CHRIS LIDDELL: Thanks a lot. As you know, each year we generally speaking have a new speaker come along. And this year it was Stephen Elop who hasn't spoken to you before. And I have a standing bet with any new speaker that it is impossible for them to make you laugh. And Stephen actually claims that during the Qamp; session he saw 20 to 25 people laughing at one of his responses. So can I just get a quick show of hands, because there's a bit of money at stake here, and you're all analysts -can I get a quick show of hands? Who laughed at anything that Stephen Elop said during the Q&A session? Okay, zero. (Laughter.) Thank you. Okay, that helps me enormously. The good news also was that I went double or nothing that I could make you laugh. (Laughter.)

So let me start by breaking the first rule of presentations by starting with my least favorite chart that I'm going to show you over the next 20 to 25 minutes, and that is the share price graph from the last year. And it's obviously my least favorite because it's an incredibly frustrating chart for us internally, and in particular when you look at the year we just had and what we think we have achieved to drive shareholder value. And you could say the good news is that we've performed, as you can see from the start of the year to the end of the year, broadly speaking, in line with indices, so it's been as much a year of market movement as it has Microsoft movement. But clearly that's not a satisfactory level of success. We have to look at how we can differentiate, both on an absolute and a relative basis. And it's doubly frustrating in the sense that if you look at it it's a year of two halves. Quite clearly in the first half of the year we did manage to differentiate -differentiate both in an absolute sense -we're up about 20 percent for the year -and in a relative basis -the index was broadly flat for the first half of the year. But in the second half of the year we didn't.

So against that backdrop I want to go back to the framework that I've used over the last couple of years to tell you about how we think we are driving shareholder value. That isn't represented in the share price graph, but nevertheless it continues to be the things that we are committed to do which we believe is going to drive shareholder value over the next few years.

And in doing that I'm going to take a framework which you all helped me with. And you'll recall a couple of years ago I talked to a number of you and said, “What are the things that you really want to hear about from us both over the course of the year and at the Financial Analysts Meeting that you think are the big drivers of the value inside the company?” And hopefully you recognize this framework certainly from last year, and I've talked to a number of you about it responses. And I've bucketed the responses that you gave me into essentially seven different buckets: What is our expectation of growth rate in our core businesses -Client, Server and Tools, Microsoft Business Division? What's our strategy to win online? When are we going to turn the Entertainment and Devices Division into profitability? What are we going to do with all this cash that we're generating? What's our margin structure look like going forward? What's the investment discipline look like inside the company? And how do we communicate to you what we are doing and how we are thinking?

So I want to go through each of these in turn and talk about the last 12 months as I see it and give you my perspective on the internal scorecard on how we've done and talk a little bit about how I see it going forward.

Before I do that, though, let's just start with the report card. So if you like, if those are the underlying balance scorecard, what do the actual numbers look like? And when you look at it relative to the guidance that I gave you at this time last year it's been a fabulous year. So we've guided 9 to 10 percent revenue growth in Client -we generated 13; 14 to 15 percent in Server and Tools -we generated 18; MBD, 11 to 12 -we generated 15; Online Services 10 to 13 -we generated 32 -and literally in this case we had aQuantive as an acquisition as well, but their numbers would have been still ahead even without that; E&D 10 to 19 percent -we generated 34; total revenue of 11 to 13 percent, and we generated 18. Now, I'm not going to read every number that pops up on every slide, but those are fabulous numbers. Those are fabulous numbers for any company of any size in the environment that we have had for the last 12 months. For a company of our size to grow 18 percent at the top line on about a $60 billion base is a fabulous result -and in particular when we went into the year thinking we would generate 11 to 13.

In terms of how that went down to the bottom line, operating income I said to you a year ago we thought we could grow 12 to 15 percent to somewhere between $22.2 and 22.7 billion. We grew at 21 percent to 23.9 (billion dollars). In earnings per share we thought we would come in at $1.69 to $1.73. We beat that by 14 to 18 cents. Admittedly we missed the fourth quarter by one cent, and I want to come back to that. But if you look at the context of the year it was an incredibly good financial performance.

So I drop down a level and say against that financial performance how did we do in the seven buckets that I think are significant in driving long-term shareholder value. Let's start with the growth rate in the core business. So this is the combined revenue growth rate in Client, MBD and Server and Tools put together -what I describe in this case as the core business. And the tremendous thing from my point of view -and you heard the business leaders talk about their individual results -is that we've not only been able to achieve around a 12 percent compound annual growth rate over the last five years, including guidance for next year, assuming we achieve it at the rate we talked about -but we have been able to increase and then hold in every one of those levels as well. So these are businesses where if I talked to you in fiscal year '05 and said we can drive these at 12 percent CAGR -and as I'll show you later at a margin structure which is intact over those five years -I think all of you would have said, “Thank you, I'll take that.”

So I believe we have demonstrated the ability, at least in this part of the business, to what I would describe beat the lure of large numbers, to grow the business at 14 percent in fiscal year '07, 15 last year, and 14 last year -again remembering that last fiscal year and next fiscal year probably have the worst economic environment that we are likely to face, certainly in the short term.

So a good result in terms of growth rate in core businesses.

In terms of what you can expect from us going forward, again you heard Kevin Turner in particular and the other business leaders talk about the opportunities that they saw. If I simplified it into two key messages, we have a fabulous suite of products, we have just gone through the biggest product wave that we have ever had as a company. We now have a sales force going out there and selling those products. So we don't have the environment that some of you are used to from a decade ago where we have a Windows 95 release, there's a huge spike. What we have is a mess of portfolio products where the growth rate is layered in over a period of time. And most of my charts normally you can simplify and you make it easy to see. In this case it's the number of products that you get by the sense of that chart that gives you some sense of our opportunity, in particular in the enterprise space, that the sales force has to go out there and sell. That's one dimension, breadth of products.

The other dimension is clearly breadth of geography. What I'm showing you in the right-hand chart is the width is the percentage of revenue, the height is the growth rate in fiscal year '08. So we grew 18 percent as a company overall. The U.S., which represents just over a third of our revenue, grew at 15 percent. Remember a lot of people think we're in a recession at the moment. We grew in the U.S. at 15 percent in fiscal year '08. The mature markets -Europe for example, grew at 16 percent -about the same -that represents about 50 percent of the business. And emerging markets -the Russias, China, BRIC countries, for example, grew at 35 percent, and that represents about 15 percent of the revenue. You do a weighted average of that and you get 18. So it wasn't one country, it wasn't one product, it wasn't one release that generated the 18 percent revenue. It was an incredible spread of revenue across a series of business, a series of products and a series of geographies with essentially virtually no weak spot in any one of them.

So I'm working my way around the circle that you saw at the start. So that's growth rate in our core businesses. Clearly the story in online is tougher. That's the business where in terms of the progress we have made in driving shareholder value in the seven areas it's the one with the least tangible results. It's not to say there hasn't been progress, because there has been in a number of areas. But it's the one where clearly it's the most interest going forward and clearly where if you like the opportunity is still vast -we still believe, as Steve talked about, there is a mess of hundreds of billions of dollars of opportunity there, but it's the one to which at this stage we have made the least tangible progress in terms of driving towards that value.

The four big areas that we think about in terms of search, information content, communications, social networking and ad platform -we have initiatives in all of those, we have strategies in all of those, we have metrics for success. The overall metric for success is called profitability. The next level of metric for success is called revenue growth, because we are overlying a huge amount of fixed cost. In order to get to profitability we need to drive the revenue at a certain rate. We managed to do that, as I showed you in the first chart, in the mid-30s last year. So we're achieving success there. And in each of the four areas we have key metrics -the sort of thing that I know you've asked for over time -and submetrics. So in search obviously the percentage of query share -something we get from third parties -is one thing you can look at. Information content, the percentage of page views that we have worldwide -again, there's third-party data on that. Communication -the percentage of minutes, again globally, that people spend on our sites. And ad platform -the percentage of growth advertising spend that goes through our platform in one form or another.

So there are metrics to a large extent that you can get externally to look at the progress that we make. And then below that we have internal metrics, things like our Windows Live IDs which drive that as well. So we have strategies in place, we have metrics in place, and we have obviously investments in place. But as I come back to you it's the area where if you look across the balanced scorecard it's the one where we have the most opportunity, the least tangible results so far.

Yahoo! A few comments on Yahoo!. Why Yahoo!? What changed? And view going forward.

Clearly, as Steve said, this was a tactical way of driving progress in the key areas that we see. We went into the acquisition totally genuine. We believed that it was a good thing for us to combine as companies, and we believed that we offered incredibly good value to the shareholders of Yahoo!

What changed? We took the view, and we still take the view, that Yahoo! is essentially a declining asset. We made an incredibly generous bid with premium because we were looking for speed. Speed was, as I am sure you all will agree, the last thing that we actually managed to achieve with the acquisition. So what you have is a situation where you have an expectation from a vendor that looks like this, an expectation from a buyer that looks like this -and you see a declining parallel path. It's ironic now that we have a situation where the vendor is happy to sell to us at a price something like what we originally offered, so if you like that path was intersected where we started -and having rejected that and said it was substantially undervalued six odd months ago. What changed is time passed. Time passed and value eroded. And we don't have a situation now where the initial offer that we made makes any sense any more from economics.

And I get the question -and I got it as recently as lunch -is, you know, you guys need this for your online strategy. There's no way that you can get the sort of boost that you get from Yahoo! by doing things organically. Yes. Does that mean that we should pay anything? Does that mean that we should pay $31? $33? $40? -or whatever number you like? There has to be some economic justification for acceleration at the end of the day time. And if time passes and the value of what we are buying erodes for one reason or another, it stops making sense for us to do it.

In terms of the view going forward, I think the chances of us buying Yahoo! on a full acquisition basis are so small that they are essentially negligible. I never say never. Who knows in years to come. But a full acquisition certainly in the timeframe and sort of economics that we had previously thought essentially makes no sense.

We still have the possibility of doing a search transaction, which we think makes some economic sense. If I had a worry it's the parallel paths continue, and about the time Yahoo! decides that search deal makes sense for them is probably about the time that we have committed to our own plan so much that it may no longer make sense for us. But we shall see.

Entertainment and Devices profitability -a very easy and very good story. We committed to you a couple of years ago -this is the one chart that I just totally replicate from what Robbie presented a couple of years ago, basically, where he said, "I believe that we can drive the business to profitability in fiscal year '08." Those of you who were there will remember this chart, hopefully. The black dot on the bottom right is essentially profitability, and it's fabulous that he's not only driven profitability but going into the year he's driven more profitability than we thought was possible. He talked about what the challenges are in the four different businesses, challenges and opportunities. Overall, from my perspective anyway, from profitability, we are now talking about sustained profitability and how we drive that going forward. We're no longer talking about the ability to be profitable.

Cash flow. We talk about earnings per share, we talk about operating income, we talk about revenue. Those are the three metrics from my point of view. But clearly cash flow is an important issue and I know a number of you look at that as one of the key metrics. The great news from my point of view is it's another good story. From cash flow point of view, cash flow from operations grew 21 percent last year. So again, in an environment that was relatively tough we managed to drive cash flow up by about 21 percent to clearly a record of $21.6 billion.

In terms of what we did with that, it was a balanced organic versus inorganic approach to how we used the cash. We spent just over $3 billion of CAPEX. I made the point last year -I'll make it again: CAPEX is increasing for us, but it is still, relative to most businesses, a very small proportion of our free cash flow.

Acquisitions were $8.1 billion -clearly aQuantive boosted that. We did 24 acquisitions last year; that's around two a month. And even though we did some very large ones, the median size for those was $45 million. So we still do a lot of relatively small acquisitions you probably don't see a lot of. Two a month -you probably only see one a quarter that hits your radar screen. We see acquisitions as a fundamental way of driving growth.

Now, it hurts our earnings, and I want to come back to margin structures and expenses. We don't call out any acquisition-related costs, unlike a lot of companies. We basically expense them all. That hurts our short-term earnings. We think it's the right thing to do. We think it's the right thing to do in terms of driving growth to make the acquisitions. And you can presume that it will continue to be a way that we drive growth in the future.

Those of you who like sort of our internal ways in terms of external ways -money that you saw more directly -dividends- we paid out around $4 billion in dividends last year, and $12.4 billion worth of buybacks.

But if I focus on buybacks, initially, this is the pattern for the last five years. Last year was, by the standards of the previous couple years, a reasonably quiet year. We only did -only- in the vertical column -is $12 billion of buybacks. Two reasons for that. One is in '06 and '07 we were getting down to a level of cash that we felt more comfortable and sustainable, so if you like there was a catch-up. And, secondly, whilst we were contemplating the Yahoo acquisition, in particular in our third fiscal quarter, we were building cash in anticipation of potentially needing that for a full acquisition. With that going away we went back into the market and bought $5 billion of shares in the fourth quarter. Good news from my point of view -the only good news from the first frustrating chart is our shares and our ability to buy back shares has become even more attractive and from PE multiple -I believe now our PE multiple is probably the lowest it's ever been in the history of the company. So the buying opportunity, at least from an internal point of view, makes more sense than it ever has.

In terms of dividends, it's a slightly different pattern. We're trying to get a more predictable, steady, balanced dividend. I know some of you would like to see this chart with a big hockey stick upwards to get to a more traditional industrial yield. What from our point of view predictability and increase is probably more the drivers of our mentality. And particularly now with the share price, if I had a marginal dollar of cash I would spend it on a buyback, not on an increased dividend. I know they have different disciplines associated with them, but in terms of driving fundamental economics, buyback makes more sense. But you can expect -and this is not our dividend policy statement, but clearly we are trying to build a track record that allows you to anticipate what we might do from a dividend point of view and continue to reward the earnings growth and dividend growth.

Margin structure. So if Entertainment and Devices' profitability was easy, cash flow was pretty easy; margin structure is a more contentious one, and I probably spend 50 percent of my time with you outside of these meetings talking with you about margin structure. I'll say the same thing I say each time, which is you cannot look at the margin structure of Microsoft as one consolidated block. Obviously you can and you do, but it really doesn't make sense. You really have to think about the margin structure in terms of the constituent parts of the company and look at how they are changing. The company is the weighted average of those -okay, that's important -but the individual bits make much more sense to me to look at thinking of the underlying drivers of economics, and the thinking that goes behind that. As I know that, particularly with the increased spending that we had, that we announced in the fourth quarter, you're trying to understand the perspective that we have.

So, again, if I split the business into core businesses, the ones that we're growing as I showed you at 12 percent [indistinct] -Entertainment and Devices and online business -quite different profiles from a margin structure perspective. The core businesses, coming off a 55 percent start, has essentially been rounded to 61 -have been flat over this whole period. Now, I think that is a fabulous result. I'm sure you could say, Can't you drive some larger expansion on these more businesses? I would like to find more businesses in the world that have 61 percent margins and are able to grow 18 to 15 percent. I think this is a tremendous performance.

In terms of E&D clearly getting at profitable, even though the margin structure at 5 percent is relatively modest compared to our core businesses -getting that profitable was a key milestone and a key commitment we made to you.

And online we're on a different phase. We are digging a hole there in terms of the investment that we are putting it. It is a totally different profile. Will it always be negative? No. I can assure you it will not always be negative. The margin structure of the company will improve by virtue of OSB going from negative to positive at some stage in the future, just as it did with E&D. But at the moment, and for terms of guidance, it will be a negative. It will be an investment.

When we think about margins -and this is the critical point, because it's probably the principal diversion about the way that we run the company versus the way that you would like to see us run it -when we think about this we are optimizing for growth. When you think about it -I know a number of you would prefer us to optimize the margin. It's just not the way that we think about the company. It's not the way that we think about driving shareholder value. Clearly you could drive both. That's nirvana. But when we think about the margin structure of the company and we think about it in different parts. We don't think about it and consolidate it. And we think about ways in which we can invest to drive growth. And one of the reasons why we were able to drive fabulous growth last year -18 percent- was the very investments two years ago that you recall that to a large extent the market penalized us for because we invested more than what you were expecting us to do. But there is a tail to that and the tail is we drive revenue growth out of it. So we think about optimizing for revenue growth. We don't think about optimizing for margin. Clearly both are important. Clearly we'd like to drive both over time, but if we had to choose one and optimize for it, it's going to be growth.

Something I have slightly more control over in terms of the capital structure is operating income to earnings per share growth. Great story here. In essence, we continue to have the ability, because of the free cash flow that we generate and because of the fact that we don't have to reinvest very much in capital -our capital is our R&D, which is expensed -we are able to generate earnings per share growth in excess of operating income growth consistently year after year. So what's the proof of that? Fiscal year '06, our earnings per share grew 3 percent faster than our operating income; by 5 percent last year, 5 percent this year, depending on the guidance, low to high, somewhere between 3 and 5 percent. Is that sustainable? It depends obviously on the cash flow, it depends on how we use it -assuming we continue to use it in particular on buyback -that will happen. And the other big variable is the tax rate, which has progressively been working its way down. I won't go into too much detail there, but clearly as we shift our geographic spread offshore, generally to lower-tax jurisdictions, our tax rate goes down and that helps from an earnings-per-share point of view, it helps you from a shareholder perspective.

Investment structure -this is a chart from Craig's -and one of the issues in terms of investment disciplines, how we actually think about making investments -and I know, because I know a number of you ask, you know, Tell us about your MPVs and IRRs and how your models work. And I've worked in a company where you make capital allocations decisions around one-percentage swings of IRRs. So you have all the investment decisions, you line them up -you know, you got a 22 percent return, you got a 21 percent, you got a 20 percent. It fundamentally doesn't work that way here. It doesn't work that way because generally speaking the investments we're making are either extremely successful or they're not. So they are much more 0-1 situations where if they are successful, the IRRs are significant.

So let's take a couple of examples. We went back -because I know there's interest -and just looked at a couple of investments we made. And I didn't cherry-pick these particularly. SQL Server -and we obviously had to make some assumptions about how much R&D was truly SQL versus others, how much value we're going to get out of the business, what sort of incremental margin structure rather than our average margin structure. The IRR of SQL Server life to date is about 101 percent. SharePoint -another good example -IRR of that is around 76 percent. These are businesses where they are successful, and particularly if you overlay it on our cost structure and overlay it on our sales force, are phenomenally successful. There's some zeroes in there, but generally speaking in terms of the portfolio of IRRs they are significant. We are not choosing 10 or 15 percent projects.

The big one, OSB. What realistically IRR could you see out of OSB? It clearly depends phenomenally on how successful we are. And we have done a range of modeling from as, if you like, from as high as sort of 10, 20, 30, 40 percent numbers that Kevin Johnson in last year's FAM talked to you about, to more modest expectations and more modest growth, and looking at how big the hole we think we have to dig from an investment point of view and when we might be successful -some big assumptions in there. The sort of returns that we get go from somewhere in the mid 20s percents to somewhere in the mid 90s. So do we think that's a good investment? Yes, we think that's a good investment. Does it depend on our ability to succeed? It depends exactly entirely on our ability to succeed. It is not the attractiveness of the investment. This is $100 billion plus opportunity. It depends enormously on our ability to succeed as opposed to the math that sits behind it.

And incremental spend. I know a good number of you are concerned about willingness and desire to spend more than what we had originally told you in April. The incremental spend -not probably as high as the average spend -sorry, average IRR in the OSB line -but we think with reasonable assumptions against that backdrop we can generate somewhere between 20s to mid-40s percent IRRs on the incremental $500 million of spend -easy, reasonable assumptions – again, against a backdrop of ability to succeed as much as the basic economics.

So what am I telling you? I'm basically telling you that we think about these things in a structured, disciplined fashion. I can come up with incredibly long models which go through every assumption. Our willingness and ability to succeed will determine what the returns look like. But generally speaking, all of the investments have significantly higher return than virtually I think any other company that I've seen.

Communication. We have done I think a lot of good things in terms of making our senior executives more available to you. Certainly if you go back a few years, this was generally the only day we had any real availability to a lot of the senior management. If you look at a number of the things that we've done -clearly you see me and talk to me on quarterly earnings calls and sell-side conferences. We're doing that one a month -a lot of industry events. Steve and I come out for a midyear review with a number of you in January/February. And we're doing things like our own Vista central Web sites -putting a lot more information electronically. So I feel very good about the big sort of structural parts of communication.

The thing I don't feel good about is a couple of things. One is clearly what happened in the fourth quarter where you feel like we surprised you both on what we spent in the quarter and then what we're going to spend next year. And so I want to put it together as a chart about the way that I think about something like the fourth-quarter surprise in vertical columns on operating expense. And what I've shown here, just in simple formulas -when we allocate capital to people we basically give them a constant dollar budget. They can either spend that or not. They can't spend more of it. Then there are other factors, like foreign exchange, that come in, and then we do acquisitions and other things which have accounting charges during the course of the year. Then I have to make some guidance and judgment about how much we're going to spend. And in essence if you look at quarter one through quarter four, this is how the actual performance racked up relative to the guidance that I gave you in the quarter. So in every one of the first three quarters our field and our business groups underspent -a green arrow up -that means positive result, underspending. On the fourth quarter they spent their budget. Overall for the year they underspent their budget.

FX was a negative in most of the year, certainly in the first three quarters. The good news on FX is we make more on FX gains on revenue than we do in FX on cost. But from an absolute cost number it clearly impacts it.

And then other things come on. We do acquisitions. We do something like Fast, and that impacts in particular because we generally have to write off reasonably higher amounts in the first few months of acquisition. So they come in. But that's something that I describe as uncontrollable from the field and business group point of view.

So this is guidance. We are broadly speaking in line for the first couple of quarters. We're actually better than what we guided to you in the third quarter, and we were worse in the fourth quarter. I know a number of you think that equals a control issue. It doesn't equal a control issue from my point of view. If you want to shoot me, shoot me not so much for the control issue -shoot me for the guidance issue, which is: I thought we would underspend our operating budget in the fourth quarter. We basically spent it. We didn't overspend it. We spent it. So from the communication point of view, I certainly got to take the rap for that, that I need to make and be clear about you on guidance and what moves things as to what the variability might be. But you know a company of this size, in Microsoft you do need to make some judgments, in particular when we continue to give guidance, which I think we should continue to do. But there is no issue from my point of view in terms of people being out there doing reckless spending. That is not an issue in this company. It hasn't been in the last couple of years, from my perspective.

The other thing is when we give guidance -and we're unusual in that we give you guidance before the fiscal year starts. And I'm actually rethinking that, and I'll get some feedback from you over the next six months as to whether we should continue. We do our budgeting in June. June is when we give people the budget that I just showed you on the previous chart. We are one of the few companies -maybe there are no other ones -that give you guidance for the following fiscal year before it even starts. And we make decisions between April, when I give you initial guidance, and July, which impact the amount of operating expense that we have. And I'm not sure whether giving you that guidance actually makes any sense. I know you want it, because you'd rather get it in January or the earlier the better. But we get into this situation, which is crazy from my point of view, that next year is actually a very good year on top of a phenomenal year, but that because we disappointed you relative to what we told you in April you have this perspective that it's going to be a bad year. And it simply isn't. It's going to be, I think, a very credible year if we can grow revenue by 11 to 13 percent, total operating income by 10 to 12, and earnings per share by 13 to 17 -if that's not as stellar a year as the one we just came out of, but again, for a company our size, and the environment that we're going into, I think those are very credible results.

Are they less than what we told you in April? Yes, they're one cent less on an earnings per share than what we told you, and they're less in the operating income to the extent that we're going to spend more in the online in particular than what we told you. Did we make credible sensible decisions between April and July as we went through our budgeting? Yes, we did. Did we have an economic framework that we're working to that we think makes sense over time? Yes. Do I think there is a negative reaction to that? Yes, there is. And that makes me think about the way in which we are communicating to you. But that's something that I really want to talk to you about certainly outside of this forum over the next little while.

In terms of FY '09 guidance, the numbers are here. Clearly I'll stand up in a year's time and talk to you about how we do against that. How do I feel about them? I think it's going to be a reasonably tough year. It's clearly the economic environment is difficult. But against that backdrop we believe that we can drive client revenue at the top double digits again. We believe we can grow Server and Tools 18 to 19 percent, MBD 14 to 15 percent, and our annuity business has been extremely good right throughout the year, so it gives us confidence going into this year. We think we can grow Online Services 18 to 20. It is a tough advertising market out there, and you've seen that in a number of other companies, but nevertheless we believe we can continue to grow it well. And E&D against the backdrop of obviously some pricing changes through last year we think we can keep broadly flat but stay profitable.

So overall double-digit growth at revenue, operating income, and earnings per share alike -a good year in a difficult environment.

So, with that, how do I think about the balanced scorecard for the last year? I think growth rate in core business is fabulous. Growing 14 percent is a tremendous result. I think strategy to win online is yellow at best. Green is good, yellow is okay, red is bad. I think we've made some progress. I don't think that it rose to the level of what you would consider to be tangible in terms of the economic opportunity that we see, but we launched some very good products, we made some progress in some key areas, and we continue to put the foundations for success together. That's a yellow.

Entertainment profitability, we said it was going to be profitable. It was. Return of cash: we increased the cash flow year on year, and we returned more than 100 percent of it either to you or through acquisitions and growth.

Overall margin structure, probably the most contentious. I think it's green. We increased our margin structure last year. You might say it's yellow, because we're going to come down again next year and it will be flat over the course of two years. So it's somewhere between a green and yellow. When you look at the individual parts growing, as I say, the core business is keeping the margin structure flat. I think it's very good. Clearly investing in the online area and what that's doing to the margin structure going forward is something that we have to prove.

Investment discipline, I'm going to say yellow. I feel good about it, but clearly you don't. So I'm going to give us a yellow in terms of our ability to convince you that we are investing money wisely. I'll make the point: the last time we heard this debate was two years ago. I think we've proved over that two years that we can actually use that money wisely and generate revenue. I'm going to give us a yellow until we can prove that again with the money that we're spending next year.

And communication. I feel really good about the things that we've been doing, but clearly when you have a result like the fourth quarter, which was actually a very good result, and guidance which I think is entirely good for next year, and have a negative reaction like we did, we are still not communicating as well as we could with you.

So it's a very good balanced scorecard, but it's not all green. So there's more work to do.

Therefore, in terms of going forward, what can you expect from us? You can expect me to continue to focus on the seven areas here. I know because you give me this feedback that actions speak louder than words. Because I'm a finance guy, what actions mean to me -they mean results. All I can say to you in terms of going forward is having a look at history, if you want to look at actions. I can talk about what we expect to do, but why don't you have a look at what we have actually been able to achieve.

I've taken the chart that Steve put up at the start of the day and put '09 guidance there and have a look at the track record of the company over the last few years. We've been able to drive revenue at 13 percent per annum compound. We've been able to drive operating income at 18 percent per annum compound, and earnings per share 24 percent per annum compound over the course of 7 years. That is a phenomenal result over an extended period of a large space. So if actions speak louder than words, I know it isn't translating into share price so we aren't getting the shareholder value result that we would like, but in terms of driving the things that we really believe we can control and will continue to control going forward. I point to this. So thank you for that. I'm going to return in a few minutes with Steve to answer your questions. Happy to talk obviously on anything I presented or anything during the course of the day. Thanks very much.

END

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