Prestige Telephone Company Case Analysis: Prestige Telephone Company Liam Hennessy, Xinyi Zhang, Yuan Chai, and Anthony Saba 1. Reasons for Continuing Losses Prestige Data Services’ main problem is that they have too many available hours that are not generating any revenue. In the first quarter of 2003, they have an average of 176 available hours per month of available hours. Its operations exact a huge amount of fixed costs to cover. If they could find more commercial customers for the available
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Q1 In the first quarter of 2003, Prestige Data Services (PDS), a strategic subsidiary of Prestige Telephone, is showing a net loss of $75K. Their monthly revenues for the quarter have varied from $189K to $212K and their expenses have remained relatively flat around $222K each month. Table 1: High Level Q1 2003 Financials It might appear that the data subsidiary is continuing to lose money and should be considered as a candidate for elimination. However, that is NOT the case. The financials
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Prestige Telephone Company case study In 1999, the Government encouraged public utilities to seek new sources of revenues and profits to reduce the need for rate increases to consumers of telephone services. Prestige Telephone Co. (PTC) considered that a centralised data provider service could be a profitable use of excess hours from existing infrastructure. Prestige Data Services (PDS) performed data processing for the telephone company and sold computer services to other companies and
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Prestige Data Services Cost Volume Profit Analysis The following equation has been used for the purpose of this analysis: (Intra-company sales + commercial sales) = Fixed Cost + Variable Cost/hour * time (in hours) To work out only the contribution of intra-company and commercial computer use, “Other commercial sales” has been removed from the revenue. To counter that, “Materials cost” has been removed from the costs; three month average for these parameters is approximately equal. Fixed Costs
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CASE BACKGROUND • Prestige Telephone Company (PTC) is the parent company of Prestige Data Services (PDS) • PDS provides data services to its parent company as well as other companies willing to hire its services • It is wholly owned by PTC, but runs as a separate business entity, so each pays the other for services received • It was conceptualized in 1994, and started operations in 1995 • Daniel Rowe, president of PTC, was the one who pitched PDS, and believes it could
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Prestige Telephone Company En su análisis del caso, asumir lo siguiente: 1. Los gastos de promoción para los próximos meses están programados para $8,000. 2. Los valores de las cuentas: “Ventas por otros conceptos” y “Gastos de materiales y suministros” se compensarán aproxima Cuestiones 1. Valorar el resultado de las operaciones de Prestige Data Services. ¿Es realmente la subsidiaria un problema para Prestige Telephone Company? Considerar detenidamente las diferencias entre los costes
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Prestige Telephone Company Question 1: Appraise the results of operations of Prestige Data Services (PDS). Is the subsidiary really a problem to Prestige Telephone Company (PTC)? Consider carefully the differences between the reported costs and costs relevant for decisions that Daniel Rowe is considering. The current data indicate that the PDS is in operating loss. And going by the presented data, yes, PDS is a problem to PTC at this point of time. And this in spite of many major costs being
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PRESTIGE TELEPHONE COMPANY In deciding whether to continue, discontinue or sell a subsidiary company, we should consider the benefits and disadvantages of each option. We gauge the contribution of a subsidiary not only by looking at its profitability but also the advantage it can give to the parent company particularly in reducing its costs. Having a low profitability or even a net loss does not necessarily mean that the decision of retaining the subsidiary is wrong. Separating the relevant
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Prestige Data Services Cost Volume Profit Analysis The following equation has been used for the purpose of this analysis: (Intra-company sales + commercial sales) = Fixed Cost + Variable Cost/hour * time (in hours) To work out only the contribution of intra-company and commercial computer use, “Other commercial sales” has been removed from the revenue. To counter that, “Materials cost” has been removed from the costs; three month average for these parameters is approximately equal. Fixed Costs
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Research Project Applied Business Methods (BAB08-2012) Hotel prices in US destinations and their page ranking on online travel agencies Devin Boyacioglu (358561) Kiki Qian Huang (354902) Renan Lesaffre (355688) Prestige Statistics – ABM Case Report 2013 Table of Contents 1. Introduction ........................................................................................................................................... 3 1.1. 1.2. 1.3. 2. 2.1. 2.2. Causal relationship scheme ...
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