...Week 2 Case; Warren Buffet, 2005 Introduction This case is about Berkshire Hathaway’s bid, through MidAmerican Energy Holdings Company, to acquire PacifiCorp, which is an energy- utilty based company, in order to diversify the activities of Berkshire Hathaway. The ideas of enterprise valuation are portrayed in two methods. These methods are multiple valuation and discount factor. These methods help evaluate the impact that a single investment can have on the acquiring company. Issues The stock prices for Berkshire Hathaway’s increased 2.4% and Scottish Power plc increased 6.28% after the acquisition of PacifiCorp. This positive market reaction was a good indicator that the deal had been a good move for both parties. The 2.55 billion gain in Berkshire’s market value hints that Berkshire Hathaway paid the acquisition at a discount price per share. Scottish power’s increase represented an increase of GBP27.75 in per-share change. The shares outstanding were over 466 million and the market value that day was 12.93 billion British pound. PacifiCorp is a private owed company, so their cash flow statements are not publicly available. The discount cash flow method would not be good way to measure the company’s value. The valuation multiple method is used because statistics from comparable companies are available. A disadvantage to this method would be if the comparable companies within that industry are mispriced. Another question raised about the range could be that...
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...Desmarais 4170 Thursday 4:00 pm - 7:00 pm Weight on Final Grade 15% 15% 10% 15% 20% 25% Course Deliverable Case 1 – Black & Decker (A) Case 2 - Marketing Simulation Case 3 – A Case for Brand Loyalty Case 4 – Online Marketing at Big Skinny Peer-to-Peer Learning Experience Final exam Due Date September 19 Part A: September 26 Part B: October 3 Par November 14 November 21 A. February 7 To be assigned To be announced Please note that all assignments must be submitted via Turnitin™ in addition to hard copy. COURSE DESCRIPTION The objectives of this course are to demonstrate the role of marketing in the company; to explore the relationship of marketing to other functions; and to show how effective marketing builds on a thorough understanding of buyer behavior to create value for customers. Using lectures, case studies, and class discussions, students learn how to control the elements of the marketing mix—product policy, channels of distribution, communication, and pricing—to satisfy customer needs profitably. The Telfer MBA distinguishes itself by training students to Lead High Performance Organizations. Successful firms are those that integrate the objectives and resources of the organization with the needs and opportunities of the marketplace better than competitors. That is, they identify untapped sources of customer value, and deliver and capture more customer value than their competitors. This course will help you develop a superior understanding of customers to help you...
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...The Basics Of Mergers And Acquisitions http://www.investopedia.com/university/mergers/ Thanks very much for downloading the printable version of this tutorial. As always, we welcome any feedback or suggestions. http://www.investopedia.com/contact.aspx Table of Contents 1) Mergers and Acquisitions: Introduction 2) Mergers and Acquisitions: Defining M&A 3) Mergers and Acquisitions: Valuation Matters 4) Mergers and Acquisitions: Doing The Deal 5) Mergers and Acquisitions: Break Ups 6) Mergers and Acquisitions: Why They Can Fail 7) Mergers and Acquisitions: Conclusion Introduction Mergers and acquisitions (M&A) and corporate restructuring are a big part of the corporate finance world. Every day, Wall Street investment bankers arrange M&A transactions, which bring separate companies together to form larger ones. When they're not creating big companies from smaller ones, corporate finance deals do the reverse and break up companies through spinoffs, carve-outs or tracking stocks. Not surprisingly, these actions often make the news. Deals can be worth hundreds of millions, or even billions, of dollars. They can dictate the fortunes of the companies involved for years to come. For a CEO, leading an M&A can represent the highlight of a whole career. And it is no wonder we hear about so many of these transactions; they happen all the time. Next time you flip open the newspaper’s business section, odds are good that at least one headline will announce some kind of M&A transaction. Sure...
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...CASE #2 – “Rosetta Stone: Pricing the 2009 IPO” Group 2 will have to make a presentation before the entire class during the synchronous session on Monday, November 23, 2015. In April 2009, the Rosetta Stone management had to price the initial public offering of Rosetta Stone stock during one of the most difficult periods in capital-raising history. The case outlines Rosetta Stone’s unique language-learning strategy and its associated strong financial performance. Students are invited to value the stock and take a position on whether the current filing range is appropriate. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples. Answer the following questions in your report: 1. What is going on at Rosetta Stone? 2. Describe the economics of the Rosetta Stone business. Is this a business that you expect will generate interest among investors? What do you think the current market price is for Rosetta Stone shares? Justify your valuation on a discounted-cash-flow basis and a market multiples basis. • What are the pros and cons of using a market-multiples approach in valuation? • Consider a discounted-cash-flow model for valuing Rosetta Stone. Are you comfortable with the financial forecast in case Exhibit 8? What are the key assumptions? Is the length of the forecast period reasonable? • What discount rate is appropriate for the cash-flow forecast? • What was your approach for terminal value? How do your...
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...HBR.ORG THE BIG IDEA Profits Without Prosperity Stock buybacks manipulate the market and leave most Americans worse off. by William Lazonick SEPTEMBER 2014 REPRINT R1409B The Big Idea PHOTOGRAPHY: ELISE FOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG STOCK BUYBACKS Five years after the official end of the Great Recession, corporate profits are high, and stock market MANIPULATE THE booming. Yet most Americans the not sharing inis are the MARKET AND LEAVE recovery. While the top 0.1% of income recipients— MOST AMERICANS which include most of the highest-ranking corporate executives—reap almost all the income gains, good WORSE OFF. BY WILLIAM LAZONICK jobs keep disappearing, and new employment opportunities tend to be insecure and underpaid. COPYRIGHT © 2014 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. September 2014 Harvard Business Review 3 THE BIG IDEA PROFITS WITHOUT PROSPERITY Corporate profitability is not translating into widespread economic prosperity. The allocation of corporate profits to stock buybacks deserves much of the blame. Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little...
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...Professor Harry E. Stucke BIG GROUP CASE STUDY By Bhuiyan Shariful Kudret Demirkol Alam Mujub Ye Yu LONG ISLAND UNIVERSITY February 27th, 2012 INTRODUCTION The Big Idea Group (BIG) was created by Micheal Collins to help both inventors and corporations meet the innovation challenge. BIG partners with inventors and companies to identify, develop and bring to market innovative ideas. Before BIG Collins founded Kid Galaxy in 1994, a specialty toy company and became a producer of the award-winning Bendos line. Bendos, a line of Gumby-like figures eventually helped Kid Galaxy gross $5 million a year. But Collins, who held just a 4% stake in his company, says he felt there was little growth in store. Collin is exposed to Clayton M. Christensen, a Harvard Business school professor who posited a theory about why companies fail, even with great technology, in his book The Innovator's Dilemma. The professor gave him an endorsement and an undisclosed investment for an idea-hunting company. A year later Collins became a success with Tiny Totes, a set of mini-handbags girls could use to store collectibles. Tiny Totes was designed by an Indianapolis woman who had tried for a number of years to break into the toy business and Collins was able to give her the first break. Almost all of Collins' products are new ideas for toys and consumer products. Collins is now looking to diversify his company Big Idea Group (BIG) which has become successful...
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...Shehzad Chowdhury Don Taylor Seminar: Issues in Corp Finance 01/31/2015 Warren Buffet Case This case study talks about Warren Buffets’s Berkshire Hathaway company; initially, it discuses regarding the possible meaning of the alters in stock price for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement is for the reason to the truth that the deal formed value for both consumers and suppliers; In addition, Berkshire was extra expanded subsequent to the acquisition. The $2.55 billion gain in Berkshire’s market value of equity oblique that the basic value of PacifiCorp was fine since it cut down within the range of challengers supported on the subsequent result, which is $2.55 billion divided by 312 and 312 again divided by 18 million gives $8.17.Next, Berkshire is keen to give this premium for every share of PacifiCorp 5.1 billion divided by 312.18 million that results $16.30 per share of PacifiCorp $8.17 plus 16.30 equals $24.47. Later, we discover the range of likely values for PacifiCorp in Exhibit 10 as follows: Revenue median of $6.252 Billion, average of $6.584 Billion, EBIT median of $8.775 Billion, average of $9.289 Billion, EBITDA median of $9.023 Billion, average of $9.076 Billion, Net Income median of $7.596 Billion, average of $7.553 Billion, EPS median of $4.277 Billion, and a mean of $4.308 Billion and Book value median of $5.904 Billion, mean of $5.678 Billion. The Question about income; the implied worth of PacifiCorp is giving...
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...Problem 1 a. How is Dow Jones index computed? Write 1 paragraph on the history of when the Dow Jones Index was first initiated. Computation Method: Dow Jones is a price-weighted index. So, to calculate the DJIA, the sum of the prices of all 30 stocks is divided by a devisor which is named the Dow Divisor. The divisor is adjusted in case of stock splits, spinoffs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. Early on, the initial divisor was composed of the original number of component companies; which made the DJIA at first, a simple arithmetic average. The present divisor, after many adjustments, is less than one (meaning the index is larger than the sum of the prices of the components). That is: Where p is the prices of the component stocks and d is the Dow Divisor. Events like stock splits or changes in the list of the companies composing the index alter the sum of the component prices. In these cases, in order to avoid discontinuity in the index, the Dow Divisor is updated so that the quotations right before and after the event coincides: History: Dow Jones & Co. was founded in 1882 by Charles Dow, Edward Jones and Charles Bergstresser. Despite popular belief, the first averages were not published in the Wall Street Journal but in its precursor, called the Customer's Afternoon Letter. The first averages didn't even include any industrial stocks. The focus was on the growth stocks of...
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...The Core Democratic Values "The Core Democratic Values are the fundamental beliefs and constitutional principles of our society, which units all Americans. These values are expressed in the Declaration of Independence, the United States Constitution and other significant documents, speeches, and other writings our nation." The term, by the way comes from a work of Thomas Jefferson. Simply put the Core Democratic Values are ideals that are important to us as Americans. These values bind us together as a nation. Below is a list of the values you will be dealing with most at the K-7 level. Take a look at the Core Democratic Activities I have gathered for you. They will not only help you discover if your students truly understand the concepts but give them practice identifying and internalizing them. I have put together a neat activity that I use whenever I introduce the Core Democratic Values for the first time. Take a look at The Core Democratic Sketchbook Activity and see if it fits your needs. Life, Liberty and the Pursuit of Happiness Mention the Declaration of Independence to most people and the first thing that usually pops into their minds are these seven words: Life, Liberty, and the Pursuit of Happiness. The Declaration tells us that we have these rights and it is the duty of our government to protect those rights. Life A good definition here would be that as Americans we have the right to live without the fear of injury...
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...and found many different prices found by using the dividend growth model and the multiples approach. We will also show how different outcomes will affect Kohler’s retained earnings and cash standing. In the end, we believe we have chosen the best possible price to make everyone in the case happy without much sacrifice from either side and without having to go to court. History & Privacy Issue By creating a hog trough John Michael Kohler established one of the most profound plumbing companies in the world. In addition to the continual development and production of plumbing supplies Kohler also hit many other markets since its formation in 1873. The company’s private dedication to excellence has allowed them expand and seek control of these other industries. Some of these include furniture, engines, generators, rental services, and most recently the elegant golfing resort destinations which gives travelers a sense of privacy. Privacy happens to be one of Kohler’s most important values of which their success can be partially credited to it. In a publicly held firm, the company’s ownership is held and controlled by outsiders who had in some way bought into the firm as an investment, but in Kohler’s case being private means something totally different. 2 Since the company’s development and upcoming ownership has generally stayed within the family and maintained a completely private state of control. This means both family members and employees are distributed the ownership of the...
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...19th July 2012 Idea Cellular Limited CMP:INR81.4 Stock Information IDEA.NS/ IDEA.BO Sector Telecom Market Cap.(INR Mil) 280,832 Avg. Daily Volume 1,560,228 Beta 0.94 PE Ratio 38.7 52 Week High/Low 103.7/65.6 SENSEX/Nifty 117266.6/4159.0 Price Perfromance Idea 1 Month 3 Month 6 Month 12 Month 10.2% -6.1% 0.5% 5.4% S&P CNX 500 1.9% -2.8% 4.9% -9.2% “Rating:Hold (on watch)” Target Price: INR96 Our DCF valuation indicates upside of almost 18% from current price level in next 12 months but consideration of potential regulatory cost makes it unattractive at the moment. We should rather wait for regulatory uncertainty to get over. Key Highlights Tariff rates: We see strong likelihood for tariff hike across the board after auction is completed in August 2012 as current price of spectrum and prevalent low tariff make the business unviable. Market share: Since small operators have shifted their focus on cash conservation and margin improvement, incremental market share of top three players have increased considerably. Idea ranks second after Airtel in terms of market share of new subscribers addition. Negativity: Recently telecom players have been going through uncertain times due to pressure from different corners: regulatory, operationally and financially. We believe this negativity has already been accounted in current price. However, sensitivity to Idea’s balance sheet of expected cash outflow is high due to smaller balance sheet size of Idea. Valuation: Our...
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...At Big Bazaar we have always tried understanding our customer’s better keeping in mind their love for better bargains and getting maximum value out of each rupee they spend. This has always pushed us to think innovatively and striving to continuously giving our customers additional reasons to shop. Times are tough and we understand that this is the time when we need to stand by our customers. Hence, to share the burden of running our customer’s household the idea of Big Bazaar PROFIT CLUB was born. Big Bazaar PROFIT CLUB is the most innovative product that the Indian Retail Market has ever witnessed. It offers an unmatched value proposition to its customers. A unique membership program where one can pay Rs. 10,000 and can shop for Rs. 1000 per month for the next 12 months i.e Rs. 12,000 over a period of 12 months. This card can be used across 215 + Big Bazaars, Food Bazaars and fbb- Fashion at Big Bazaar stores across the country. In case you miss shopping in a particular month, the amount can be carried forward to the next month. Members of the Big Bazaar PROFIT CLUB will also receive the benefit of existing offers on their Payback cards and T24 mobile services. The Big Bazaar PROFIT CLUB Card can be used as a Gift Card for your friends and family, like children living away from home or parents residing in other cities etc. The Big Bazaar PROFIT CLUB Card can also serves as an excellent Employee Incentive program for your employees . It can also be extended to your business...
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...Analyzing a Complex Communication Problem PBRL 495 H1WW-Public Relations and Communications Capstone Professor Cara Keithley Assignment 1-4 Alexis J. Lilly March 30, 2012 The case study that I chose to conduct my analysis on was Case Study 2: Namaste` Solar. This particular case study examined a solar energy firm that was headquartered in Boulder, Colorado. The CEO, Blake Jones, had been toying with the idea of either selling part of the business or selling the firm altogether. Jones and his partners decided that they would need to recruit long-term employees that were dedicated to the solar energy business in order for the company to flourish. Jones and his partners felt that if they hired employees that would have an opportunity to hold equity in the company it could turn into something big, beyond the mere idea of an investment in the solar energy industry. After recruiting more than fifty-five employees, Jones and his partners started to hold (BPM’s) Big Picture Meetings. According to Lawrence et. al (2010), held weekly, BPMs brought together all employees for a full discussion of the issues facing the company, both large and small. All employees were expected to attend the meetings and actively participate in the discussion. The meetings were more geared towards the internal audience, which are the employees at Namaste’ Solar. Some of the trends in current organizations that may impact existing or cause new organizational communication...
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...ended funds are still hailing the demanding curse of present age. Using the mutual fund scheme was more beneficial for the investors and was less fruitful for the manager or the body managing and investing the funds. Therefore to make more money from limited funds a newer system was stemmed into the fabric of trade. That system was to engage poor into this business by investing money in the form of blocks. This trick helped the managing body to withdraw more money out of the flow in the form of commission. On the contrary it involved less investment share which was easy to contribute by an average investors. Hence it had the characteristics of close ended mutual fund accompanied by replication of index. This system was easy to manipulate and friendly to the traders. In a nut shell the trade of funds took place in exchange of securities. It was a simple game that could be played without time limit. It had small shares than mutual funds, was more idealized and encouraged by majority of traders and investors. This scheme of investing the funds was given the name of exchange trade funds. It is the combination of index fund and close ended fund. Exchange...
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...should it structure its pricing? The case lays out three pricing options. Which option would you choose and why? In designing your pricing plan, be as specific as possible with respect to the various elements under considerations (e.g. contracts, the size of the subsidies, hidden fees, average per-minute charges, etc.) 2. How confident are you that the plan you have designed will be profitable? Provide evidence of the financial viability of your pricing strategy. 3. the cellular industry is notorious for high customer dissatisfaction. Despite the existence of service contracts, the big carriers churn roughly 24% of their customers each year. Clearly, there is very little loyalty in this market. What is the source of all of this dissatisfaction? How have the various pricing variables (contracts, pricing buckets, hidden fees, off-peak hours, etc.) affected the consumer experience? Why haven’t the big carriers responded more aggressively to customer satisfaction? 4. How do the major carriers make money in this industry? Is there a financial logic underlying their pricing approach? 5. What do you think of virgin Mobile’s value proposition (the VirginXtras, etc.)? What do you think of its channel and merchandising strategy? 6. Do you agree with virgin Mobile’s target market selection? What are the risks associated with targeting this segment? Why have the major carriers been slow to target this segment? 1. When examining this case study, Virgin Mobile USA, and evaluating...
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