1. Is Carl Icahn Buying the Wrong Stock?
October 25, 2013
Microsoft Corp. NASDAQ: MSFT

2. Disclosure!
Longboard
Asset
Management,
LLC
(“Longboard”)
is
an
investment
advisor
to
funds
that
are
in
the
business
of
buying
and
selling
securi>es
and
other
financial
instruments.
Longboard
currently
has
a
long
posi>on
in
MicrosoB
Corpora>on
(“MicrosoB”)
common
stock.
We
do
not
own
any
op>ons
on
MicrosoB
common
stock.
Longboard
will
profit
if
MicrosoB
stock
increases
in
value
and
will
lose
money
if
it
decreases
in
value.
Longboard
may
change
its
views
about
or
investment
posi>on
in
MicrosoB
at
any
>me
for
any
reason
or
for
no
reason.
Longboard
may
buy,
sell,
cover
or
otherwise
change
the
form
or
substance
of
its
MicrosoB
investment.
Longboard
disclaims
any
obliga>on
to
no>fy
the
market
of
any
such
changes.
The
informa>on
and
opinions
expressed
in
this
presenta>on
(the
“Presenta>on”)
is
based
on
publicly
available
informa>on
about
MicrosoB.
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recognizes
that
others
may
disagree
with
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analyses,
conclusions
and
opinions.
The
Presenta>on
includes
forward-­‐looking
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es>mates,
projec>ons
and
opinions.
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es>mates,
projec>ons
and
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prove
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substan>ally
inaccurate
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subject
to
significant
risks
and
uncertain>es
beyond
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control.
Although
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believes
the
Presenta>on
is
substan>ally
accurate
in
all
material
respects
and
does
not
omit
to
state
material
facts
necessary
to
make
the
statements
therein
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misleading,
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makes
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representa>on
or
warranty,
express
or
implied,
as
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accuracy
or
completeness
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wriNen
or
oral
communica>on
it
makes
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respect
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MicrosoB
and
Longboard
expressly
disclaims
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liability
rela>ng
to
the
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or
such
communica>ons
(or
any
inaccuracies
or
omissions
therein).
Thus,
shareholders
and
others
should
conduct
their
own
independent
inves>ga>on
and
analysis
of
the
Presenta>on
and
of
MicrosoB
and
other
companies
men>oned.
The
Presenta>on
is
not
investment
advice
or
a
recommenda>on
or
solicita>on
to
buy
or
sell
any
securi>es.
Except
where
otherwise
indicated,
the
Presenta>on
speaks
as
of
the
date
hereof,
and
Longboard
undertakes
no
obliga>on
to
correct,
update
or
revise
the
Presenta>on
or
to
otherwise
provide
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addi>onal
materials.
Longboard
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undertakes
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commitment
to
take
or
refrain
from
taking
any
ac>on
with
respect
to
MicrosoB
or
any
other
company.
As
used
herein,
except
to
the
extent
the
context
otherwise
requires,
Longboard
includes
its
affiliates
and
its
and
their
respec>ve
partners,
directors,
officers
and
employees.
For Investment Professional Use Only
2

3. !
To
Buy,
or
Not
To
Buy,
That
is
the
Ques3on
3

4. A No Brainer?!
Apple
Buyback
Thesis
§
§
§
§
Carl
Icahn
is
calling
for
a
$150
Billion
Apple
share
buyback
Says
buyback
is
a
“no
brainer”
Thinks
Apple
board
is
doing
a
poor
job
Believes
the
stock
is
undervalued
4

5. Is Carl Icahn Missing Something?!
§ We
believe
Apple
shareholders
over
the
next
5
years
would
be
far
beMer
off
if
Tim
Cook
ignored
Mr.
Icahn
and
instead
bought
$150
Billion
of
MicrosoR
The
Future
of
MicrosoB?
$60
$55
Microsoft: MSFT
?
?
$50
$45
$40
$35
$30
$25
$20
$15
5

6. Apple Value Hinges on 3 Key Questions!
Key
Ques>ons
§
§
§
Does
Google,
Samsung,
Amazon
&
MicrosoR
building
their
own
Android
OS
devices
help
or
hurt
aggregate
Apple
demand?
How
vulnerable
is
iPad
demand
to
more
produc3ve
and
innova3ve
devices?
How
aMrac3ve
are
higher
produc3vity
tablet
devices
which
run
both
Windows
+
Android
to
PC
buyers?
6

7. Why is Tim Cook Afraid of Microsoft?!
If
the
Apple
buyback
is
such
a
“no
brainer”,
why
is
Tim
Cook
so
worried
about
MicrosoB?
“Our
compe33on
is
confused.
They’re
turning
tablets
into
PCs
and
PCs
into
tablets.
Who
knows
what
they’re
going
to
do
next?”
Tim
Cook
just
dedica3ng
his
key
note
speech
to
talk
about
a
compe3tor.
If
MicrosoR
is
confused
and
irrelevant,
why
is
Apple
spending
so
much
3me
talking
about
the
Windows
8
strategy
during
their
own
product
launch?
7

8. Same Picture, Different Views!
MicrosoB
Percep>on
=
Confused
MicrosoB
Reality
=
Success
8

9. Microsoft is Out Innovating Apple!
Windows
8
Device
Strategy
§ MicrosoR
Surface
plaaorm
is
a
completely
new
category
of
tablet
devices
§ Delivering
the
most
produc3ve
and
innova3ve
compu3ng
devices
on
the
planet
§ PC
users
want
a
unified
new
experience
which
delivers
Android
+
Windows
on
one
device
§ Leveraging
Android
is
the
future
of
MicrosoR
device
strategy
and
Tim
Cook
knows
that’s
a
serious
problem
for
Apple
Will
Surface
3
Include
Android?
9

10. Apple Vulnerable to Competition!
Apple
Threats
§ Fickle
Consumer
Dependence
§ Hit
product
dependent
§ iOS
geeng
flanked
by
Android
§ Dual
Boot
Windows
+
Android
Devices
become
iPad
category
killer
§ Weakness
in
Enterprise
§ MicrosoR
Mojo
is
Back
10

11. Summary!
Mr.
Icahn
has
Right
Idea,
Wrong
Stock
§
§
§
§
We
believe
an
Apple
buyback
is
not
as
much
of
a
no
brainer
as
Mr.
Icahn
thinks
A
large
buyback
does
not
improve
Apple’s
strategic
posi3on
or
hedge
serious
fundamental
business
risks
on
the
horizon
Buying
$150
Billion
of
MicrosoR
stock
gives
Apple
economic
exposure
to
enterprise
market
dominance,
hedges
fundamental
business
risk
and
provides
a
beMer
long
term
value
and
risk
reward
use
of
cash
for
Apple
shareholders
If
Mr.
Icahn
truly
cares
about
maximizing
long
term
value
for
Apple
shareholders,
he
should
be
pitching
MicrosoR
stock
to
Tim
Cook
11

12. About Longboard!
An
alterna>ve
approach
to
naviga>ng
the
investment
ocean
Longboard
is
an
asset
management
firm
specializing
in
trend
following
strategies.
The
firm’s
principals
have
been
inves3ng
in
and
researching
trend
following
strategies
since
the
late
1990s.
We
manage
both
private
investment
funds
and
mutual
funds
applying
our
trend
following
investment
style.
“Trends
come
like
a
series
of
ocean
waves,
bringing
the
high
3de
when
things
are
good
and,
as
condi3ons
recede,
the
low
3de
appears.
These
trends
come
unexpectedly,
unpredictably,
and
they
have
to
be
weathered
with
temperance,
poise,
and
pa3ence-­‐
good
or
bad.”
Jesse
Livermore,
Reminiscences
of
a
Stock
Operator
12

13. Contact Us!
To
learn
more
about
Longboard,
connect
with
us
at:
info@longboard-­‐am.com
602.910.6961
2355
East
Camelback
Road,
Suite
750
Phoenix,
Arizona
85016
www.longboardmutualfunds.com
www.longboard-­‐am.com
For
media
inquiries,
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contact:
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longboard@dukaspr.com
212.704.7385
13