General Meeting 1

January 22, 2013

Meeting Agenda
Points System Semester at A Glance & Meeting Structure Market Overview Question of the Day Pitch Sign-Ups Pitch Announcements

Market News
DavosWorld Economic Forum
Very Confident CEOs36% Crisis is new normal

Microsoft may invest in Dell Equities hover at 5-year highs

72% of earnings exceed estimates

Google Profit Rises on year-end ad gains Apple braces for first profit drop since 2003

S&P 500

NASDAQ

Commodities

Can We Get Much Higher?

The Standard & Poors 500 Index is 5.1 percent below the all-time high in October 2007. Profits in the benchmark gauge are forecast to exceed $1 trillion this year, or 31 percent more than when the gauge peaked, according to more than 11,000 analyst estimates compiled by Bloomberg. Even if the price- earnings ratio, now 9.8 percent below the six-decade mean, doesnt expand, the S&P 500 is poised to recover fully from the financial crisis that began almost six years ago.

-Bloomberg
Jan. 21, 2013

Investment Thesis
Looking for a stable company with an established reputation.

Microsofts usage of Office as a competitive differentiator for its hardware products has been well received and has opened up a market opportunity.
With Windows 8, SkyDrive, and Office 2013, Microsoft is creating an ecosystem that links all your devices together, and streamlines the entire experience.

Company Overview
5 Primary Business Segments: Windows and Windows Live

Servers and Tools

Software Online Services Entertainment and Devices

Windows and Windows Live

Comprised of the Windows operating system and Microsoft branded hardware 75% of segment revenue comes from operating system license sales Software competition comes from Apple, Google, and open-source offerings Hardware competition comes from Dell, HP, Lenovo, Apple, Samsung

Strengths include ease of use, security, compatibility, and support networks

Servers and Tools

Makes IT professionals systems more productive and efficient 80% of revenue from servers, SQL, Azure, 20% of revenue from enterprise services Competition from HP, IBM, and Oracle as well as Amazon and Google in cloud services Strengths include performance and total cost of ownership

Microsoft Business Division

Software and online services to increase productivity 90% of revenue from Microsoft Office, 10% from Microsoft Dynamics business solutions Competition from Adobe, Apple, Cisco, SAP Strengths include security, ease of use, historical usage, compatibility with existing technology

Online Services
Provides online content and connects advertisers to audiences Covers Bing search engine and Microsoft Network (MSN) Competition from Google in search engine Strengths include prepackaging services into the Windows operating system through Original Equipment Manufacturer deals

Entertainment and Devices

Covers Xbox 360, Skype, Windows Phones, video game publishing, Xbox Live, Accessories Covers Bing search engine and Microsoft Network (MSN) Competition from Sony, Nintendo Strengths include exclusive game content, Xbox Live player networks

Microsoft Features
One platform across PC, tablet, phone, servers, and cloud
Unlike other companies, Microsoft unites everything under one operating system Possible to select a movie from a PC, start playing it on the TV and finish watching on a tablet.

Office redesigned for Windows 8

Touch and pen capabilities Offerings on new tablets

Cloud Services
SkyDrive Take notes, annotate documents, and share information using a Windows 8 tablet, OneNote, and SkyDrive

Financial Summary
Revenue
80000 75000 69943 70000 65000 60420 60000 55000 50000 45000 40000 2008 2009 2010 2011 2012 58437 62484 23000 21000 19000 17000 20693 25000 24071 24098 73723 29000 27161 27000

Operating Income
27956

15000
2008 2009 2010 2011 2012

Liquidity Summary
Cash from Operations
35000 30000 25000 20000 15000 1 10000 5000 0 0.5 0 24073 21612 19037 1.5 1.446898 2 1.822889 31626 26994 3 2.603669 2.5 2.129345 2.602912

Current Ratio

2008

2009

2010

2011

2012

2008

2009

2010

2011

2012

Revenue Breakdowns
Business Segments Geographic Segments
Windows & Windows Live Server and Tools Online Services Microsoft Business Entertainment and Devices Corporate and Other

United States Other Countries

Comps
Enterprise Multiples Pricing Multiples NTM P/E LTM P/BV 216.6x 8.1x 33.8x 11.7x 24.6x 3.0x 12.2x 10.1x LTM EV/Revenue LTM EV/EBITDA LTM EV/EBIT NTM EV/EBITDA LTM P/E High Low Mean Median 8.3x 0.3x 3.0x 2.3x 59.9x 4.5x 15.5x 9.0x 287.1x 6.0x 40.8x 10.9x 27.9x 4.2x 9.8x 7.0x 54.9x 8.7x 19.2x 14.0x

LTM EV/Revenue LTM EV/EBITDA LTM EV/EBIT NTM EV/EBITDA LTM P/E High Low Mean Median $77.50 $9.30 $32.10 $25.80 $211.40 $21.90 $59.30 $37.10 $895.50 $24.90 $132.70 $40.10 $75.20 $9.96 $32.75 $28.78 $102.63 $16.35 $36.00 $26.14

NTM P/E LTM P/BV $658.10 $24.49 $102.82 $35.56 $148.75 $18.11 $73.98 $61.40

Discounted Cash Flow

Announcements
Texas Investment Conference Wall Street Journal Improvement Surveys Texas Investment Conference