John Caruso
Professor Dori Lombard
AC600
18 June 2009

Microsoft: Industry, Incorporation, and Investment --- Executive Summary

Group A conducted a due diligence evaluation of Microsoft Corporation to determine if Microsoft should be acquired by our company. In our report, we examined data from numerous sources, including annual and quarterly reports, as well as news articles from the World Wide Web. This data yielded facts about Microsoft's organization, capitalization, accounting practices, markets, and management. By varying our perspective, we were able to drill down into the company's financial results, and in many cases, see how those results occurred. We were also able to identify market areas of greatest competition and the relationship of reported profits to cash profits. We also explored the company's handling of contingencies and the effect of those contingencies on earnings. Through the eyes of numerous sources, we were able to evaluate Microsoft's ability to add value, to meet stakeholder expectations, and to deal with risks and competitors.
Microsoft has impressive financial ratios based on its financial reporting figures (Group A - Part II). The company is focused on consistently achieving shareholder value, and simultaneously trades on that value using stock-based compensation (Group A - Part III), stock repurchases (Group A - Part II), and regular cash dividends (Group A - Part VI). Microsoft's shareholders are as important to Microsoft as are its customers, and the entire business model focuses on building and maintaining key relationships with shareholders, customers, partners, and suppliers. The company also pursues profits through various aggressive marketing (Group A - Part V), acquisition (Group A - Part I), and tax strategies (Group A - Part IV). Microsoft has a AAA debt rating (Group A - Part II) and has issued debt for the first