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Government Exhibit P0841-R

From: Tivanka Ellawala
Sent: Thursday, December 04, 2003 1:09 PM
To: Bill Gates; Steve Ballmer; Eric Rudder, Doug Burgum
Cc: Cindy Bates; Dennis Durkin; Brian Roberts; Dave O'Hara (MBS); Dave Dadoun (LCA)
Subject RE: Project Constellation Materials

Attached are the discussion materials for the meeting with Sagittarius tomorrow. We have also included additional detail in a separate document for internal review only.

We will have hard copies for Bill and Steve with Christine and Dorothy.

Project
installation 12-05

Project
Dinstellation 12-05 De

-Tiv

Tivanka Ellawala
Corporate Development
Microsoft Corporation

425.705.4775
tivankae@microsoft.com <mailto:tivankae@microsoft.com>

From: Tivanka Ellawala
Sent: Monday, December 01, 2003 8:25 PM
To: Bill Gates; Steve Ballmer; Eric Rudder; Doug Burgum
Cc: Cindy Bates; Dennis Durkin; Brian Roberts; Dave O'Hara (MBS); Dave Dadoun (LCA)
Subject Project Constellation Materials

We have enclosed the materials we discussed with Steve, Eric and Doug last week:

  • A summary backgrounder deck on Sagittarius culled from the various presentations we have previously discussed

  • Additional background information which includes two research reports, one from Goldman that is positive and comprehensive, and one from Dresdner, the only analyst with a "sell" on the company. Also included is a Gartner report on Netweaver.

  • A separate shorter deck that focuses just on an analysis of a possible combination, including customer benefits, synergies and accretion/dilution (see "Project Constellation 12-01 Analysis.ppt"). The first few slides could be shared with Sagittarius. We have also included additional financial detail and supporting information which most likely you wont want to share at this point.

REDACTED

MS-OPCID 000000019497
HIGHLY CONFIDENTIAL

We have time on the calendar to discuss this on Wednesday at 3:00 pm. Let us know if you want a broad group for that or if you would prefer to pass along any additional comments via email.

<< File: Sagittarius Backgrounder ll-28.ppt >> <<File: SAP (DRKW 10 17 03).pdf >> <<File: GoldmanReport.pdf >> <<File: GartneronNetweaver.pdf >> << File: Project Constellation 12-01 Analysis.ppt>>

-Tiv

Tivanka Ellawala
Corporate Development
Microsoft Corporation

425.705.4775
tivankae@microsoft.com <mailto:tivantae@microsoft.con)>

MS-OPCID 000000019498
HIGHLY CONFIDENTIAL

Project Constellation

Discussion Materials

December 5th, 2003

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The Future: How a Combination Would Benefit Customers

  • Front end users better able to communicate with and use backend data
    • Great Office integration for customers (through open, documented interfaces)
      • E.g., view business analytics through Excel
      • Seamless workflow and data exchange through InfoPath, etc
    • More powerful CRM functionality

  • Combined efforts in business applications under Sagittarius brand and organization
    • REDACTED
    • MBS integration (ERP, CRM, etc) with Sagittarius enterprise solutions for improved "hub" and "spoke" scenarios
    • Ultimately, seamless roadmap for growing customers
    • Best of SMB offering and strengthened SMB channel- Creates critical mass to attract and benefit ISV/partner ecosystem
      • Extend "common denominator" vertical expertise into current SMB products to facilitate growth of ISV/SI ecosystem

  • Together create unified next generation service level-oriented enterprise computing platform; unified portal, BI, app. server and programming model
    • Enhanced offerings for customers of all sizes

  • Continued cross platform support for Sagittarius applications

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Revenue Synergies Summary

Portal / B1 Desktop Related
  • New "Sagittarius CAL" opportunity for enabling Office user base to access Sagittarius Back Office functionality (Portal/BI, ERP, CRM and SCM systems)
CRM Related
  • Incremental Sagittarius CRM opportunity when coupled with new Office functionality (ability to better monetize stand alone Sagittarius CRM)
Small and Medium Business Related
  • Improved integration with Sagittarius enterprise solutions that result in increased mid-market value proposition (enterprise "hub" and mid-market "spokes")

  • Incremental revenue opportunity from monetization of Sagittarius vertical content in MBS solutions
SQ1 Server "[unreadable text]"
  • Incremental SQL share of Sagittarius implementations

  • Acceleration in SQL server sales growth resulting from broader CIO acceptance in Enterprise segment
Windows Server "[unreadable text]"
  • Incremental Windows server share of Sagittarius implementations

  • Acceleration in Windows server sales growth resulting from broader CIO acceptance in Enterprise segment

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Cost Synergies Summary

Research & Development
  • Consolidation of Portal, BI and App. Server efforts (unified development platform)

  • Consolidation of Business One, All in One and MBS product development efforts; Utilize best of each
Sales & Marketing
  • Consolidation of SMB channel building and marketing efforts
General & Administration
  • Corporate overhead and expense reduction (mitigated by assumption of large corporate presence in Germany)

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Synergies Summary -- Mensa Fiscal Year
($ in millions) Revenue Synergies : Operating Margin Synergies

REDACTED

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Exchange Ratio Analysis

The Sagittarius share price rally since October has taken the Sagittarius/Mensa market exchange ratio to a ~50% premium to its three-year average, and to a 3 year hi

07/26/2003 12/01/2003 % Change Last 3 Years 4.048x
Mensa Share Price $26.89 $25.84 (3.9%) Last 2 Years 3.965x
Sagittarius Share Price € 99.50 € 131.00 31.7% LTM 4.219x
$/€ Exchange Rate $1.154 $1.196 3.7% Last 90 Days 5.172x
Exchange Ratio 4.270x 6.065x 42.0% Last 30 Days 5.904x

Exchange Ratio Analysis Graph

Note: Sagittarius' stock price is in € and is converted to $ based on the $/€ spot rate of the day

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HIGHLY CONFIDENTIAL

Project Constellation

Discussion Materials Detail--For Internal Use Only

December 5th, 2003

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Sagittarius Price to Synergy Sensitivity
($ in millions, except per share data)

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Synergies Summary - Mensa Fiscal Year (same as pg. 4 of external deck)

($ in millions) Revenue Synergies : Operating Margin Synergies

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Synergies Detail - New Portal / BI Related SAP CAL

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Synergies Detail - CRM and SMB Related

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Synergies Detail - Database Related

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Synergies Detail - Windows Server Related

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Synergies Detail - Cost Related

REDACTED

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HIGHLY CONFIDENTIAL