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Annual Report

Annual Report. Microsoft Corporation Joey Janssen ACG2021.002. Executive Summary.

gannon-hebert
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Annual Report

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  1. Annual Report Microsoft Corporation Joey Janssen ACG2021.002

  2. Executive Summary • The outlook looks strong for Microsoft with increasing revenues in 2004 of 4.65 billion dollars, or 14 percent and with continuing innovations in technology and development of new products. In 2005 they hope to be the largest patent filer in the world (@ 3,000 patents). They continue to develop Windows XP and are developing advanced technologies that will help fight against internet attacks on computers and/or make them more resilient when they are attacked. Continuing growth of PC’s will continue to rise due to Microsoft’s pioneering efforts of Media Center and Tablets. With Americas increased dependency on technology especially computers, Microsoft will prosper for years to come. • Link to Microsoft 2004 Annual Report

  3. Part A. Introduction • CEO: Raymond V. Gilmartin • Headquarters: Redmond, WA • Ending Date of Last Fiscal Year: June 30, 2004 • Description of Products: There are 7 product product segments involved in the Microsoft Corporation. They are client, which involves the technical architecture for the Microsoft Windows operating system and new media technology including Windows XP and other Windows operating systems; Server & Tools, which is responsible for the marketing of the Windows server system products including building and marketing Windows Server operating systems; Information Worker, consists of Microsoft Office System of Programs, servers, services and solutions; Microsoft Business Solutions, responsible for developing and marketing integrated, end to end business applications and servers that are made to help small businesses reach out to customers, employees, partners and suppliers; MSN, is responsible for delivering online services; Mobile and Embedded Devices, helps market products that are advantageous to the Windows platform and many types of devices it creates; Home and Entertainment, realizes the companies plan to grow new consumer businesses such as X-box. • Main Geographic area of activity: North America, Latin America, Europe, The Middle East, Africa, Japan, Asia-Pacific region, Greater China and the worldwide OEM channel.

  4. Part A. Audit Report • Independent Auditors: Deloitte and Touche LLP • What did they have to say about the Co.? After they analyzed and conducted their audit report in accordance to the Public Company Accounting Oversight Board standards they concluded that their financial position was presented fairly in all material aspects of the business.

  5. Part A. Stock Market Information • Most Recent Price: $26.93 • 12 Month trading range: $23.82 - $28.38 • Dividend per share: $0.36 • Date: March 3, 2006 • My Opinion: If you are looking to make a large profit in the stock market this stock is not for you. The current price, being at 26.93, is in the middle of the 52 week range and doesn’t seem to be increasing at a high rate. For every dollar invested it only pays a dividend of $0.36. My opinion is to not buy this stock now but if you currently own it then hold on to it because even though it won’t make you millions you won’t lose millions either. MSFT.

  6. Part B. Industry Situation and Company Plans • In today’s societies technology is expanding dramatically and every year new things come out to enhance the world of technology. Microsoft is at the top of its field in technological advancements and continues to grow as a company. Their future depends on innovation and they are in a great position to deliver new value to customers through a broad set of technologies (www.microsoft.com). They have a long term commitment to research and development for driving innovations. During 2003 they applied for 2,000 patents and in 2004 they plan on applying for 3,000 more (www.microsoft.com).

  7. Part C. Income Statement -The Microsoft Comp. Uses a single-step format -Both the operating income and Net Income of Microsoft increased from ’03 to ’04, that tells me that though its net income increased, it took more money for that to happen, thus a part of their business was not making a profit on the money put into it.

  8. Part C. Balance Sheet -The asset account changed the most between 2003 and 2004, mainly due to large increases in short term investments and property and equipment. The liabilities account did not increase too much which is good because for the year, they did not incur many new debts. The large increase in the asset account directly affected the Stockholders Equity account.

  9. Part C. Statement of Cash Flows • Are the cash flows from operations more or less than net income for the past two years? Cash flow from operations is greater than net income in both 2003 and 2004 (2003 NI $7,531 and operations $15,797, 2004 NI $8,168 and operations $14,626). • Is the company growing through investing, activities, i.e. buying property, plant and equipment and other long lived assets? No. • What is the company’s primary source of financing, i.e., long-term loans, stock sales? Sales of investments. • Overall has cash increased or decreased over the past two years? Increased tremendously. It went from $6,438 in 2003 to $15,982 in 2004.

  10. Part D. Accounting Policies • The financial statements/notes are made in accordance to GAAP in the United States of America • The topics include… • Principles of Consolidation • Estimates and Assumptions • Foreign Currencies • Revenue Recognition • Research & Development • Sales & Marketing • Income Taxes • Derivative & Financial Instruments • Foreign Currency Risk • Equities Price Risk • Interest Rate Risk • Other Derivatives

  11. Part E. Liquidity Ratios for 2003 & 2004

  12. Part E. Profitability Ratios for 2003 & 2004

  13. Part E. Solvency Ratios for 2003 & 2004 • Debt To Equity Ratio • 2003 • 0.215 • 2004 • 0.200 -The debt to equity ratio for both 2003 and 2004 is less than 1, meaning that TSHE is greater than TL. That being said, in both years Microsoft has a larger THSE than TL and from 2003 to 2004 the debt to equity ratio decreased.

  14. Part E. Market Strength Ratios • Earnings Per Share • 2003 • $1.44 • 2004 • $1.33 • Dividend Yield • 2003 • $0.08 • 2004 • $0.16 -The Earnings per share dropped from 2003 to 2004, showing a weaker stock price return. The dividend yield doubled from 2003 to 2004 showing an increase in dividends paid of 100% increase.

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