1,372 1,372 846 1,466 953 1,588 1,588 1,019
2,467 2,467 2,467 2,467 2,467 2,467 2,467 2,467
3,320 3,320 3,320 3,320 3,320 3,320 3,320 3,320
74,918 74,918 80,025 86,192 91,870 98,703 98,703 104,683

8,162 8,162 8,054 7,982 7,946 7,947 7,947 7,967

10,865 10,865 10,865 10,865 10,865 10,865 10,865 10,865
12,581 12,581 12,581 12,581 12,581 12,581 12,581 12,581
744 744 744 744 744 744 744 744
1,434 1,434 1,434 1,434 1,434 1,434 1,434 1,434
108,704 108,704 113,703 119,798 125,440 132,274 132,274 138,274

4,197 4,197 3,960 4,541 4,352 4,992 4,992 4,598

- - - - - - - -
3,575 3,575 3,575 3,575 3,575 3,575 3,575 3,575
580 580 580 580 580 580 580 580
15,722 15,722 16,310 16,922 17,563 18,236 18,236 18,927
1,208 1,208 1,208 1,208 1,208 1,208 1,208 1,208
3,492 3,492 3,492 3,492 3,492 3,492 3,492 3,492
28,774 28,774 29,125 30,318 30,770 32,083 32,083 32,381

11,921 11,921 11,921 11,921 11,921 11,921 11,921 11,921

1,398 1,398 1,398 1,398 1,398 1,398 1,398 1,398
1,456 1,456 1,456 1,456 1,456 1,456 1,456 1,456
8,072 8,072 8,072 8,072 8,072 8,072 8,072 8,072
51,621 51,621 51,972 53,165 53,617 54,930 54,930 55,228
 63,415 63,415 68,063 72,965 78,155 83,676 83,676 89,378
(6,332) (6,332) (6,332) (6,332) (6,332) (6,332) (6,332) (6,332)
57,083 57,083 61,731 66,633 71,823 77,344 77,344 83,046
108,704 108,704 113,703 119,798 125,440 132,274 132,274 138,274

- - - - - - - -

2.60 2.60 2.75 2.84 2.99 3.08 3.08 3.23

1.83 1.83 2.20 2.08 2.43 2.31 2.31 2.68
65.55 18.22 61.00 61.00 61.00 61.00 19.02 61.00
29.79 6.17 25.18 25.18 25.18 25.18 7.85 25.18
98.49 24.02 92.59 92.59 92.59 92.59 24.38 92.59
11,921 11,921 11,921 11,921 11,921 11,921 11,921 11,921
43% 41% 37% 35% 34% 33% 30% 32%
2Q13 E 3Q13 E 4Q13 E 2013 E 1Q14 E 2Q14 E 3Q14 E 4Q14 E
Dec-12 Mar-13 Jun-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14

43,180 56,290 56,286 56,286 68,793 69,204 83,142 82,001

43,162 43,162 43,162 43,162 43,162 43,162 43,162 43,162
86,342 99,452 99,448 99,448 111,955 112,366 126,304 125,163
18,107 11,936 18,921 18,921 12,781 19,798 13,690 20,741
1,657 1,091 1,732 1,732 1,169 1,812 1,252 1,898
2,467 2,467 2,467 2,467 2,467 2,467 2,467 2,467
3,320 3,320 3,320 3,320 3,320 3,320 3,320 3,320
111,893 118,267 125,889 125,889 131,692 139,762 147,033 153,590

8,004 8,058 8,128 8,128 8,213 8,313 8,427 8,555

10,865 10,865 10,865 10,865 10,865 10,865 10,865 10,865
12,581 12,581 12,581 12,581 12,581 12,581 12,581 12,581
744 744 744 744 744 744 744 744
1,434 1,434 1,434 1,434 1,434 1,434 1,434 1,434
145,521 151,949 159,641 159,641 165,530 173,700 181,084 187,769

5,247 4,863 5,521 5,521 5,147 5,816 5,453 6,133

- - - - - - - -
3,575 3,575 3,575 3,575 3,575 3,575 3,575 3,575
580 580 580 580 580 580 580 580
19,637 20,365 21,113 21,113 21,882 22,672 23,484 24,318
1,208 1,208 1,208 1,208 1,208 1,208 1,208 1,208
3,492 3,492 3,492 3,492 3,492 3,492 3,492 3,492
33,738 34,083 35,489 35,489 35,884 37,342 37,791 39,306

11,921 11,921 11,921 11,921 10,921 10,921 10,921 8,921

1,398 1,398 1,398 1,398 1,398 1,398 1,398 1,398
1,456 1,456 1,456 1,456 1,456 1,456 1,456 1,456
8,072 8,072 8,072 8,072 8,072 8,072 8,072 8,072
56,585 56,930 58,336 58,336 57,731 59,189 59,638 59,153
 95,268 101,351 107,637 107,637 114,131 120,842 127,778 134,948
(6,332) (6,332) (6,332) (6,332) (6,332) (6,332) (6,332) (6,332)
88,936 95,019 101,305 101,305 107,799 114,510 121,446 128,616
145,521 151,949 159,641 159,641 165,530 173,700 181,084 187,769

- - - - - - - -

3.32 3.47 3.55 3.55 3.67 3.74 3.89 3.91

2.56 2.92 2.80 2.80 3.12 3.01 3.34 3.18
61.00 61.00 61.00 18.65 61.00 61.00 61.00 61.00
25.18 25.18 25.18 7.70 25.18 25.18 25.18 25.18
92.59 92.59 92.59 24.38 92.59 92.59 92.59 92.59
11,921 11,921 11,921 11,921 10,921 10,921 10,921 8,921
31% 29% 28% 26% 27% 26% 25% 25%
2014 E
Jun-14

82,001
43,162
125,163
20,741
1,898
2,467
3,320
153,590

8,555
10,865
12,581
744
1,434
187,769

6,133
-
3,575
580
24,318
1,208
3,492
39,306

8,921
1,398
1,456
8,072
59,153
134,948
(6,332)
128,616
187,769

3.91
3.18
18.30
7.56
24.26
8,921
23%
Microsoft Corp.
Cash Flow Statement
(All numbers are in USD Millions, except per share data)
(Red for assumptions and Black for Calculations)
1Q09 A 2Q09 A 3Q09 A 4Q09 A 2009 A
Sep-08 Dec-08 Mar-09 Jun-09 Jun-09

Operations
Net income
Adjustments to reconcile net income to net cash from operations:
Depreciation, amortization, and other noncash items
Stock-based compensation
Net recognized losses (gains) on investments and derivatives
Excess tax benefits from stock-based compensation
Deferred income taxes
Deferral of unearned revenue
Recognition of unearned revenue
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Other current assets
Other long-term assets
Accounts payable
Other current liabilities
Other long-term liabilities
Net cash from operations

Investing
Additions to property and equipment
Acquisition of companies, net of cash acquired
Purchases of investments
Maturities of investments
Sales of investments
Securities lending payable
Net cash used in investing

Financing
Short-term borrowings, maturities of 90 days or less, net
Proceeds from issuance of debt, maturities longer than 90 days
Repayments of debt, maturities longer than 90 days
Common stock issued
Common stock repurchased
Common stock cash dividends paid
 Excess tax benefits from stock-based compensation
Other
Net cash used in financing

Effect of exchange rates on cash and cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period
1Q10 A 2Q10 A 3Q10 A 4Q10 A 2010 A 1Q11 A 2Q11 A 3Q11 A
Sep-09 Dec-09 Mar-10 Jun-10 Jun-10 Sep-10 Dec-10 Mar-11

3,574 6,662 4,006 4,518 18,760 5,410 6,634 5,232

646 615 694 718 2,673 694 663 720

443 485 481 482 1,891 528 553 541
(66) (188) (68) 114 (208) (29) (226) (122)
(9) (15) (14) (7) (45) (5) (4) (5)
(46) 550 (241) (483) (220) (148) (117) (59)
6,679 6,926 6,087 9,682 29,374 5,881 6,834 6,616
(6,237) (9,126) (6,395) (7,055) (28,813) (6,862) (7,301) (7,026)

2,748 (2,789) 1,947 (4,144) (2,238) 3,674 (3,270) 3,031

(419) 558 77 (260) (44) (468) 380 (170)
(235) 686 (361) 374 464 208 (77) (618)
(78) 16 (81) (80) (223) 62 118 (8)
(36) 3 122 755 844 (400) 216 (51)
(1,203) 282 775 597 451 (911) (500) 237
346 304 364 393 1,407 560 283 354
6,107 4,969 7,393 5,604 24,073 8,194 4,186 8,672

(435) (376) (408) (758) (1,977) (564) (491) (658)

(39) (63) (143) 0 (245) - (69) 0
(10,490) (4,287) (11,217) (4,174) (30,168) (7,417) (5,896) (14,394)
3,498 1,896 1,054 1,005 7,453 870 1,836 2,286
4,417 3,361 4,927 2,420 15,125 1,427 2,603 5,738
1,850 (623) (117) (2,612) (1,502) 727 447 (111)
(1,199) (92) (5,904) (4,119) (11,314) (4,957) (1,570) (7,139)

378 (475) (349) (545) (991) 814 (1,000) 0

695 1,046 851 1,575 4,167 4,721 0 2,239
(823) (573) (502) (1,088) (2,986) (814) 0 0
248 729 422 912 2,311 177 660 1,405
(1,540) (3,867) (2,023) (3,839) (11,269) (4,399) (5,052) (848)
(1,157) (1,152) (1,139) (1,130) (4,578) (1,118) (1,363) (1,349)
 9 15 14 7 45 5 4 5
0 0 0 10 10 (25) 0 (15)
(2,190) (4,277) (2,726) (4,098) (13,291) (639) (6,751) 1,437

29 (1) (30) (37) (39) 58 (3) 28

2,747 599 (1,267) (2,650) (571) 2,656 (4,138) 2,998

6,076 8,823 9,422 8,155 6,076 5,505 8,161 4,023

8,823 9,422 8,155 5,505 5,505 8,161 4,023 7,021
4Q11 A 2011 A 1Q12 E 2Q12 E 3Q12 E 4Q12 E 2012 E 1Q13 E 2Q13 E
Jun-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Jun-12 Sep-12 Dec-12

5,874 23,150 5,434 5,663 5,925 6,225 23,247 6,389 6,558

689 2,766 724 715 709 705 2,853 705 707

544 2,166 563 587 614 645 2,409 662 680
15 (362) - - - - - - -
(3) (17) - - - - - - -
326 2 - - - - - - -
11,896 31,227 588 613 641 673 2,514 691 709
(7,746) (28,935) - - - - - - -

(4,886) (1,451) 5,733 (6,755) 5,589 (6,929) (2,362) 6,198 (6,956)

(303) (561) 526 (620) 513 (636) (216) 569 (638)
(772) (1,259) - - - - - - -
(110) 62 - - - - - - -
293 58 (237) 581 (189) 639 795 (394) 648
28 (1,146) - - - - - - -
97 1,294 - - - - - - -
5,942 26,994 13,331 784 13,801 1,324 29,240 14,820 1,709

(642) (2,355) (617) (643) (672) (707) (2,639) (725) (744)

(2) (71) - - - - - - -
(8,286) (35,993) - - - - - - -
1,905 6,897 - - - - - - -
6,112 15,880 - - - - - - -
(37) 1,026 - - - - - - -
(950) (14,616) (617) (643) (672) (707) (2,639) (725) (744)

0 (186) - - - - - - -
0 6,960 - - - - - - -
0 (814) - - - - - - -
180 2,422 - - - - - - -
(1,256) (11,555) - - - - - - -
(1,350) (5,180) (1,349) (1,349) (1,349) (1,349) (5,395) (1,349) (1,349)
 3 17 - - - - - - -
0 (40) - - - - - - -
(2,423) (8,376) (1,349) (1,349) (1,349) (1,349) (5,395) (1,349) (1,349)

20 103 - - - - - - -

2,589 4,105 11,366 (1,208) 11,780 (732) 21,207 12,747 (384)

7,021 5,505 9,610 20,976 19,768 31,548 9,610 30,817 43,563

9,610 9,610 20,976 19,768 31,548 30,817 30,817 43,563 43,180
3Q13 E 4Q13 E 2013 E 1Q14 E 2Q14 E 3Q14 E 4Q14 E 2014 E
Mar-13 Jun-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Jun-14

6,735 6,917 26,599 7,107 7,303 7,507 7,718 29,635

710 715 2,838 721 729 738 748 2,936

698 717 2,756 736 757 778 800 3,071
- - - - - - - -
- - - - - - - -
- - - - - - - -
728 748 2,877 769 790 812 835 3,205
- - - - - - - -

6,170 (6,985) (1,572) 6,140 (7,016) 6,107 (7,050) (1,820)

566 (641) (144) 563 (644) 560 (647) (166)
- - - - - - - -
- - - - - - - -
(384) 658 529 (374) 669 (363) 680 612
- - - - - - - -
- - - - - - - -
15,223 2,130 33,884 15,662 2,588 16,139 3,084 37,473

(764) (785) (3,019) (807) (829) (852) (876) (3,364)

- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
(764) (785) (3,019) (807) (829) (852) (876) (3,364)

- - - - - - - -
- - - - - - - -
- - - (1,000) - - (2,000) (3,000)
- - - - - - - -
- - - - - - - -
(1,349) (1,349) (5,395) (1,349) (1,349) (1,349) (1,349) (5,395)
 - - - - - - - -
- - - - - - - -
(1,349) (1,349) (5,395) (2,349) (1,349) (1,349) (3,349) (8,395)

- - - - - - - -

13,110 (4) 25,470 12,507 410 13,938 (1,141) 25,715

43,180 56,290 30,817 56,286 68,793 69,204 83,142 56,286

56,290 56,286 56,286 68,793 69,204 83,142 82,001 82,001
Microsoft Corp.
Segment Revenue
(All numbers are in USD Millions, except per share data)
(Red for assumptions and Black for Calculations)
1Q09 A 2Q09 A 3Q09 A 4Q09 A 2009 A 1Q10 A
Sep-08 Dec-08 Mar-09 Jun-09 Jun-09 Sep-09

Segment Revenue
Windows & Windows Live Division 2,880
Server and Tools 3,550
Online Services Division 487
Microsoft Business Division 4,514
Entertainment and Devices Division 1,412
Unallocated and other 77
Consolidated 12,920
checksum -

Q/Q % Growth
Windows & Windows Live Division
Server and Tools
Online Services Division
Microsoft Business Division
Entertainment and Devices Division
Unallocated and other
Consolidated
2Q10 A 3Q10 A 4Q10 A 2010 A 1Q11 A 2Q11 A 3Q11 A 4Q11 A
Dec-09 Mar-10 Jun-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11

7,193 4,650 4,781 19,504 4,785 5,054 4,445 4,740

3,978 3,706 4,149 15,383 3,959 4,390 4,104 4,643
579 566 568 2,200 527 691 648 662
4,864 4,341 5,375 19,094 5,126 6,032 5,252 5,777
2,381 1,210 1,144 6,147 1,795 3,698 1,935 1,485
27 30 22 156 3 88 44 60
19,022 14,503 16,039 62,484 16,195 19,953 16,428 17,367
- - - - - - - -

149.76% -35.35% 2.82% 0.08% 5.62% -12.05% 6.64%

12.06% -6.84% 11.95% -4.58% 10.89% -6.51% 13.13%
18.89% -2.25% 0.35% -7.22% 31.12% -6.22% 2.16%
7.75% -10.75% 23.82% -4.63% 17.67% -12.93% 10.00%
68.63% -49.18% -5.45% 56.91% 106.02% -47.67% -23.26%
-64.94% 11.11% -26.67% -86.36% 2833.33% -50.00% 36.36%
47.23% -23.76% 10.59% 0.97% 23.20% -17.67% 5.72%
2011 A 1Q12 E 2Q12 E 3Q12 E 4Q12 E 2012 E 1Q13 E 2Q13 E 3Q13 E
Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Jun-12 Sep-12 Dec-12 Mar-13

19,024 4,743 4,747 4,750 4,754 18,995 4,757 4,761 4,764

17,096 4,793 4,948 5,108 5,273 20,122 5,443 5,619 5,801
2,528 695 729 765 803 2,993 843 885 929
22,187 5,923 6,073 6,226 6,383 24,605 6,545 6,710 6,880
8,913 1,827 2,247 2,763 3,399 10,235 3,569 3,747 3,934
195 100 100 100 100 400 100 100 100
69,943 18,081 18,843 19,713 20,712 77,350 21,257 21,822 22,408
- - - - - - - - -

0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07%

3.23% 3.23% 3.23% 3.23% 3.23% 3.23% 3.23%
4.96% 4.96% 4.96% 4.96% 4.96% 4.96% 4.96%
2.53% 2.53% 2.53% 2.53% 2.53% 2.53% 2.53%
23.00% 23.00% 23.00% 23.00% 5.00% 5.00% 5.00%
66.67% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4.11% 4.22% 4.62% 5.07% 2.63% 2.66% 2.68%
4Q13 E 2013 E 1Q14 E 2Q14 E 3Q14 E 4Q14 E 2014 E
Jun-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Jun-14

4,768 19,050 4,771 4,775 4,778 4,782 19,106

5,988 22,851 6,182 6,381 6,588 6,801 25,951
975 3,632 1,023 1,074 1,127 1,183 4,409
7,053 27,188 7,232 7,414 7,602 7,794 30,042
4,131 15,381 4,338 4,555 4,782 5,021 18,696
100 400 100 100 100 100 400
23,016 88,503 23,646 24,299 24,978 25,681 98,604
- - - - - - -

0.07% 0.07% 0.07% 0.07% 0.07%

3.23% 3.23% 3.23% 3.23% 3.23%
4.96% 4.96% 4.96% 4.96% 4.96%
2.53% 2.53% 2.53% 2.53% 2.53%
5.00% 5.00% 5.00% 5.00% 5.00%
0.00% 0.00% 0.00% 0.00% 0.00%
2.71% 2.74% 2.76% 2.79% 2.82%
Microsoft Corp.
Cost Metrics
(All numbers are in USD Millions, except per share data)
(Red for assumptions and Black for Calculations)
1Q09 A 2Q09 A 3Q09 A 4Q09 A 2009 A 1Q10 A
Sep-08 Dec-08 Mar-09 Jun-09 Jun-09 Sep-09

Revenues 12,920

Cost of revenue 2,842

Research and development 2,065
Sales and marketing 2,790
General and administrative 741
Other income 283
Provision for income taxes 1,191

Cost as % of Revenues

Cost of revenue 22%

Research and development 16%
Sales and marketing 22%
General and administrative 6%
Other income 2%
Provision for income taxes 9%

Effective Tax Rate (Provision for Income Tax / Income Before Tax) 25%

Cash dividends declared per common share $ 0.13

Cash Dividends Paid 1,159
 2Q10 A 3Q10 A 4Q10 A 2010 A 1Q11 A 2Q11 A 3Q11 A 4Q11 A
Dec-09 Mar-10 Jun-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11

19,022 14,503 16,039 62,484 16,195 19,953 16,428 17,367

3,628 2,755 3,170 12,395 3,139 4,833 3,897 3,708

2,079 2,220 2,350 8,714 2,196 2,185 2,269 2,393
3,619 3,203 3,602 13,214 2,806 3,825 3,393 3,916
1,183 1,152 987 4,063 938 945 1,160 1,179
370 168 94 915 114 332 316 148
2,221 1,335 1,506 6,253 1,820 1,863 793 445

19% 19% 20% 20% 19% 24% 24% 21%

11% 15% 15% 14% 14% 11% 14% 14%
19% 22% 22% 21% 17% 19% 21% 23%
6% 8% 6% 7% 6% 5% 7% 7%
2% 1% 1% 1% 1% 2% 2% 1%
12% 9% 9% 10% 11% 9% 5% 3%

25% 25% 25% 25% 25% 22% 13% 7%

$ 0.13 $ 0.13 $ 0.13 $ 0.52 $ 0.16 $ 0.16 $ 0.16 $ 0.16

1,151 1,140 1,133 4,582 1,378 1,360 1,347 1,349
 2011 A 1Q12 E 2Q12 E 3Q12 E 4Q12 E 2012 E 1Q13 E 2Q13 E 3Q13 E
Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Jun-12 Sep-12 Dec-12 Mar-13

69,943 18,081 18,843 19,713 20,712 77,350 21,257 21,822 22,408

15,577 4,008 4,177 4,370 4,592 17,148 4,713 4,838 4,968

9,043 2,355 2,454 2,568 2,698 10,075 2,769 2,842 2,919
13,940 3,603 3,754 3,928 4,127 15,412 4,235 4,348 4,465
4,222 1,102 1,148 1,201 1,262 4,714 1,296 1,330 1,366
910 232 242 253 266 995 273 281 288
4,921 1,811 1,888 1,975 2,075 7,749 2,130 2,186 2,245

22% 22% 22% 22% 22% 22% 22% 22% 22%

13% 13% 13% 13% 13% 13% 13% 13% 13%
20% 20% 20% 20% 20% 20% 20% 20% 20%
6% 6% 6% 6% 6% 6% 6% 6% 6%
1% 1% 1% 1% 1% 1% 1% 1% 1%
7% 10% 10% 10% 10% 10% 10% 10% 10%

18% 25% 25% 25% 25% 25% 25% 25%

$ 0.64 $ 0.16 $ 0.16 $ 0.16 $ 0.16 $ 0.64 $ 0.16 $ 0.16 $ 0.16

5,434 1,349 1,349 1,349 1,349 5,395 1,349 1,349 1,349
4Q13 E 2013 E 1Q14 E 2Q14 E 3Q14 E 4Q14 E 2014 E
Jun-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Jun-14

23,016 88,503 23,646 24,299 24,978 25,681 98,604

5,102 19,621 5,242 5,387 5,537 5,693 21,860

2,998 11,528 3,080 3,165 3,253 3,345 12,843
4,586 17,634 4,711 4,842 4,977 5,117 19,646
1,403 5,394 1,441 1,481 1,522 1,565 6,009
296 1,138 304 312 321 330 1,268
2,306 8,866 2,369 2,434 2,502 2,573 9,878

22% 22% 22% 22% 22% 22% 22%

13% 13% 13% 13% 13% 13% 13%
20% 20% 20% 20% 20% 20% 20%
6% 6% 6% 6% 6% 6% 6%
1% 1% 1% 1% 1% 1% 1%
10% 10% 10% 10% 10% 10% 10%

25% 25% 25% 25% 25%

$ 0.16 $ 0.64 $ 0.16 $ 0.16 $ 0.16 $ 0.16 $ 0.64

1,349 5,395 1,349 1,349 1,349 1,349 5,395
Microsoft Corp.
Schedules
(All numbers are in USD Millions, except per share data)
(Red for assumptions and Black for Calculations)
1Q09 A 2Q09 A 3Q09 A 4Q09 A
Sep-08 Dec-08 Mar-09 Jun-09

Property and equipment Schedule

Property and equipment, net

Depreciation
Depreciation as % of Opening PPE, Net

Additions to property and equipment

Additions as % of Revenues

Stock Compensation Schedule

Stock Based Compensation

Stock compensation as % Revenues

Deferred Revenue Schedule

Deferral of unearned revenue

Recognition of unearned revenue
Total Deferred Unearned Revenue
Additional deferred unearned revenue as % of Total Revenue

Debt Schedule

Debt Tranche - 1 Sep-13 0.88%

Debt Tranche - 2 Jun-14 2.95%
Debt Tranche - 3 Sep-15 1.63%
Debt Tranche - 4 Mar-16 2.50%
Debt Tranche - 5 Jun-19 4.20%
Debt Tranche - 6 Sep-20 3.00%
Debt Tranche - 7 Mar-21 4.00%
Debt Tranche - 8 Jun-39 5.20%
Debt Tranche - 9 Sep-40 4.50%
Debt Tranche - 10 Mar-41 5.30%
Debt Tranche - 11 Mar-16 0.00%
 Debt Tranche - 12 Mar-16 0.00%
Total Debt
Checksum

Debt Repayment
Debt Tranche - 1
Debt Tranche - 2
Debt Tranche - 3
Debt Tranche - 4
Debt Tranche - 5
Debt Tranche - 6
Debt Tranche - 7
Debt Tranche - 8
Debt Tranche - 9
Debt Tranche - 10
Debt Tranche - 11
Debt Tranche - 12
2009 A 1Q10 A 2Q10 A 3Q10 A 4Q10 A 2010 A 1Q11 A 2Q11 A 3Q11 A
Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Jun-10 Sep-10 Dec-10 Mar-11

7,512 7,402 7,372 7,630 7,630 7,771 7,799 7,969

646 615 694 718 2,673 694 663 720

8.2% 9.4% 9.7% 9.1% 8.5% 9.2%

(435) (376) (408) (758) (1,977) (564) (491) (658)

-3.4% -2.0% -2.8% -4.7% -3.2% -3.5% -2.5% -4.0%

443 485 481 482 1,891 528 553 541

3.4% 2.5% 3.3% 3.0% 3.0% 3.3% 2.8% 3.3%

6,679 6,926 6,087 9,682 29,374 5,881 6,834 6,616

(6,237) (9,126) (6,395) (7,055) (28,813) (6,862) (7,301) (7,026)
442 (2,200) (308) 2,627 561 (981) (467) (410)
3% -12% -2% 16% 1% -6% -2% -2%
4Q11 A 2011 A 1Q12 E 2Q12 E 3Q12 E 4Q12 E 2012 E 1Q13 E 2Q13 E
Jun-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Jun-12 Sep-12 Dec-12

8,162 8,162 8,054 7,982 7,946 7,947 7,947 7,967 8,004

689 2,766 724 715 709 705 2,853 705 707

8.6% 36.3% 8.9% 8.9% 8.9% 8.9% 35.0% 8.9% 8.9%

(642) (2,355) (617) (643) (672) (707) (2,639) (725) (744)

-3.7% -3.4% -3.4% -3.4% -3.4% -3.4% -3.4% -3.4% -3.4%

544 2,166 563 587 614 645 2,409 662 680

3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1%

11,896 31,227
(7,746) (28,935)
4,150 2,292 588 613 641 673 2,514 691 709
24% 3% 3% 3% 3% 3% 3% 3% 3%

1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000

2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750
750 750 750 750 750 750 750 750
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
500 500 500 500 500 500 500 500
750 750 750 750 750 750 750 750
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250
 (79) (79) (79) (79) (79) (79) (79) (79)
11,921 11,921 11,921 11,921 11,921 11,921 11,921 11,921
- - - - - - - -

- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
3Q13 E 4Q13 E 2013 E 1Q14 E 2Q14 E 3Q14 E 4Q14 E 2014 E
Mar-13 Jun-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Jun-14

8,058 8,128 8,128 8,213 8,313 8,427 8,555 8,555

710 715 2,838 721 729 738 748 2,936

8.9% 8.9% 35.7% 8.9% 8.9% 8.9% 8.9% 36.1%

(764) (785) (3,019) (807) (829) (852) (876) (3,364)

-3.4% -3.4% -3.4% -3.4% -3.4% -3.4% -3.4% -3.4%

698 717 2,756 736 757 778 800 3,071

3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1% 3.1%

728 748 2,877 769 790 812 835 3,205

3% 3% 3% 3% 3% 3% 3% 3%

1,000 1,000 1,000 - - - - -

2,000 2,000 2,000 2,000 2,000 2,000 - -
1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750
750 750 750 750 750 750 750 750
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
500 500 500 500 500 500 500 500
750 750 750 750 750 750 750 750
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250
 (79) (79) (79) (79) (79) (79) (79) (79)
11,921 11,921 11,921 10,921 10,921 10,921 8,921 8,921
- - - (1,000) - - (2,000) -

- - - (1,000) - - - (1,000)
- - - - - - (2,000) (2,000)
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
Microsoft Corp.
Valuation
(All numbers are in USD Millions, except per share data)
(Red for assumptions and Black for Calculations)

Growth Assumptions Enterpsire Value (EV)

World economic growth rate 3%
Current Market Price
Diluted Shares
CAPM Assumptions Market Capitalisation (E)
Ke 11.82% Debt (D)
RFR 3% Less: Cash & Cash Equivalents
Beta 0.98 Net Debt
Rp = Rm - Rf 9% Current Enterprise Value (EV)

Calculation of Free Cash Flow

Explicit Forecast Period First Stage
2011 A 2012 E 2013 E 2014 E 2015 E

Revenues 69,943 77,350 88,503 98,604 108,474

EBITDA 29,927 32,854 37,166 41,181 45,304
EBIT 27,161 30,001 34,327 38,245 42,073
Tax Expense 4,921 7,749 8,866 9,878 -
Net Operating Profit After Tax = EBIT - Ta 22,240 22,252 25,461 28,367 42,073
Depreciation & Amortisation 2,766 2,853 2,838 2,936 3,230
Working Capital Change (3,003) (1,783) (1,187) (1,374) (1,374)
Operating Cash Flow 22,003 23,322 27,112 29,929 43,930
Capex (2,355) (2,639) (3,019) (3,364) (3,700)
FCFF 19,648 20,683 24,093 26,566 40,229

Diluted Shares 8,574 8,574 8,574 8,574 8,574

Projection Year 1 2 3 4
Discount Factor 0.90 0.81 0.73 0.65
Present Value of FCF 18,582 19,446 19,263 26,207

Y/Y Growth Analysis

Revenues 11% 14% 11% 10%
EBITDA 10% 13% 11% 10%
EBIT 10% 14% 11% 10%
Depreciation & Amortisation 3% -1% 3% 10%

Margin Analysis (As % of Revenues)

EBITDA Margin 42% 42% 42% 42%
EBIT Margin 39% 39% 39% 39%
Depreciation & Amortisation 4% 3% 3% 3%
Capex -3% -3% -3% -3%

Tax Rate (Tax Expense/EBIT) 26% 26% 26% 26%

Terminal Value Calculated Equity Value
Sum of PV of FCF for explicit forecast + Sta 179,567 Enterprise Value
WACC 11% - Debt
Long term growth in EBIT 3% + Cash
Present Value of terminal value 274,429 Net Debt
Terminal Value as % of Total Value 60% Equity Value
 Debt Equity Weightage
E/(D+E) 95%
$ 25.01 D/(D+E) 5%
8,574
214,436 Interest Rate (%) 3%
11,921.0 Tax Rate (@) 25%
9,610.0
2,311.0 WACC Calculation
216,747 WACC 11.31%

First Stage of Valuation Terminal Year

2016 E 2017 E 2018 E 2019 E 2020 E

117,812 126,302 133,633 139,516 143,701

49,204 52,749 55,811 58,268 60,016
45,695 48,988 51,831 54,113 55,736
- - - - -
45,695 48,988 51,831 54,113 55,736
3,509 3,761 3,980 4,155 4,279
(1,374) (1,374) (1,374) (1,374) (1,374)
47,830 51,376 54,437 56,894 58,642
(4,019) (4,309) (4,559) (4,759) (4,902)
43,811 47,067 49,879 52,135 53,740

8,574 8,574 8,574 8,574 8,574

5 6 7 8 9
0.59 0.53 0.47 0.42 0.38
25,640 24,746 23,560 22,124 20,488

9% 7% 6% 4% 3%
9% 7% 6% 4% 3%
9% 7% 6% 4% 3%
9% 7% 6% 4% 3%

42% 42% 42% 42% 42%

39% 39% 39% 39% 39%
3% 3% 3% 3% 3%
-3% -3% -3% -3% -3%

26% 26% 26% 26% 26%

 Intrinsic Value
453,996 <== as of toda Equity Value 451,685
11,921 Diluted Shares 8,574
9,610
2,311 Intrinsic Value 52.68
451,685