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Microsoft-Yahoo (Pro Forma)Mar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07Jun-07Sep-07Dec-07

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Analysis By:

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Silicon Alley Insider

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What Microsoft's financials will look like after the Yahoo deal closes, before and after cost synergies. (Microsoft said the deal would be accretive to EPS in the "second full year after closing." This pro forma analysis supports that.)

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YAHOOMar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07Jun-07Sep-07Dec-07EFY 2005CY 2006CY 2007CY 2008ECY 2009E

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Revenues$1,173,742$1,252,997$1,329,929$1,501,000$1,567,055$1,575,854$1,580,322$1,702,448$1,671,850$1,697,920$1,767,506$1,831,998$5,257,668$6,425,679$6,969,274$8,000,000$9,000,000

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Y/Y Change33.51%25.77%18.83%13.42%6.69%7.75%11.84%7.61%22.22%8.46%14.79%12.50%

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Operating Income$247,363$261,357$270,057$328,948$0$0$0$0$0$0$0$0$0$940,966$695,413$711,989$806,000

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Margin21.07%20.86%20.31%21.92%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%14.64%9.98%9.00%9.00%

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Net Income$751,391$667,916$642,372$728,004

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Margin12%10%8%8%

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EPS$0.52$0.47$0.46$0.53

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Shares Out1,457,6861,428,5321,399,9621,371,962

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MICROSOFT (Current)Mar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07Jun-07Sep-07Dec-07EFY 2005CY 2006CY 2007CY 2008ECY 2009E

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Revenues$1,173,742$1,252,997$1,329,929$1,501,000$1,567,055$1,575,854$1,580,322$1,702,448$1,671,850$1,697,920$1,767,506$1,831,998$5,257,668$46,057,000$57,571,000$62,753,000$69,655,000

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Y/Y Change33.51%25.77%18.83%13.42%6.69%7.75%11.84%7.61%25.00%9.00%11.00%

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Operating Income$247,363$261,357$270,057$328,948$0$0$0$0$0$0$0$0$0$15,672,000$22,453,000$24,474,000$27,166,000

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Margin21.07%20.86%20.31%21.92%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%34.03%39.00%39.00%39.00%

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Net Income$11,866,000$15,717,000$16,887,000$18,744,000

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Margin26%27%27%27%

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EPS$1.17$1.63$1.80$2.06

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Shares Out10,178,0009,669,0009,379,0009,098,000

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MICROSOFT-YAHOO (Pre-Cost Synergy)Mar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07Jun-07Sep-07Dec-07EFY 2005CY 2006CY 2007CY 2008ECY 2009E

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Revenues$1,173,742$1,252,997$1,329,929$1,501,000$1,567,055$1,575,854$1,580,322$1,702,448$1,671,850$1,697,920$1,767,506$1,831,998$5,257,668$52,482,679$64,540,274$70,753,000$78,655,000

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Y/Y Change33.51%25.77%18.83%13.42%6.69%7.75%11.84%7.61%22.97%9.63%11.17%

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Operating Income$247,363$261,357$270,057$328,948$0$0$0$0$0$0$0$0$0$16,612,966$23,148,413$25,185,989$27,972,000

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Margin21.07%20.86%20.31%21.92%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%31.65%35.87%35.60%35.56%

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Net Income$12,617,391$16,384,916$17,529,372$19,472,004

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Margin24%25%25%25%

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EPS$1.08$1.48$1.74$1.99

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Shares Out11,635,68611,097,53210,079,0009,798,000

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EXPECTED COST SYNERGY$1,000,000

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MICROSOFT-YAHOO (Post-Synergy)Mar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07Jun-07Sep-07Dec-07EFY 2005CY 2006CY 2007CY 2008ECY 2009E

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Revenues$1,173,742$1,252,997$1,329,929$1,501,000$1,567,055$1,575,854$1,580,322$1,702,448$1,671,850$1,697,920$1,767,506$1,831,998$5,257,668$52,482,679$64,540,274$70,753,000$78,655,000

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Y/Y Change33.51%25.77%18.83%13.42%6.69%7.75%11.84%7.61%22.97%9.63%11.17%

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Operating Income$247,363$261,357$270,057$328,948$0$0$0$0$0$0$0$0$0$16,612,966$23,148,413$25,185,989$28,972,000

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Margin21.07%20.86%20.31%21.92%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%31.65%35.87%35.60%36.83%

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Net Income$12,617,391$16,384,916$17,529,372$20,472,004

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Margin24.04%25.39%24.78%26.03%

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EPS$1.08$1.48$1.74$2.09

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Shares Out11,635,68611,097,53210,079,0009,798,000