1. IBM, Microsoft, Sun Microsystems, HP, & Apple Bion Porzio Steve Lewis Erin Garcia May 16, 2007

2. Presentation Overview Dot.com “bubble burst” of 2000 Dot.com “bubble burst” of 2000 Company information Company information How each IT company has fared since How each IT company has fared since Question for the class Question for the class

3. Dot.com Bubble Economic bubble lasting from 1995-2001 Economic bubble lasting from 1995-2001 Value increased in Internet and technology stocks Value increased in Internet and technology stocks Rise of “dot.com” businesses Rise of “dot.com” businesses Stock prices, individual speculation, venture capital all increased Stock prices, individual speculation, venture capital all increased Companies focused on market share, investment and future promise; not profitability Companies focused on market share, investment and future promise; not profitability “Bubble burst”- failure of dot.coms, recession “Bubble burst”- failure of dot.coms, recession

4. International Business Machines Corporation (IBM) Founded: 1889 Founded: 1889 Market Capital: $157.36 Billion Market Capital: $157.36 Billion Share Price: $105.98 (May 11, 2007) Share Price: $105.98 (May 11, 2007) Last Annual Earnings: $11.9 Billion Last Annual Earnings: $11.9 Billion Last Annual Revenues: $91.4 Billion Last Annual Revenues: $91.4 Billion P/E: 16.92 P/E: 16.92 Main Products: hardware, software, consulting services, hosting services, infrastructure services Main Products: hardware, software, consulting services, hosting services, infrastructure services Employees: 355,766 Employees: 355,766 Since Bust: Not hurt, market leader in services because of previous reorganization Since Bust: Not hurt, market leader in services because of previous reorganization

5. IBM 10 year stock price http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=US%3AIBM http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=US%3AIBM

6. Apple Inc. Founded: 1976 Founded: 1976 Market Capital: $94.03 Billion Market Capital: $94.03 Billion Share Price: $108.74 (May 11, 2007) Share Price: $108.74 (May 11, 2007) Last Annual Earnings: $2.4 Billion Last Annual Earnings: $2.4 Billion Last Annual Revenues: $19.3 Billion Last Annual Revenues: $19.3 Billion P/E: 34.41 P/E: 34.41 Main Products: Computer hardware, software, consumer electronics Main Products: Computer hardware, software, consumer electronics Employees: 17,787 (full-time), 2,399 (temporary) Employees: 17,787 (full-time), 2,399 (temporary) Since Bust: Ipod and Itunes saved company, stock soared, needs to continue to grow Since Bust: Ipod and Itunes saved company, stock soared, needs to continue to grow

7. Apple Inc 10 year stock price http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=AAPL http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=AAPL

8. Hewlett Packard (HP) Founded: January 1 st, 1939 Founded: January 1 st, 1939 Market Capital: $121.08 Billion Market Capital: $121.08 Billion Share Price: $45.24(May 12, 2007) Share Price: $45.24(May 12, 2007) Last Annual Earnings: $6.5 Billion Last Annual Earnings: $6.5 Billion Last Annual Revenues: $91.7 Billion Last Annual Revenues: $91.7 Billion P/E: 19.4 P/E: 19.4 Main Products: personal computing and other access devices, imaging and printing-related products and services, enterprise information technology infrastructure and multi- vendor customer services Main Products: personal computing and other access devices, imaging and printing-related products and services, enterprise information technology infrastructure and multi- vendor customer services Employees: over 140,000 people in 178 countries Employees: over 140,000 people in 178 countries Since Bust: PC segment is booming (pushed Dell out as #1 PC maker), Different from competitors in terms of what they offer. Since Bust: PC segment is booming (pushed Dell out as #1 PC maker), Different from competitors in terms of what they offer.

9. HP 10 year stock price http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=HPQ&CP=0&PT=10 http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=HPQ&CP=0&PT=10 http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=HPQ&CP=0&PT=10 http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=HPQ&CP=0&PT=10

10. Microsoft Founded: 1975 Founded: 1975 Market capital: $296 billion Market capital: $296 billion Share price: $30.95 Share price: $30.95 Last annual earnings: $12.6 billion Last annual earnings: $12.6 billion Last annual revenue: $44.28 billion Last annual revenue: $44.28 billion P/E: 22.32 P/E: 22.32 Main Products: Microsoft Windows operating system, Microsoft Office suite, Microsoft Servers, Xbox. Main Products: Microsoft Windows operating system, Microsoft Office suite, Microsoft Servers, Xbox. Employees: 71,172 Employees: 71,172 Since Burst: Grew dramatically in 1990’s. Presence around the world allowed them to recover nicely from the burst. In 2001 released Windows XP which helped in transition to overcoming the bust and into the millennium. Since Burst: Grew dramatically in 1990’s. Presence around the world allowed them to recover nicely from the burst. In 2001 released Windows XP which helped in transition to overcoming the bust and into the millennium.

11. Microsoft 10 year stock price http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=MSFT http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=MSFT

12. Sun Microsystems Founded: 1982 Founded: 1982 Market capital: $18.2 billion Market capital: $18.2 billion Share Price: $5.11 Share Price: $5.11 Last annual earnings: -$157 million Last annual earnings: -$157 million Last annual revenue: $13.87 billion Last annual revenue: $13.87 billion P/E: NA P/E: NA Main Products: UNIX Computer servers, workstations, storage, Java-based software and services. Main Products: UNIX Computer servers, workstations, storage, Java-based software and services. Employees: 38,600 Employees: 38,600 Since Burst: Pre-burst: Dramatic growth in all areas. 2001 burst hit them hard. Relied heavily on hardware sales. Repeated layoffs and consolidation of manufacturing operations. Linux servers gained popularity because of the substantially lower expenses due to the open-source software and helped in recovery. Since Burst: Pre-burst: Dramatic growth in all areas. 2001 burst hit them hard. Relied heavily on hardware sales. Repeated layoffs and consolidation of manufacturing operations. Linux servers gained popularity because of the substantially lower expenses due to the open-source software and helped in recovery.

13. Sun Microsystems 10 year stock price http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=US%3ASUNW http://moneycentral.msn.com/investor/charts/ch artdl.aspx?Symbol=US%3ASUNW

14. Future Implications Dotcom Bubble burst (2001) Dotcom Bubble burst (2001) Resulted from public bubble funded by Wall Street.Resulted from public bubble funded by Wall Street. Immense initial public offerings created a gullible public whose money propped up companies that should have never been in business.Immense initial public offerings created a gullible public whose money propped up companies that should have never been in business. Web 2.0 Explosion Web 2.0 Explosion Resulting from a private bubble financed by venture capital.Resulting from a private bubble financed by venture capital. Venture capital investments are small in comparison.Venture capital investments are small in comparison. Current business model is “build to flip” – start a small company and sell it to the highest bidder.Current business model is “build to flip” – start a small company and sell it to the highest bidder.

15. Questions Now that you have a better understanding of these particular companies: Now that you have a better understanding of these particular companies: which company listed above would you invest in for the next ten years if you had $100,000 and left it in one company for a decade without taking it out? Why?which company listed above would you invest in for the next ten years if you had $100,000 and left it in one company for a decade without taking it out? Why?