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MSFT 10yr OSV Stock Valuation Spreadsheet
MSFT 10yr OSV Stock Valuation Spreadsheet
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.
- 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.
- 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
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 EPV Valuation DCF Valuation Graham Valuation Current Price
Total Net Reprod. Cost $ 4.93 EPV $ 24.36 DCF Price $ 27.91 Graham Price $ 29.89 $ 24.95
Reprod. Cost of Assets BV $ 7.69 Normalized Income $ 19,259.53 Growth Rate 9% Growth Rate 14%
Tangible BV $ 2.84 Discount Rate 9% Discount Rate 9% Normalized EPS $ 1.01
NNWC $ 0.56 Margin of Safety 0% Margin of Safety 11% Margin of Safety 17%
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
2000-2007 2001-2008 2002-2009 2000-2005 2001-2006 2002-2007 2003-2008 2004-2009 Median
Shareholder Equity -6.7% -10.2% -9.4% 1.4% -5.5% -12.8% -17.3% -18.7% -9.8%
Free Cash Flow 5.2% 11.4% 8.1% 5.8% 8.9% 10.2% 9.4% 11.2% 9.2%
CROIC 19.4% 20.8% 26.2% 16.6% 16.6% 20.8% 26.2% 33.1% 20.8%
FCF/Sales 29.7% 28.1% 27.2% 30.8% 29.7% 27.8% 27.2% 26.4% 27.9%
ROA 14.3% 14.3% 16.5% 13.4% 13.4% 14.3% 16.5% 18.6% 14.3%
ROE 18.8% 18.8% 24.2% 17.1% 17.1% 18.8% 24.2% 33.5% 18.8%
Revenue Growth 12.1% 13.2% 10.9% 11.6% 11.8% 12.5% 13.4% 9.7% 12.0%
Gross Margin 82.5% 82.1% 81.7% 83.4% 82.5% 82.1% 82.1% 81.3% 82.1%
Operating Margin 39.1% 37.2% 36.9% 41.5% 39.1% 36.9% 36.9% 36.4% 37.1%
Net Margin 28.7% 28.7% 28.0% 29.9% 28.7% 28.0% 28.9% 28.0% 28.7%
Earnings Growth 7.6% 16.0% 12.5% 5.7% 12.7% 14.9% 15.2% 16.7% 13.8%
Cash from Ops Growth 3.5% 7.0% 4.0% 3.5% 1.4% 4.2% 6.5% 5.4% 4.1%
Margin Percentages
100.0%
86.9% 86.3%
90.0% 82.3% 84.4% 82.7%
81.7% 81.8% 80.8%
79.1% 79.2%
80.0%
70.0%
60.0%
47.6% 46.3% Gross Margin
50.0% 41.0% 42.0% 41.1%
36.6% 37.2% 36.2% 37.2% Operating Margin
40.0% 34.8%
29.0% 31.0% 30.8% 29.3% Net Margin
27.6% 28.5% 27.5%
30.0% 24.5% 24.9%
22.2%
20.0%
10.0%
0.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Free Cash Flow vs Tangible Shareholder Equity Trend Efficiency & Profitability
$80,000.0 70.0%
$70,000.0 60.0%
$60,000.0
50.0%
$50,000.0
40.0% CROIC
$40,000.0 FCF FCF/Sales
30.0%
$30,000.0 Shareholder Equity ROA
20.0% ROE
$20,000.0
$10,000.0 10.0%
$- 0.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$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 Last 4 yrs
$5,000.0
$30,000.0 Accts Receivable Last 3 yrs
$4,000.0
Inventory Last 2 yrs
$20,000.0 $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 $ 22,956.0 $ 25,296.0 $ 28,365.0 $ 32,187.0 $ 36,835.0 $ 39,788.0 $ 44,282.0 $ 51,122.0 $ 60,420.0 $ 58,437.0 $ 58,437.0
% change from last year 9.3% 10.8% 11.9% 12.6% 7.4% 10.1% 13.4% 15.4% -3.4% 0.0%
COGS $ 3,002.0 $ 3,455.0 $ 5,191.0 $ 5,686.0 $ 6,716.0 $ 6,200.0 $ 7,650.0 $ 10,693.0 $ 11,598.0 $ 12,155.0 $ 12,155.0
COGS (%) 13.1% 13.7% 18.3% 17.7% 18.2% 15.6% 17.3% 20.9% 19.2% 20.8% 20.8%
Gross Profit $ 19,954.0 $ 21,841.0 $ 23,174.0 $ 26,501.0 $ 30,119.0 $ 33,588.0 $ 36,632.0 $ 40,429.0 $ 48,822.0 $ 46,282.0 $ 46,282.0
Gross Profit (%) 86.9% 86.3% 81.7% 82.3% 81.8% 84.4% 82.7% 79.1% 80.8% 79.2% 79.2%
Operating Expenses
SG&A $ 5,150.0 $ 5,742.0 $ 6,957.0 $ 8,625.0 $ 13,306.0 $ 12,843.0 $ 13,576.0 $ 14,784.0 $ 18,166.0 $ 16,909.0 $ 16,909.0
SG&A (%) 22.4% 22.7% 24.5% 26.8% 36.1% 32.3% 30.7% 28.9% 30.1% 28.9% 28.9%
R&D $ 3,775.0 $ 4,379.0 $ 4,307.0 $ 4,659.0 $ 7,779.0 $ 6,184.0 $ 6,584.0 $ 7,121.0 $ 8,164.0 $ 9,010.0 $ 9,010.0
R&D (%) 16.4% 17.3% 15.2% 14.5% 21.1% 15.5% 14.9% 13.9% 13.5% 15.4% 15.4%
Other $ 92.0 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Other (%) 0.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Operating Income $ 10,937.0 $ 11,720.0 $ 11,910.0 $ 13,217.0 $ 9,034.0 $ 14,561.0 $ 16,472.0 $ 18,524.0 $ 22,492.0 $ 20,363.0 $ 20,363.0
Operating Income (%) 47.6% 46.3% 42.0% 41.1% 24.5% 36.6% 37.2% 36.2% 37.2% 34.8% 34.8%
Balance Sheet
Assets
Cash and Equiv $ 4,846.0 $ 3,922.0 $ 3,016.0 $ 6,438.0 $ 15,982.0 $ 4,851.0 $ 6,714.0 $ 6,111.0 $ 10,339.0 $ 6,076.0 $ 6,076.0
Short-Term Investments $ 18,952.0 $ 27,678.0 $ 35,636.0 $ 42,610.0 $ 44,610.0 $ 32,900.0 $ 27,447.0 $ 17,300.0 $ 13,323.0 $ 25,371.0 $ 25,371.0
Accts Rec $ 3,250.0 $ 3,671.0 $ 5,129.0 $ 5,196.0 $ 5,890.0 $ 7,180.0 $ 9,316.0 $ 11,338.0 $ 13,589.0 $ 11,192.0 $ 11,192.0
% change from last year 11.5% 28.4% 1.3% 11.8% 18.0% 22.9% 17.8% 16.6% -21.4% 0.0%
Inventory $ - $ - $ 673.0 $ 640.0 $ 421.0 $ 491.0 $ 1,478.0 $ 1,127.0 $ 985.0 $ 717.0 $ 717.0
% change from last year 100.0% -5.2% -52.0% 14.3% 66.8% -31.1% -14.4% -37.4% 0.0%
Other Current Assets $ 3,260.0 $ 4,366.0 $ 4,122.0 $ 4,089.0 $ 3,663.0 $ 3,315.0 $ 4,055.0 $ 4,292.0 $ 5,006.0 $ 5,924.0 $ 5,924.0
Total Current Assets $ 30,308.0 $ 39,637.0 $ 48,576.0 $ 58,973.0 $ 70,566.0 $ 48,737.0 $ 49,010.0 $ 40,168.0 $ 43,242.0 $ 49,280.0 $ 49,280.0
Net PP&E $ 1,903.0 $ 2,309.0 $ 2,268.0 $ 2,223.0 $ 2,326.0 $ 2,346.0 $ 3,044.0 $ 4,350.0 $ 6,242.0 $ 7,535.0 $ 7,535.0
Intangibles $ - $ - $ 1,669.0 $ 3,512.0 $ 3,684.0 $ 3,808.0 $ 4,405.0 $ 5,638.0 $ 14,081.0 $ 14,262.0 $ 14,262.0
Other Long-Term Assets $ 19,939.0 $ 17,311.0 $ 15,133.0 $ 14,863.0 $ 15,813.0 $ 15,924.0 $ 13,138.0 $ 13,015.0 $ 9,228.0 $ 6,811.0 $ 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
Total Current Liabilities $ 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 $ 27,034.0
Long-Term Debt $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 3,746.0 $ 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 from Operations $ 13,961.0 $ 13,422.0 $ 14,509.0 $ 15,797.0 $ 14,626.0 $ 16,605.0 $ 14,404.0 $ 17,796.0 $ 21,612.0 $ 19,037.0 $ 19,037.0
Cash from Investing $ (11,927.0) $ (8,734.0) $ (10,845.0) $ (7,213.0) $ (2,745.0) $ 15,027.0 $ 8,003.0 $ 6,089.0 $ (4,587.0) $ (15,770.0) $ (15,770.0)
Cash from Financing $ (2,192.0) $ (5,586.0) $ (4,572.0) $ (5,223.0) $ (2,364.0) $ (41,078.0) $ (20,562.0) $ (24,544.0) $ (12,934.0) $ (7,463.0) $ (7,463.0)
Currency Adj $ 29.0 $ (26.0) $ 2.0 $ 61.0 $ 27.0 $ (7.0) $ 18.0 $ 56.0 $ 137.0 $ (67.0) $ (67.0)
Change in Cash $ (158.0) $ (898.0) $ (908.0) $ 3,361.0 $ 9,517.0 $ (9,446.0) $ 1,845.0 $ (659.0) $ 4,228.0 $ (4,263.0) $ (4,263.0)
Free Cash Flow $ 9,290.0 $ 7,779.0 $ 8,143.0 $ 10,541.0 $ 8,245.0 $ 12,297.0 $ 11,924.0 $ 13,241.0 $ 16,555.0 $ 14,012.0 $ 14,012.0
Book Value Per Share $ 3.74 $ 4.24 $ 4.70 $ 5.61 $ 6.87 $ 4.41 $ 3.81 $ 3.15 $ 3.83 $ 4.40 $ 4.44
Company Name ticker
Microsoft Corp www.oldschoolvalue.com MSFT
10/1/2009 User Growth Figures in Millions except per share values
Desired MOS Growth Discount % Price Share Value Buy under Actual D/C % 52Wk High 52Wk Low
User Input Params
50% 9.2% 9.0% $ 24.95 $ 27.91 $ 13.95 11% $27.47 $14.87
Financial Data
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Income Sheet Data
Revenue $ 22,956.0 $ 25,296.0 $ 28,365.0 $ 32,187.0 $ 36,835.0 $ 39,788.0 $ 44,282.0 $ 51,122.0 $ 60,420.0 $ 58,437.0
Gross Profit $ 19,954.0 $ 21,841.0 $ 23,174.0 $ 26,501.0 $ 30,119.0 $ 33,588.0 $ 36,632.0 $ 40,429.0 $ 48,822.0 $ 46,282.0
Operating Income $ 10,937.0 $ 11,720.0 $ 11,910.0 $ 13,217.0 $ 9,034.0 $ 14,561.0 $ 16,472.0 $ 18,524.0 $ 22,492.0 $ 20,363.0
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
Diluted EPS $ 0.9 $ 0.7 $ 0.7 $ 0.9 $ 0.8 $ 1.1 $ 1.2 $ 1.4 $ 1.9 $ 1.6
Margins
Gross Margin 86.9% 86.3% 81.7% 82.3% 81.8% 84.4% 82.7% 79.1% 80.8% 79.2%
Operating Margin 47.6% 46.3% 42.0% 41.1% 24.5% 36.6% 37.2% 36.2% 37.2% 34.8%
Net Margin 41.0% 29.0% 27.6% 31.0% 22.2% 30.8% 28.5% 27.5% 29.3% 24.9%
Current Assets>1.5 times 310.7% 356.1% 381.2% 422.0% 471.4% 288.8% 218.4% 169.1% 144.7% 182.3%
Debt Related
Debt to Equity 26.1% 25.3% 29.6% 30.4% 23.5% 47.2% 73.5% 103.1% 100.6% 96.9%
Capitalization Ratio 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 8.7%
FCF to Debt 86.2% 65.0% 52.7% 56.8% 46.9% 54.2% 40.4% 41.3% 45.3% 36.6%
Multi-Year Performance
2000-2007 2001-2008 2002-2009 2000-2005 2001-2006 2002-2007 2003-2008 2004-2009 Median
Shareholder Equity -6.7% -10.2% -9.4% 1.4% -5.5% -12.8% -17.3% -18.7% -9.8%
Free Cash Flow 5.2% 11.4% 8.1% 5.8% 8.9% 10.2% 9.4% 11.2% 9.2%
CROIC 19.4% 20.8% 26.2% 16.6% 16.6% 20.8% 26.2% 33.1% 20.8%
FCF/Sales 29.7% 28.1% 27.2% 30.8% 29.7% 27.8% 27.2% 26.4% 27.9%
ROA 14.3% 14.3% 16.5% 13.4% 13.4% 14.3% 16.5% 18.6% 14.3%
ROE 18.8% 18.8% 24.2% 17.1% 17.1% 18.8% 24.2% 33.5% 18.8%
Revenue Growth 12.1% 13.2% 10.9% 11.6% 11.8% 12.5% 13.4% 9.7% 12.0%
Gross Margin 82.5% 82.1% 81.7% 83.4% 82.5% 82.1% 82.1% 81.3% 82.1%
Operating Margin 39.1% 37.2% 36.9% 41.5% 39.1% 36.9% 36.9% 36.4% 37.1%
Net Margin 28.7% 28.7% 28.0% 29.9% 28.7% 28.0% 28.9% 28.0% 28.7%
Earnings Growth 7.6% 16.0% 12.5% 5.7% 12.7% 14.9% 15.2% 16.7% 13.8%
Cash from Ops Growth 3.5% 7.0% 4.0% 3.5% 1.4% 4.2% 6.5% 5.4% 4.1%
Company Valuation Free Cash Flow and Tangible Shareholder Equity Trend
Total Value $ 248,410 $80,000.0 $71,141.0
FCF Shareholder Equity
Shares Outstanding 8901 8901 $70,000.0
$57,508.0
Per Share Value $ 27.91 $60,000.0 $50,511.0
$47,289.0
Margin of Safety 50% $50,000.0 $41,368.0 $44,307.0
Purchase Price $ 13.95 $35,699.0
$40,000.0
Current Price $ 24.95 $25,459.0 $25,296.0
$30,000.0 $22,205.0
Actual Discount 11% $16,555.0
$14,012.0
$20,000.0 $9,290.0 $7,779.0 $8,143.0 $10,541.0 $8,245.0 $12,297.0$11,924.0$13,241.0
Enterprise Value $ 205,030.00
$10,000.0
Enterprise Value/EBITDA 8.812
$-
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% 33.5%
18.8% 24.2% 24.2%
18.8% 17.1% 17.1% 18.8%
14.3% 13.4% 14.3% 16.5% 18.6%
14.3% 16.5% 13.4%
7.6% 16.0% 5.7% 12.7% 14.9% 15.2% 16.7%
150.0% 12.5%
50.0%
82.5% 82.1% 81.7% 83.4% 82.5% 82.1% 82.1% 81.3%
0.0%
2000-2007 2001-2008 2002-2009 2000-2005 2001-2006 2002-2007 2003-2008 2004-2009
Margin Percentages
100.0%
86.9% 86.3% 84.4%
90.0% 81.7% 82.3% 81.8% 82.7% 80.8%
79.1% 79.2%
80.0%
Gross Margin
70.0%
60.0%
47.6% 46.3%
50.0% 41.0% 42.0% 41.1%
36.6% 37.2% 36.2% 37.2% 34.8% Operating Margin
40.0% 31.0% 30.8%
29.0% 27.6% 28.5% 27.5% 29.3%
30.0% 24.5%
22.2% 24.9%
20.0%
Net Margin
10.0%
0.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
10.0% 20.0%
0.0% 0.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$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
Company Name ticker
Microsoft Corp MSFT
10/1/2009 www.oldschoolvalue.com Figures in Millions except per share values
Desired MOS Growth Discount % Price Share Value Buy under Actual D/C % 52Wk High 52Wk Low
50% 9.2% 9% $ 24.95 $ 27.91 $ 13.95 11% $ 27.47 $ 14.87
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
Desired MOS Growth Price Actual DC% Share Value Buy under P/B Ratio Net Net Working Capital
User Input Params
66% 13.8% $ 24.95 17% $ 29.89 $ 10.16 5.67 $ 0.21
Earnings
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$ 0.85 $ 0.66 $ 0.71 $ 0.92 $ 0.75 $ 1.12 $ 1.20 $ 1.42 $ 1.87 $ 1.62
Diluted EPS
2010 2011 2012 2013
$ 1.62 $ 1.85 $ 1.86 $ 2.15
Multi-Year Performance
2000-2005 2001-2006 2002-2007 2003-2008 2004-2009 2000-2003 2001-2004 2002-2005
Earnings Growth 5.7% 12.7% 14.9% 15.2% 16.7% 2.7% 4.4% 16.4%
EPS Weighted Average $ 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)
Earnings Growth 9.26% 23.71% 18.63% 10.52% 13.8%
EPS Weighted Average $ 1.00 $ 1.12 $ 1.40 $ 1.53 $1.01
$1.62 $1.62
Expected 5 Year Growth 13.79%
$1.60 $1.42
20 yr A Corp Bond Rate 5.74
$1.40
Book Value Per Share 4.40 $1.20
$1.20 $1.12
Price to Book Ratio 5.67
$1.00 $0.92
Enterprise Value Per Share 23.03 $0.85
$0.71 $0.75
$0.80 $0.66
Company Valuation $0.60
Per Share Value $ 29.89 $0.40
Desired MOS 66.00% $0.20
Purchase Price $ 10.16 $-
Current Price $ 24.95 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Actual Discount 17%
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 % EPV Net Reprod. Cost Current Price MOS % Tangible BV NNWC
9% $ 24.36 $4.93 $ 24.95 0% $ 2.84 $ 0.56
Reproduction Asset Value
Quarterly numbers based on: 2009 Q4 Data Source
Statement Source Date: 30-Jul-09 MSN
Adjust Reproduction
Assets Book Value +/- Multiplier Asset Value 2003 2004 2005 2006 2007 2008 2009 TTM
CAPEX
Cash & Equivalents $ 31,447.0 $ 31,447.0 (statements) $ 891.0 $ 1,109.0 $ 812.0 $ 1,578.0 $ 2,264.0 $ 3,182.0 $ 3,119.0 $ 3,119.0
Marketable Securities $ 25,371.0 $ 25,371.0 Last 6 yrs
Accounts Receivable - Gross $ 11,192.0 $ 11,192.0 Last 5 yrs
Other Receivable $ - $ - Last 4 yrs
Receivables $ 11,192.0 $ 11,192.0 Last 3 yrs $ 2,764.0 $ 2,770.0 $ 2,812.0 $ 3,499.0 $ 4,654.0 $ 7,024.0 $ 8,565.0 $ 9,420.0
Inventories: Raw Materials Error Last 2 yrs $ 1,661.0 $ 2,000.0 $ 1,921.0 $ 2,390.0 $ 3,842.0 $ 5,446.0 $ 6,301.0 $ 6,238.0
Inventories: Work in Progress Error Last 1 yr $ 891.0 $ 1,109.0 $ 812.0 $ 1,578.0 $ 2,264.0 $ 3,182.0 $ 3,119.0 $ 3,119.0
Inventories: Purchased
Components Error PPE $ 2,223.0 $ 2,326.0 $ 2,346.0 $ 3,044.0 $ 4,350.0 $ 6,242.0 $ 7,535.0 $ 7,535.0
Inventories: Finished Goods Error Sales $ 32,187.0 $ 36,835.0 $ 39,788.0 $ 44,282.0 $ 51,122.0 $ 60,420.0 $ 58,437.0 $ 58,437.0
Inventories: Other Error R&D $ 4,659.0 $ 7,779.0 $ 6,184.0 $ 6,584.0 $ 7,121.0 $ 8,164.0 $ 9,010.0 $ 9,010.0
Inventories -- Total $ 717.0 $ 717.0 $10,000.0
Prepaid Expenses $ - $ -
Current Defered Income Taxes Error Error $9,000.0
Other Current Assets $ 5,924.0 $ 5,924.0
$8,000.0
Total Current Assets $ 49,280.0 $ 49,280.0
Goodwill, Net $ 12,503.0 50% $ 6,251.5 $7,000.0 Last 6 yrs
Intangibles, Net $ 1,759.0 $ 1,759.0 Last 5 yrs
$6,000.0
Intangibles $ 14,262.0 $ 8,010.5 Last 4 yrs
$5,000.0
Property/Plant/Equipment - Net $ 7,535.0 $ 7,535.0 Last 3 yrs
Long Term Investments $ 4,933.0 $ 4,933.0 $4,000.0
Note Receivable - Long Term $ - $ - Last 2 yrs
Other Long Term Assets, Total $ 1,878.0 $ 1,878.0 $3,000.0
Last 1 yr
Total Assets $ 77,888.0 $ 71,636.5 $2,000.0 PPE
Reproduction $1,000.0
Liabilities & Equity Book Value Corrected BV Multiplier Asset Value $-
Accounts Payable $ 3,324.0 $ 3,324.0 2003 2004 2005 2006 2007 2008 2009 TTM
Accrued Expenses $ 3,156.0 $ 3,156.0
Accrued Liabilities $ - $ - Asset Valuation Asset Valuation Data
Notes Payable/Short Term Debt $ 2,000.0 $ 2,000.0 Total Per Share Shares Outstanding 8901.0 8901
Current Port. of LT Debt/Capital Tangible BV $ 25,296 $ 2.84
Leases $ - $ - Balance Sheet Assets $ 77,888.0
Other Current Liabilities $ 18,554.0 $ 18,554.0 Adjusted BV $ 33,307 $ 3.74 Adjusted Assets $ 71,636.5
Total Current Liabilities $ 27,034.0 $ 27,034.0 NNWC $ 5,026 $ 0.56 Total Liabilities $ 38,330.0
Reprod. Cost of
Long-Term Debt $ 3,746.0 $ 3,746.0 Assets $ 106,763 $ 11.99 Total Equity $ 39,558.0
Reprod. Cost of
Capital Lease Obligations Error Error Assets BV $ 68,433 $ 7.69
Total Net
Deferred Income Taxes $ - $ - Reprod. Cost $ 43,901 $ 4.93 Marketing/Brand Value $ 17,631.3
Minority Interest $ - $ - R&D Value $ 17,495.2
Total Other Liabilities $ 7,550.0 $ 7,550.0
Total Liabilities $ 38,330.0 $ 38,330.0 Cash Needed for Business $ 584.4
Common Stock Equity Error Error Interest Bearing Debt $ 5,746.0
Retained Earnings Error Error Non Interest Bearing Debt $ 32,584.0
Total Capitalization Error Error Excess Cash $ 30,278.3
Total Equity $ 39,558.0 $ 39,558.0
Total Liabilities & Stock Equity $ 77,888.0 $ 77,888.0
Old School Value | http://www.oldschoolvalue.com
Income Statement 2005 2006 2007 2008 2009 2009 Q1 2009 Q2 2009 Q3 2009 Q4 TTM User Input
Sales $ 39,788 $ 44,282 $ 51,122 $ 60,420 $ 58,437 $15,061.0 $ 16,629.0 $ 13,648.0 $ 13,099.0 $ 58,437.0
EBIT $ 16,628.0 $ 18,262.0 $ 20,101.0 $ 23,814.0 $ 19,821.0 $5,927.0 $5,690.0 $3,999.0 $3,937.0
$ 19,553.0
Add back one time charges
EBIT Margin 41.8% 41.2% 39.3% 39.4% 33.9% 39.4% 34.2% 29.3% 30.1% 33.5%
EBIT at user defined % of sales $ -
EBIT User Defined % Margin 41.8% 41.2% 39.3% 39.4% 33.9% 39.4% 34.2% 29.3% 30.1% 33.5%
Normalized EBITDA $ 17,755.0 $ 18,782.0 $ 19,874.0 $ 24,143.0 $ 22,984.0 $6,584.0 $ 6,571.0 $ 5,392.0 $ 4,708.0 $ 23,255.0
Normalized EBIT $ 16,871.0 $ 17,792.0 $ 18,438.0 $ 22,271.0 $ 20,693.0 $5,999.0 $ 5,939.0 $ 4,728.0 $ 4,027.0 $ 20,693.0
SG&A $ 2,697.3 $ 3,064.0 $ 3,717.5 $ 4,596.8 $ 4,144.8 $982.8 $ 982.8 $ 1,123.3 $ 973.5 $ 4,062.3
R&D $ 1,524.3 $ 1,646.0 $ 1,780.3 $ 2,041.0 $ 2,252.5 $570.8 $ 570.8 $ 572.5 $ 553.0 $ 2,267.0
Adjusted EBIT $ 20,849.5 $ 22,972.0 $ 25,598.8 $ 30,451.8 $ 26,218.3 $7,480.5 $ 7,243.5 $ 5,694.8 $ 5,463.5 $ 25,882.3
Adjusted EBIT % 52.4% 51.9% 50.1% 50.4% 44.9% 49.7% 43.6% 41.7% 41.7% 44.3%
Income Before Tax $ 16,628.0 $ 18,262.0 $ 20,101.0 $ 23,814.0 $ 19,821.0 $5,927.0 $ 5,690.0 $ 3,999.0 $ 3,937.0 $ 19,553.0
Income Tax - Total $ 4,374.0 $ 5,663.0 $ 6,036.0 $ 6,133.0 $ 5,252.0 $1,618.0 $ 1,464.0 $ 1,073.0 $ 1,097.0 $ 5,252.0
Tax Rate 26.3% 31.0% 30.0% 25.8% 26.5% 27.3% 25.7% 26.8% 27.9% 26.9%
Adjusted Earnings After tax $ 15,365.0 $ 15,848.4 $ 17,911.9 $ 22,609.3 $ 19,271.2 $5,438.4 $ 5,379.79 $ 4,166.75 $ 3,941.16 $ 18,926.1
Depreciation & Amortization $ 884.0 $ 990.0 $ 1,436.0 $ 1,872.0 $ 2,291.0 $585.0 $ 632.0 $ 664.0 $ 681.0 $ 2,562.0
Add user defined % of D&A $ 176.8 $ 198.0 $ 287.2 $ 374.4 $ 458.2 $117.0 $ 126.4 $ 132.8 $ 136.2 $ 512.4
Income as Adjusted $ 15,541.8 $ 16,046.4 $ 18,199.1 $ 22,983.7 $ 19,729.4 $5,555.4 $ 5,506.2 $ 4,299.6 $ 4,077.4 $ 19,438.5
Income as Adjusted % 39.1% 36.2% 35.6% 38.0% 33.8% 36.9% 33.1% 31.5% 31.1% 33.3%
Operating Income as Reported $ 14,561.0 $ 16,472.0 $ 18,524.0 $ 22,492.0 $ 20,363.0 $5,927.0 $ 5,677.0 $ 4,018.0 $ 3,987.0 $ 19,609.0
2005-2006 2006-2007 2007-2008 2008-2009 2009-TTM Normalized Adjusted Income Possible Values for Override Box
3.2% 13.4% 26.3% -14.2% -1.5% Normalized Income $ 19,259.5
$ 15,794.1 $ 17,122.8 $ 20,591.4 $ 21,356.5 $ 19,583.9 Avg Adj. Income 5 yrs $ 18,500.1
TTM Adjusted Income $ 19,438.5
$19,259.5
2005-2007 2006-2008 2007-2009 2008-TTM
8.2% 19.7% 4.1% -8.0% EPV Data
Multiyear Timeframe Adjusted $ 16,595.8 $ 19,076.4 $ 20,304.0 $ 20,717.2 Cost of Capital 9%
Income & Growth Normalized Adjusted Income $ 19,259.5
2005-2008 2006-2009 2007-TTM Normal. Adj. Income Growth Average Maintenance Capex $ 2,008.1
12.7% 2.7% -5.4% 4.5% Interest Bearing Debt $ 5,746
$ 18,192.8 $ 19,239.6 $ 20,087.7 1% of sales $ 584.37
Cash & Equiv $ 31,447
2005-2009 2006-TTM Cash - Debt $ 25,116.63
6.1% 4.9% Shares 8901
$ 18,500.1 $ 19,279.4
+Cash-Debt
Cost of Capital Rates EPV Per Share Adjustment Per Share
5% $ 345,029.3 $ 38.76 $ 370,145.9 $ 41.58
7% $ 246,449.5 $ 27.69 $ 271,566.1 $ 30.51
9% $ 191,682.9 $ 21.53 $ 216,799.6 $ 24.36
11% $ 156,831.5 $ 17.62 $ 181,948.1 $ 20.44
13% $ 132,703.6 $ 14.91 $ 157,820.2 $ 17.73
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
Stock Price 24.95 183.62 46.33 15.25 NA NA
Market Cap (millions) 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
Valuation Ratios
P/E Ratio (TTM) 15.88 32.39 15.9 16.22 14.5 4
Price to Sales (TTM) 3.93 4.8 0.96 0.56 0.74 2
Price to Book (MRQ) 5.79 6.41 2.71 6.45 3.72 3
Price to Tangible Book (MRQ) 9.08 6.56 82.55 13.38 10.72 3
Price to Cash Flow (TTM) 13.4 28.55 9.36 11.81 4.61 2
Price to Free Cash Flow (TTM) 20.06 16.31 12.9 14.04 71.55 1
Enterprise Value/Revenue (TTM) 3.51 4.1 0.99 0.4 NA NA
Enterprise Value/EBITDA (TTM) 8.812 18.859 7.481 5.71 NA NA
Dividends
Dividend Yield 2.01 NA 0.68 NA 0.13 1
Dividend Yield - 5 Year Avg. 3.96 0 0.91 0 1.96 1
Dividend 5 Year Growth Rate 26.58 0 0 0 14.67 1
Payout Ratio (TTM) 31.71 0 10.46 0 31.02 1
Growth Rates
Sales (MRQ) vs Qtr. 1 Yr. Ago -17.29 11.7 -2.07 -22.33 -9.99 3
Sales (TTM) vs TTM 1 Yr. Ago 3.93 4.8 0.96 0.56 0.74 2
Sales - 5 Yr. Growth Rate 9.67 39.23 10.13 8.07 9.14 3
EPS (MRQ) vs Qtr. 1 Yr. Ago -25.55 13.89 -15.77 -21.85 0.11 4
EPS (TTM) vs TTM 1 Yr. Ago -13.36 11.88 -7.71 -29.72 0 3
EPS - 5 Yr. Growth Rate 16.65 124.7 31.39 4.32 3.4 3
Capital Spending - 5 Yr. Growth Rate 22.98 48.87 8.43 -14.54 30.23 2
Financial Strength
Quick Ratio (MRQ) 1.8 2.09 1.03 1.41 2.27 2
Current Ratio (MRQ) 1.82 2.11 1.17 1.46 2.44 2
LT Debt to Equity (MRQ) 9.47 0 33.45 73.38 12.11 3
Total Debt to Equity (MRQ) 14.53 0 41.36 74.44 18.21 3
Profitability
Gross Margin (TTM) 79.2 35.49 23.35 18.11 16.63 1
Gross Margin - 5 Yr. Avg. 81.06 31.83 24 17.94 54.11 1
EBITD Margin (TTM) 37.94 21.84 12.23 6.04 0 1
EBITD - 5 Yr. Avg. 38.98 16.82 9.65 7.33 25.11 1
Operating Margin (TTM) 33.56 19.98 8.27 4.76 4.42 1
Operating Margin - 5 Yr. Avg. 36.03 15.4 6.92 6.43 21 1
Pre-Tax Margin (TTM) 33.92 21.2 7.69 4.66 4.16 1
Pre-Tax Margin - 5 Yr. Avg. 38.82 17.24 7.19 6.86 22.22 1
Net Profit Margin (TTM) 24.93 14.97 6.25 3.43 2.78 1
Net Profit Margin - 5 Yr. Avg. 28.01 12.15 5.76 5.14 13.49 1
Management Effectiveness
Return On Assets (TTM) 19.34 12.96 7.08 6.29 2.14 1
Return On Assets - 5 Yr. Avg. 19.63 13.96 6.62 11.93 10.01 1
Return On Investment (TTM) 31.08 19.18 11.88 15.34 3.14 1
Return On Investment - 5 Yr Avg 28.63 21.57 11.36 33.97 14.65 2
Return On Equity (TTM) 38.42 22.74 18.3 48.86 3.81 2
Return On Equity - 5 Yr. Avg. 33.44 24 14.59 60.76 16.08 2
Efficiency
Revenue/Employee (TTM) 628355 1080063 365125 701908 11391701 NA
Net Income/Employee (TTM) 156656 161719 22816 24052 337100 NA
Receivable Turnover (TTM) 4.72 16.12 6.97 9.06 2.76 NA
Inventory Turnover (TTM) 14.28 48.21 12.82 45.26 3.21 NA
Asset Turnover (TTM) 0.78 0.87 1.13 1.84 0.29 4
Company Name ticker
Microsoft Corp www.oldschoolvalue.com MSFT
10/1/2009 Figures in Millions except per share values
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0 0 0 0 0 0 0 0 0 0 0
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Company Name ticker
Microsoft Corp MSFT
10/1/2009 www.oldschoolvalue.com Figures in Millions except per share values
Margins, Profit and Growth Criteria over 10yrs Value Points User Points
Median Revenue growth 10% 12.0% 1
Median Gross Margin 30% 82.1% 2
Median Operating Margin 15% 37.1% 2
Median Net Margin 10% 28.7% 2
Median EPS growth 10% 13.8% 1
Business and Management Performance Criteria over 10yrs Value Points User Points
Cash growth from Operations 15% 4.1% 0
CROIC is postive and capable of paying off financing 13% 20.8% 2
Median FCF growth positive and consistent 10% 9.2% 0
Median FCF/Sales 7% 27.9% 2
Consistent ROE (manually check) Consistent over 10yrs N/A N/A
Consistent ROA (manually check) Consistent over 10yrs N/A N/A
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.
Low Risk High Growth Under Valued Well Managed Good Financial Health Strong Moat
3.7 2.0 2.5 3.5 3.5 4.0
3.7 2.0 2.5 3.5 3.5 4.0
Low Risk
5.0
4.0
3.0
Strong Moat High Growth
2.0
1.0
0.0
Well Managed