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Hannah Kradenpoth10-K CEO Letter

CLASS PROJECT DO NOT TRADE

Dear Shareholders, Customers, Partners, and Employees,

It is a pleasure to write this letter to you as the

third CEO in Microsoft’s history. When I accepted this

position, I saw an opportunity for Microsoft to change the

world with technology and empower people and

organizations to do amazing things.

As technology has evolved over the years, I

believe this is a landmark moment for our company. Cloud and mobile technologies are

continuing to change the way people work and play. Each year more and more people are

connected to Internet-enabled devices. Even though the technology will be there, it is our

mission to facilitate the technology to determine the true potential of individuals, teams, and

organizations.

What We’re Doing

We believe that Microsoft has set the standard in becoming the productivity and platform

company for this mobile and cloud world. We are working to empower every person and

organization to do and achieve more through building digital work that is supported by the Cloud

Operating System, Device Operating System and Hardware platforms.

How we Plan to Achieve This

To achieve this, we focused on this goal in the last fiscal year. We drove our mobile

strategy by acquiring Nokia’s Devices and Services business, which created and expanded

Microsoft’s devices including Nokia phones, Xbox hardware, Surface, Perceptive Pixel products,

and accessories. In addition, we announced Office for iPad, which created 35 million downloads

of Microsoft Office. By offering Office for iPad, it became one of the most popular applications

in the app store.



With the introduction of the Windows 8.1 phone we announced Cortana, a personal

assistant. Cortana learns from users and provides information and assistance to better the mobile

experience. Aside from Cortana we introduced the Surface Pro 3. The Pro 3 is redefining tablets,

and allows users to replace their laptop. Lastly, we did

something to make Windows licenses available to and

original equipment manufacturers building devices

smaller than nine inches. Microsoft provided licenses

for zero dollars. This will allow consumers to obtain

low-cost devices with Microsoft software included.

Consumers can now experience this innovation at a low-

cost. In addition to building on devices and licensing we

continued to build onto The Cloud.

Fiscal Year Financial Overview

Regardless of an eventful year introducing new products and services, Microsoft

continued to show strong results. We displayed revenues of more than $86 billion, gross margin

of almost $60 billion and operating income of $27.8 billion. Diluted earnings per share increased

$0.08 this fiscal year from $0.53 to $0.62. In addition, and we returned more than $15.7 billion

in cash to our shareholders.

Looking Forward

Looking ahead, we have unique and full product and feature list that will allow Microsoft

to flourish in this mobile and cloud-first world. Recently we launched Delve, an Office 365

cloud-based service that allows users to see relevant documents, data, and artifacts straight from

the cloud. In addition, we announced our intention to acquire Mojang. Mojang is a Stockholm

based game developer who created “Mincraft,” a game that is compatible on PC, console, tablets,

and mobile devices. We are also working to launch a Skype Translator. This will allow users to

have different languages translated and has the potential to break down language barriers in

communication. The most important product we plan to launch in the upcoming year is Windows



10. We will be offering the Windows 10 update to consumers at no cost. Our hope by offering

the update to users for free, users will have the ability to do and create more.

As CEO, I am dedicated to making sure Microsoft makes the most of this landmark time.

I understand it is equally important to continue to evolve our culture by creating more innovative

products and features, focusing on leading indicators, and continuing to ensure that Microsoft

creates innovations for people, groups, and companies to do great work. Continuing to reinvent

efficiency and building platforms, I believe we can empower each person on the planet to do and

achieve more.

Thank you for your continued support,

Satya Nadella Chief Executive Officer

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