...CASE: Quality of Earnings #2 – Bear Stearns & Co 1. What is Blockbuster's amortization timetable? Do you think it is appropriate? The amortization timetable of Blockbuster is 40 years. In my opinion as an investor's perspective, it is not appropriate because of this is not as per the SEC standard of 5-7 years. 2. What would be the impact on Blockbuster's 1988 earnings per share if 5 amortization were applied to this goodwill? If the 5-year amortization were applied in its place of the 40-year timetable, then it is necessary for Blockbuster to identify the goodwill in larger amounts. This would increase tax liability of Blockbuster, which would have represented a loss of $0.09 (0.58 - 0.49) per share | 1988 | 40 Yrs. Total | 5 Yrs. Amortization | Current Amortization | 769,000.00 | 30,760,000.00 | 6,152,000.00 | Operating Income | | | 26,345,000.00 | New Operating Income | | | 20,193,000.00 | Income Tax | | | 7,673,340.00 | Net Income | | | 12,519,660.00 | Outstanding Shares | | | 25,741,549 | Earnings Per Share | | | 0.49 | 3. What would have been the effect on earnings per share if Video Superstore purchases were not included in 1988 revenues? If Video Superstore purchases were not included in 1988 revenues then there would be negative effect on earnings per share. The earnings-per-share would be lower in that condition...
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...CONSUMER INTERNET Bear, Stearns & Co. Inc. – U.S. Equity Research February 4, 2008 Rating Information Sector Rating Target Price YE ’08 Long-Term Growth Market Weight 26.23% (YHOO-$28.38-Outperform) MicroHoo!: Where are We Now & Where Do We Go From Here? Trading Data 52-Wk Range Market Cap. Shares Out. Dividend Yield Avg Daily Vol. Float Yahoo! Corp. $18.58 - $34.08 $25,459 MM 1,336.4 MM 0.0% 27,140,000 NA Source: FactSet It’s not often that management of a company sees its stock skyrocket ~50% in one day and have to ask themselves “Is this the best day in company history or the worst?” We believe Yahoo!'s valuation has being hampered by near-term investment concerns which weighed on investor realization of the long-term potential and value of the company. As we pointed out in our 4Q earnings note, we thought the near-term investor disappointment created an opportunity for any suitor that was remotely serious. Fundamental Data EV/EBITDA Enterprise Value LT Debt to Total Cap. Book Value 16.4x $24,681.6 MM 0.0% $7.00 • Implications to Traffic and Search Market Share. Domestically, Yahoo! and MSN together command 11% in page views market share, more than double Google’s 5% market share. In the international market, however, Yahoo! and MSN jointly account for 8% of total page views, still slightly lower than Google at 9%. On Search, the combination of Yahoo! and MSN would represent 33% of query market share in the...
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...Header: Bear Stearns Corporate Governance Issues at Bear Stearns Article Summary: In the summer of 2008 the global financial crisis swept away trillions of dollars in net worth, wiping out people’s retirement savings, and causing the loss of millions of jobs. As the world slipped into recession, people looked for answers, and a place to rest blame. At Bear Stearns, a venerable financial firm which was brought down by mistakes made by decisions made by management, there is much blame to be shared. This paper seeks to explore the corporate governance decisions which created this crisis, and which ultimately led to the almost complete destruction of shareholder value for Bear Stearns’ investors. In good times, the shareholders at Bear Stearns were handsomely rewarded by the very decisions which would ultimately end the company’s storied 85 year history and send the global economy into the deepest and most painful recession since the great depression. The firm’s stock traded at $160 a share and several key executives held stock valued at almost $1 billion dollars, but it is clear that hubris, greed, and incredible egos and personality conflicts were the cause of the firm’s demise. In May of 2008, The Wall Street journal published a three part series written by Kate Kelly on the last days of Bear Stearns. Kelly’s articles consider all the factors which brought about the company’s demise, and provide insight into the corporate governance issues which helped seal Bear Sterns...
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...people with poor credit -- the Dow industrials plunge 198.94 points, or 1.5%, to 13266.73. Treasurys see some of their sharpest losses in years, pushing the yield on 10-year notes up to 5.10% amid simmering inflation jitters. June 13 -- U.S. bond yields hit a five-year high as investors continue to sell Treasurys, with the yield on the benchmark 10-year note rising to 5.249%. June 14 -- Bear Stearns reports a 10% decline in quarterly earnings as the mortgage market shows signs of cracking. Chief Financial Officer Sam Molinaro says, ``We are impacted in a weaker mortgage market until that industry turns around.'' June 18 -- Reports say Merrill Lynch seized collateral from a Bear Stearns hedge fund invested heavily in subprime loans. June 22 -- Bear Stearns commits $3.2 billion in secured loans to bail out its High-Grade Structured Credit Fund, says company's troubles are "relatively contained." June 22 -- Blackstone Group's initial public offering is priced at $31 a share, raising as much as $4.6 billion; the next day, on the first day of trading, the stock jumps 13%. June 23 -- Bear Stearns agrees to lend as much as $3.2 billion to one of its two troubled hedge funds. Associated Press Federal Reserve Chairman Ben Bernanke June 28 -- Federal Reserve policy makers, on the second day of a two-day meeting, announce the key federal-funds rate will remain unchanged at 5.25%. July 2 -- BCE Inc. agrees to be acquired by the investment arm of Ontario...
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...contract for the sale of land or transfer of another interest in real property to be specifically performed if it has been partially performed and performance is necessary to avoid injustice (Cheeseman p. 224). Thus giving the case in favor to the Sacketts because they have been making the payments for 15 years, which provides that they are in compliance with the part performance rule; without a written contract the house still belongs to the Sacketts. Cheeseman, Henry R. (2010). Business Law: Legal Environment Online Commerce, Business Ethics and International Issues. (Seven Edition) New Jersey, NJ. Pearson Prentice Hall Case 16.10 Intentional interference with contractual relations Pacific Gas and Electric Company (PGEC) v Bear Stearns & company deals with a long term agreement between PGEC and Placer County Water Agency. Where Placer County...
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...Bear Stearns & Co Bear Stearns & Co Answer the following 10 questions, using the financial statement data from Blockbuster Entertainment Corporation. Show your work (i.e., note what numbers you're using). On May 9, 1989, Bear Stearns & Co. issued a report on Blockbuster Entertainment Corp., which is reproduced in part below. Blockbuster-Entertainment (Ticker symbol: BV, Price per share: $33 ½) increased owned and franchised video stores from 19 at the end of 1986 to 415 at December 31, 1988. In the same period revenue jumped from $7.4 million to $136.9 million. Reported earnings also leaped; from $.34 per share in 1986 to $.57 per share in 1988. The stock carries an historical Price to Earnings ratio of 59, and there were 25,741,549 shares of common stock issued and outstanding as of 12/31/88. A) Some of Blockbuster's mergers with other video rental companies have been recorded as purchases. In a merger treated as a purchase, the price paid is first allocated to the fair values of assets that can be kicked, picked up or painted. Any excess paid for the company beyond these "fair values” becomes goodwill, which Blockbuster labels "intangible assets relating to acquired businesses." APB Opinion 17 requires that goodwill be amortized to income (expensed) over 40 years or less. In the past, many companies automatically adopted 40 year amortization. Current practice (which is usually required by the SEC) is to relate the amortization period to the nature of the...
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...entered into an oral agreement with the Sacketts to sell them the home if they paid the arrearage and continued to make monthly payment. The Sacketts, now being considered equitable owners, performed their part of the oral agreement and therefore the Statue of Fraud would not be a valid defense in this case. The courts ruled in Favor of Sackett to avoid injustice. (Briggs v. Sackett, 1980) In the Case of PG&E v. Bear Stearns and Company, PG&E would win the case. This case is a perfect example of a tort with intentional interference with contractual relationships. PG&E had a valid contract, Bear gained knowledge of the contract in1990 and told Agency that they would help them terminate their contract with PG&E. The court found that Bear did not have cause of action to bring forward the lawsuit against PF&E and there wasn’t any probable cause on behalf of PG&E that made the contract more expensive or caused any burden to Bears. The court ruled in favor of PG&E alleging that the defendant did not have probable cause. (Pacific Gas and Electric Company v. Bear Stearns & Company, 1990) In the case of f Gulash v Stylarama, the judge would rule in favor of Stylarama. At the time they signed the contract there was not an indication as to whether the contract was for good or for service. Because the breakdown of the cost of the contract was not provided a determination could not be made to substantiate Gulash accusation of breach of implied warranty. This contracts looks to be a construction...
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...contract is to provide pecuniary benefit to the guarantor, the collateral contract does not have to be in writing to be enforced.”(Cheeseman 222) The Sacketts indeed provided a pecuniary benefit to the Briggs by helping them catch up on past due payments and keeping the payments current for fifteen years. The main purpose exception overrides the Statute of Frauds and therefore the Sacketts win. 16.10 Intentional Interference with Contractual Relations The case between PG & E v. Bear Stearns is an example of “a tort that arises when a third party induces a contracting party to breach the contract with another party.” (Cheeseman 257) PG & E can sue Bear Stearns based on the basis of the intentional interference with contractual relations tort. PG & E entered into a contract with Agency and Bear Stearns induced Agency to breach the contract with PG & E. PG & E and Bear Stearns have approximately 15 – 20 years left before there is a complete performance of the contract. Bear Stearns would be responsible for the material breach and the compensatory damages, which compensates the nonbreaching party for the loss of the...
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...JP Morgan Chase Publicly Traded Company JP Morgan Chase & Co. is on of the oldest and largest financial institutions in the world. They founding was in New York in 1799 and they have grown and succeeded by listening to there customers. They are a global financial service firm in more than 50 countries. “J.P (John Pierpont) Morgan is the founder and one of the most powerful bankers of his era. He financed railroads and helped organize U.S. Steel, General Electric and other major corporations” (Staff, 2009). The circumstances revolving around the fraudulent issues for JPMorgan began in 2008. It was involved in a massive fraud of residential mortgage backed securities in the billion of dollars. It was widespread fraud leading to the financial collapse of 2008. “Which lead to JPMorgan Chase facing class action lawsuits that claims it defrauded New Jersey residents who applied for the Home Affordable Mortgage Program, a federal program that is designed to help homeowners in danger of defaulting on their homes” (Mirando, 2011). When loans stated to go bad, the bank was required to take them out of the securitization products and seek restitution from the mortgage originators. The impact that it had on the company was very negative as far as it’s financial and operations were families where improperly foreclosed on, and will be able to save or get there homes back. JPMorgan Chase agreed to pay $13 billion dollars to settle the allegations on the mortgage back securities it sold...
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...Bear Stearns & Co Answer the following 10 questions, using the financial statement data from Blockbuster Entertainment Corporation. Show your work (i.e., note what numbers you're using). On May 9, 1989, Bear Stearns & Co. issued a report on Blockbuster Entertainment Corp., which is reproduced in part below. Blockbuster-Entertainment (Ticker symbol: BV, Price per share: $33 ½) increased owned and franchised video stores from 19 at the end of 1986 to 415 at December 31, 1988. In the same period revenue jumped from $7.4 million to $136.9 million. Reported earnings also leaped; from $.34 per share in 1986 to $.57 per share in 1988. The stock carries an historical Price to Earnings ratio of 59, and there were 25,741,549 shares of common stock issued and outstanding as of 12/31/88. A) Some of Blockbuster's mergers with other video rental companies have been recorded as purchases. In a merger treated as a purchase, the price paid is first allocated to the fair values of assets that can be kicked, picked up or painted. Any excess paid for the company beyond these "fair values” becomes goodwill, which Blockbuster labels "intangible assets relating to acquired businesses." APB Opinion 17 requires that goodwill be amortized to income (expensed) over 40 years or less. In the past, many companies automatically adopted 40 year amortization. Current practice (which is usually required by the SEC) is to relate the amortization period to the nature of the business acquired. Thus in a typical...
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...| |Financial Management | |[2007 Financial Collapse] | |This report will inform you of how the lack of oversight and management caused the financial collapse and the housing market to plummet. | [pic] TABLE OF CONTENTS Introduction………………………………………………..………… The History…………………………………………………………… Causes………………………………………………………………. The Run Up………………………………………………………… Lehman Brothers………………………………………………… Bank of America…………………………………………………… Fallout……………………………………………………………… Conclusion………………………………………………………… INTRODUCTION In 2007, the United States was in the midst of the largest mortgage and financial crisis since the Great Depression. The impact of the financial collapse caused many Americans to lose their homes and their jobs. Across the country, mortgage delinquencies and foreclosures have hit an all-time recorded high, with 11% of loans currently two or more payments behind. Complicating matters, 24% of borrowers are “underwater,” having mortgage balances greater than the values of their homes. The lack of financial management caused two large investment banks and the largest insurance firm in the world to cripple the Dow Jones Industrial Average by nearly 30% within 2-3 weeks. The financial collapse did not just affect home owners, but many financial firms were now facing...
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...Daniels Fund Ethics Initiative University of New Mexico http://danielsethics.mgt.unm.edu Banking Industry Meltdown: The Ethical and Financial Risks of Derivatives INTRODUCTION The 2008–2009 global recession was caused in part by a failure of the financial industry to take appropriate responsibility for its decision to utilize risky and complex financial instruments. Corporate cultures were built on rewards for taking risks rather than rewards for creating value for stakeholders. Unfortunately, most stakeholders, including the public, regulators, and the mass media, do not always understand the nature of the financial risks taken on by banks and other institutions to generate profits. Problems in the subprime mortgage markets sounded the alarm in the 2008–2009 economic downturn. Very simply, the subprime market was created by making loans to people who normally would not qualify based on their credit ratings. The debt from these loans was often repackaged and sold to other financial institutions in order to take it off lenders’ books and reduce their exposure. When the real estate market became overheated, many people were no longer able to make the payments on their variable rate mortgages. When consumers began to default on payments, prices in the housing market dropped and the values of credit default swaps (the repackaged mortgage debt, also known as CDSs) lost significant value. The opposite was supposed to happen. CDSs were sold as a method of insuring against loss. These...
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...| GRAND CENTAL OFFICE MARKET | | | Lisa Downing | 5/5/2009 | | Table of Contents Subject Headings Page Nos. Grand Central Office Market 1 Grand Central Scene 1 Who/What Dominates the District 2 Grand Central Office Climate 4 District Vis a Vis Office Setting 4 Historical Analysis of Market Statistics 6 Comparative Analysis: Grand Central, Midtown & Manhattan 7 History of Land Use and Development Trends 8 Grand Central Terminal Today 11 External Market Forces 12 Government Intervention 14 Employment 15 Subject Properties 18 Lincoln Building 18 JP Morgan Chase 20 Competitive Position 21 Summary & Trends 25 Projections 26 I. Grand Central Office Market Analysis The New York City Office Market is comprised of three submarkets, Downtown, Midtown and Midtown South. The Midtown submarket in the largest Central Business District in the United States; it is the submarket that the Grand Central office market is located and upon which this analysis is based. Other neighborhoods within the Midtown submarket include: Columbus Circle, Penn Plaza/Garment District, Plaza District and Times Square (Kindly refer to Appendix Nos.1 & 2). The Grand Central office market straddles in both Community Board #5...
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...your post-MBA goals given your experience to date combined with your intended MBA study plans? 3. What do you anticipate will be the primary challenges to achieving your career goals? What is your lifetime career goal? 4. What unique aspects of the Foster MBA Program would contribute the most towards achieving your short term and long term goals? (750 words max) I was exposed to the world of finance when I first came to the United States, back in 2002. After finishing my Marketing program at Berkeley, I was hired as an unpaid intern at the now defunct investment bank, Bear Stearns, & Co. It was there, that my interest in finance soon turned into fascination at how the world financial markets worked. The fast-paced yet organized environment was unlike anything I had experienced and something, I decided then, that I wanted to be a part of. Over the last 5 years, I have worked at Bear Stearns (in their Private Bank and Institutional Equity Sales departments), and at Credit Suisse’s Institutional Equities Sales desk. Although my past experience has been fulfilling, I have reached the ideal junction in my career to broaden my business experience and pursue a UW Foster Evening MBA. Immediately after the program, I hope to transition to a sales and/ or marketing role at a hedge fund or mutual fund investment company within the West Coast. This role...
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