...Southern New Hampshire University Investigative Report The Capital Structure of Microsoft Corporation Zhang Yue Capital Budgeting & Financing, Fin 630 David Fehr June 3rd, 2013 Abstract At the first part, we are going to introduce Microsoft Corp. and how it works. Then, we try to figure out the WACC of Microsoft based on the data like income statements, balance sheets, cash flow statements, and some data searched from Yahoo! And Google Finance. At last, we are going to analyze and evaluate several terms of Microsoft. Compare Microsoft performance to Apple and Google, which are the most famous technology and Internet company, and then discuss with the whole technology market. Key Words: capital structure, WACC, ROE, leverage, liquidity, 1. Introduction 1.1 Company Background Microsoft Corporation is an American multinational software corporation headquartered in Redmond, Washington that develops, manufactures, licenses, and supports a wide range of products and services related to computing. This company was founded by Bill Gates and Paul Allen in 1975. With about four decades of development, now Microsoft is the world's largest software maker measured by revenues. It is also one of the world's most valuable companies. As of 2013, Microsoft is market dominant in both the PC operating system and office suite markets. The company also produces a wide range of other software for desktops and servers, and is active in areas including internet search...
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...Contents 1. Executive Summary 4 2. Introduction 5 3. Industry Analysis 6 3.1 Market Value 6 3.2 SWOT Analysis for the Technology Sector 7 4. Non-Financial Analysis 8 4.1 Google Inc. 8 4.1.1 Company Profile 8 4.1.2 Strategic Target 8 4.1.3 SWOT Analysis 9 4.1.4 Others 10 4.2 Microsoft Corp. 11 4.2.1 Company Profile 11 4.2.2 Strategic Target 12 4.2.3 SWOT Analysis 13 4.2.4 Others 13 4.3 Amazon.com 14 4.3.1 Company Profile 14 4.3.2 Strategic Target 14 4.3.3 SWOT Analysis 15 4.3.4 Others 15 5. Financial Analysis 16 5.1 Profitability 16 5.1.1 Year-on-Year (YoY) Revenue Distribution 16 5.1.2 Net Income 19 5.1.3 Return on Total Asset (ROTA) 20 5.1.4 Return on Equity (ROE) 21 5.2 Liquidity and Financing 22 5.2.1 Short-Term: Current Ratio 22 5.2.2 Long-Term: Gearing 23 5.3 Shareholder Value 24 5.3.1 Earning Per Share (EPS) 24 5.3.2 Price Earning Ratio (PE Ratio) 25 5.3.3 Dividend Per Share 26 5.4 Risk and Discounting 26 5.4.1 CAPM and NPV on Google Inc. 27 5.4.2 CAPM and NPV on Amazon.com 29 5.4.3 CAPM and NPV on Microsoft Corp. 31 6. Investment Decision and Conclusion 34 6.1 Investment Evaluation’s Matrix 34 6.2 Investment Decision and Conclusion 38 7. References 39 8. Appendix 40 Figures and Tables Figure 51: Amazon YOY Revenue, Cost, and Operating Income 16 Figure 52: Microsoft YOY Revenue, Cost, and Operating Income 17 Figure 53: Google YOY Revenue...
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...The Business Enterprise 508 Lisa Falls December 11, 2011 Microsoft Corporation and Apple Computers, Inc. Annual Report Comparison as we all know that both of these companies have become public figures names. Both companies have many divisions, and both manage extensive assets and liabilities. In searching various internet articles both reported large amounts of income, and the matter of accounting checks and balances becomes more complicated than many smaller companies. Apple, Inc. is Microsoft’s biggest competitor in designing and developing computer software. Apple was started in April of 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. In January of 1977, Apple was incorporated but without Wayne. On September 7, 1984, Apple had its first initial public stock offering. It was also during this year that the Macintosh computer was introduced. 1985 brought some turmoil with the new CEO John Sculley and Steve Jobs, and Jobs was removed from his position with Apple. After many tumultuous years and mismanagement, Apple brought back Jobs as a consultant in 1996. In July 1997, after the CEO was let go, Jobs resumed his position as CEO. In May 2001, Apple opened its first retail store and later that year introduced the IPOD, which became a huge success for Apple, along with the release of the iMac computer. By 2006, Apple was using Intel chips solely for its computers. On January 9, 2007, Apple released the iPhone and Apple TV, which made Apple’s stock soar...
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...Assignment 5 Dr. Laura Pogue Contemporary Business: BUS 508 March 11, 2012 Rosalind R. Smith Microsoft and Google are two names that automatically come to mind when you think of computers and the internet. Microsoft launched Bing a search engine in 2009 that competes with Google. Beyond that one item, you will find that the two companies are very different and their products and services are noncompetitive with each other. Microsoft has 8 products and services that it focuses on. As they are listed, I guaranteed you that more than half of them will be familiar to you. They are: (1) Online Services Division which include the search engines BING and MSN (2) Server and Tools Division which includes infrastructure software such as Windows Server (3) Microsoft Business Solutions (4) Microsoft Office Division which includes the software Office, Exchange, Project and Visio (5) Interactive Entertainment which include X box, X box360, Kinect for X Box 360, PC and mobile interactive entertainment (6) Windows Phone Division (7) Windows and Windows Live Division and (8) Skype (Our Commitment to Our Customers, 2011). Google on the other hand has 6 services that it focuses on. They are (1) Search Advertising which is an advertising source for businesses (2) Display Advertising which gives companies the ability to advertise across more than one internet site through Google products (3) Mobile Advertising which has evolved with the wave of Smartphone’s and I phones (4) Tools...
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...Running head: FINANCIAL MANAGEMENT Financial Management: Comparing Google’s Business Model/ Financial Management with Microsoft By: Zanthe Gillison Strayer University Financial Management: Comparing Google’s Business Model/ Financial Management with Bing Google is doing bigger and better things in the world of internet media searching. Despite the challenges with other big names in Internet technology, Google and Microsoft have still remained to be leaders. In this paper, I will show comparison views of Google’s business model and financial management with Microsoft’s launch with Bing. Taking a look into Google and Microsoft core business, leading products and services, management and leadership styles, and innovation track record we will have the opportunity to compare the two businesses in and appendix. Google is known to be the leading internet media website’s in the world. Google and Microsoft are well-known internet information websites. Although, Microsoft is in business for more than searching the internet, Microsoft is known to be the world’s leading producer and marketer of computer software. Google’s product line and services are for Google products only. Google’s products include services that will enhance your desktop features such as Google Chrome and Google desktop which is an organizational tool that gives the customer the option to design and edit photos, organize personal and business information, search, and communicate with...
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...Abstract Apple Inc is a multinational company that designs and manufactures computer hardware, software, and other consumer electronics. Today, Apple Inc is known as the largest technology company in the world. In May of 2010, Apples market cap closed at $222.12 billion which put them ahead of Microsoft Corp. As years went on, they continued the blow other companies out of the water. Currently Apple is the most valuable company in the world. Although they have many big competitors, they have a $260 billion market led over Microsoft and are worth more than $300 billion more than Google. Throughout this paper, I will conduct a ratio analysis of Apple’s most recent annual report. Ratio Analysis of Apple Inc Apple Inc, formally known as Apple Computer Inc, was founded in April 1976 by two men in a garage. For three decades, Apple Computer was mostly a manufacturer of personal computers, but later on grew into a multinational corporation that creates much more than just that. It was a long journey for, at the time, 20 year old founders Steve Jobs and Steve Wozniak. Today, with a spot in the top five on the Fortune 500 list, 437 retail stores in ten different counties, and a net worth of more than $670 billion, it is no secret the success Apple Inc has gained. It is now being predicted that reaching a market cap of 1 trillion could be a possibility. With such growing success, liabilities and assets are constantly changing from year to year. Common Size...
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...In contrast, Microsoft is widely centered in the software support for businesses worldwide. In addition, Microsoft has successfully launched other products and services such as their search engine Bing, mobile phone, and Windows Phone software support, and social media- Skype. Google focuses on innovation practices, most recently, the addition of “Search plus your world” that will enable users to integrate their Google+ account and find friends in their social network. (Google Annual Report 2011) Google is also focusing on innovating practices to enlarge its dormant market share and incorporate “semantic search” a better way to match queries through word association, helping the site better understand the users query. Google also launched Google+ a social network comparative to Facebook. Finally, the Company recently acquired Android under its “Google Mobile”, a base of its mobile operating system. Currently the Android growth has been “impressive. Over 250 Million Android devices have been activated globally” (Google Annual Report 2012) By Contrast, Microsoft has continued to diversify its products for businesses to increase their efficiency and productivity including Windows 7, Office 2010 and Sharepoint. (Microsoft Annual Report 2011) Microsoft also recently launched “Office 365”, a subscription based offering of their cloud services and “Kinect” that increased the gaming features and Xbox 360. To stay in competition with Google, Microsoft launched “Bing” as their search...
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...I. SWOT ANALYSIS STRENGTHS | WEAKNESSES | * Strong broad band image provides edge over competitors * Robust financial performance strengthens investors’ confidence and provides capital for future growth avenues * Wide portfolio of offerings * Net Sales/Employee: 2010 * Liquidity Ratios – leader in Current and Quick Ratios | * Patent infringement lawsuits may affect financial condition and operating results * Profitability Ratios 2010 trailing Baidu and Microsoft in: * NPM, ROA, ROE, * Productivity Ratios 2010: * SG&A/Net Sales – trailing Baidu * COGS/Net Sales – trailing Baidu and MS | OPPORTUNITIES | THREATS | * Strategic Acquisitions to further strengthen the company’s portfolio * Rising popularity of Android to increase market share * Robust outlook for mobile advertising market provides growth opportunity * Entry into mobile payments market * Serving additional customer groups or market segments * Integrating forward or backward * Acquiring companies with attractive technological expertise or capabilitiesFurther penetration into international markets | * Intense competition may affect revenues and profitability * Slowdowns in market growth * Economy slowdown in both domestic and international markets * Board of Directors at risk for corporate conflcit * Loss of operation in China * Adverse economic conditions that threaten critical suppliers or distributors * Web spam and content farms may decrease...
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...research I ‘_ Marries fundamental analysis and financial statement analysis – Exploits accounting as a system for measuring value added – Exposes good (and “bad”) accounting from a valuation perspective L Financial Statement Analysis and Security Valuation • • • Integrates financial statement analysis with corporate finance Focuses on technologies that can be used in practice – Based on real world examples Adopts activist point of view to investing – The market may be inefficient 0-1 What Will You Learn from the Course Part I Financial statements and valuation Ch. 1-7 • How intrinsic values are calculated • What determines a firm’s value • How businesses are analyzed to assess the value they create • How financial analysis is developed for strategy and planning • The role of financial statements in determining firms’ values • How to pull apart the financial statements to get at the relevant information • How ratio analysis is employed in valuation • How growth is analyzed and valued • How to calculate the P/E and P/B ratio and what they should be • The value of operations • How to make forecasts and develop valuations • How to assess the quality of the accounting 0-2 _c I- By the end of the course, students should be able to develop earnings forecasts and then use the forecasts to value equity and form investment recommendations, much the same as what financial analysts do in the market. Microsoft Corporation MSI-T lNa=d~1l |*** mlllum 310009...
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...Apple Financial Performance General Notes: This financial analysis for Apple Inc was carried out for the year 2007. The first section of the Financial Analysis will detail my preconceived notions of Apple (without the facts in hand). The second part of the Financial Analysis will review Apple's stock performance, various financial ratios, competitors, market segment. Interest coverage ratios, dividend yield ratios, and dividend payout will be discussed as well. The financial analysis will conclude with my opinion of Apple's future prospects, its stocks, and whether it is creating value to its shareholders. Apple General Information On January 3, 1977, Apple was officially incorporated in California. Apple's stock is traded under sticker Symbol "AAPL" in NASDAQ stock exchange, and in Frankfurt Stock Exchange, Apples' shares trade under the symbol "APCD". Apple became a public company in 1980, and in its Initial Public Offering (IPOD), Apple's shares were offered for $22.50. On a split-adjusted basis, Apple's Initial Public Offering stock price was $2.75. Apple has no preferred stock outstanding. Apple, Inc. Dividend Policy Apple doesn't pay its stockholders any dividends. In fact, the last time Apple paid dividends was in December of 1995. Apple paid dividends from 15 June 1987 to 1995. As Apple does not have an active dividend policy, Dividend Reinvestment Program (DRIP) is also not available to investors. Cash dividends that Apple did pay, ranged from .06$...
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...Department of Business MGMT 659 - Strategy Summer 2013 Prof. Irish BUS Project – Microsoft Rakan Mogaddam Contents 1 Current Situation Analysis 3 1.1 Past Performance Indexes 3 1.1.1 Ratios 3 1.1.2 Industry Competitor Comparison 4 1.2 Strategic Posture 4 1.2.1 Mission Statement 5 1.2.2 Vision Statement 5 1.2.3 Strategies and Policies 5 2 Corporate Governance 6 2.1 Board of Directors 6 2.2 Top Management 7 2.3 Stakeholders 8 3 External Environment 9 4 Internal Environment 10 5 Analysis of Strategic Factors 14 6 Alternatives & Recommendations 15 7 Implementation and Control 17 8 Evaluation Scorecard (Kaplan) 18 References: 20 Current Situation Analysis 1 Past Performance Indexes 1 Ratios The ratios of Microsoft can be used to analyze how well the company is performing according to its investments and recent profits. The following are a few ratios for the year ended June 30, 2013: 1 Credit Ratios 1. Current Ratio: 271% This ratio tells us the relation between the current assets and liabilities of the company. 2. Quick Ratio 266% This ratio tells us how liquid our assets are. This means how quickly we can change our assets into cash. 2 Profitability Ratios 1. Return on Assets 12.69% It tells about the profitability of the company...
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...Microsoft Corporation Manish Maharjan Dickinson State University Abstract Microsoft a leading company within the industry is developing and supporting many software products for various computing devices in worldwide. Due to frequent change in technologies, and introduction of new products Microsoft faces competition from various software commercial products, Apple, Google etc. This research paper tells about the company financial strength and its position in the market. Analyzing the data and all the information from annual report tells us the potential for future growth. Keywords: Potential, Analyzing Microsoft Corporation’s Microsoft Corporation’s began on April 4, 1975, when Bill Gates and Paul Allen in Albuquerque founded it. On January 1, 1979, the company moved from Albuquerque to Bellevue, Washington and started mainly as a software development company creating operating systems for personal computers (PCs) and office productivity software for PCs. Today, Microsoft is a dominating leader in industries who is developing and supporting many software products for various computing devices in the world. The company also designs and sells hardware, and delivers online advertising to customers. Microsoft is listed in the Fortune 100. MSFT identified five major segments within the Microsoft Corporation and each segments has competition. 1) Window & windows Live Division: The windows operating system faces competition from various commercial software...
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...1. What are the four major types of firm in the U.S, how are they defined, and what are the key differences between them? I understand from the course text that within the context of corporate finance the four types of firms in the U.S. are sole proprietorship, limited liability companies, partnerships and corporations (Berk & DeMarzo, 2011). These four firms are fundamentally different in their makeup and operations. To begin with a corporation is a legally defined artificial being with legal powers such as the ability to enter into contracts, acquire assets and incur obligations amongst others. I believe that corporations are one of the most recognizable business structures today as their span is wide spread and various corporations are in the news at any given point in time. Essentially they have a separate identity from the owners of the company and there may be many owners who participate as shareholders of a corporation. From the very name, a sole proprietorship is a business in which there is a single owner who is solely responsible for making business decisions and a partnership consists of two or more individuals who share the responsibility of running the company. A sole proprietorship is the most common form of business organization as it is easy to form and offers the owner complete control. Within a partnership each partner contributes money, property or skill with the expectation to share in the profits and losses of the business. From a corporate context the...
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...CONSUMER INTERNET Bear, Stearns & Co. Inc. – U.S. Equity Research February 4, 2008 Rating Information Sector Rating Target Price YE ’08 Long-Term Growth Market Weight 26.23% (YHOO-$28.38-Outperform) MicroHoo!: Where are We Now & Where Do We Go From Here? Trading Data 52-Wk Range Market Cap. Shares Out. Dividend Yield Avg Daily Vol. Float Yahoo! Corp. $18.58 - $34.08 $25,459 MM 1,336.4 MM 0.0% 27,140,000 NA Source: FactSet It’s not often that management of a company sees its stock skyrocket ~50% in one day and have to ask themselves “Is this the best day in company history or the worst?” We believe Yahoo!'s valuation has being hampered by near-term investment concerns which weighed on investor realization of the long-term potential and value of the company. As we pointed out in our 4Q earnings note, we thought the near-term investor disappointment created an opportunity for any suitor that was remotely serious. Fundamental Data EV/EBITDA Enterprise Value LT Debt to Total Cap. Book Value 16.4x $24,681.6 MM 0.0% $7.00 • Implications to Traffic and Search Market Share. Domestically, Yahoo! and MSN together command 11% in page views market share, more than double Google’s 5% market share. In the international market, however, Yahoo! and MSN jointly account for 8% of total page views, still slightly lower than Google at 9%. On Search, the combination of Yahoo! and MSN would represent 33% of query market share in the...
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...Microsoft’s Bid for Yahoo! Timeline As early as in late 2007, Microsoft proposed a number of cooperation alternatives with Yahoo! ranging from commercial partnerships to a merger, which were rejected by Yahoo!. Regarding to Microsoft’s proposal of acquisition in 2008, here are some key issues: Late 2007 Yahoo! rejected partnerships or merger proposal from Microsoft 31/1/2008 Microsoft announced its bid for Yahoo! at US$31/share 11/2/2008 Yahoo! rejected the offer, saying that it undervalued the company 28/2/2008 Google released news that with willingness to acquire 20% Yahoo share 6/4/2008 Final call from Microsoft – threatened Yahoo! Board with a proxy battle 2/5/2008 Yahoo! asked for US$37, Microsoft rose to US$33 4/5/2008 Microsoft withdrew US$47.5 buyout offer 5/5/2008 Yahoo!’s value dropped to $34 billion 17/5/2008 Yahoo! accepted the price $33-34, but Microsoft only interested in search business, Yahoo decided instead to sign a search advertising deal with Google. Microsoft’s Motivation of Acquisition After the failure of the deal, Steven Ballmer was made fun by the public that his greatest contribution during his tenure was: not able to close the deal. Why would Microsoft pay such high cost to acquire Yahoo! at the first place? As we know, Google was the dominant player in this industry and it kept consolidating its dominance through acquisition. Microsoft was eager to content against its biggest rival. The combination...
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