Академический Документы
Профессиональный Документы
Культура Документы
Mina Mousa,
Anna Puzei,
Francisco Villegas,
Moscow School of Management SKOLKOVO
Executive summary
Capitalization
Capitalization
Why to capitalize
To increase capacity
To expand business
To pay debts
For R&D
To gain visibility
Disadvantages
Increased Capital.
Liquidity.
Increased Prestige..
Valuation.
Increased wealth.
Which Business
Valuation
Approach ?
Company
Date of IPO
Price per
share offered
12/14/94
5/8/95
6/27/95
5/25/95
$13.00
$12.00
$17.00
$14.00
% Change in stock
st
price after 1 day
of trading
+31%
+27%
+60%
+96%
SUCCESS?
Highest value of the day $75.0 per share
Final value of trading $58.25 per share
Browser market from 90% (1995) -> 1% (2002)
Netscape Business
Valuation
Netscape Valuation
Netscape Valuation
Netscape Valuation
Netscape Valuation
$13.00
$18,500,000.00
$0.28
performance
systems
$12.00
$43,700,000.00
$0.17
1995
Earning per share
Net rev
Net income
current assets
current liabilities
Working Capital (CA-CL)
Initial investments (capital
expenditures)
Cash flow
market value of the company
P/E
P/B
Cash to shareholders (lets
assume that it is EPS*number)
$36.00
$0.04
$17,321,000.00
$12,778.00
$235,500.00
$789,300.00
($553,800.00)
$22.00
($0.26)
$394,290.00
$33,647.00
$5,564,000.00
$7,118,000.00
($1,554,000.00)
$49.25
$0.39
5 937000
$1,453,000.00
$3,254,562.00
$1,406,727.00
$1,847,835.00
$46.25
($0.35)
$9,084.00
$1,509.00
$6,192,629.00
$5,755,418.00
$437,211.00
34519
42531
-8012
$1,027,600.00
$2,536,000.00
$208,567.00
$5,897,309.00
7618
$666,789,300.00
900.00
2.77
$968,518,000.00
-84.62
1.83
$986,406,727.00
126.28
2.90
$2,191,067,918.00
-132.14
3.30
98042531
71.8
2.0
$740,000.00
($11,362,000.00)
$7,800,000.00
($16,537,500.00)
($8,524,785.00)
Netcome online
Spyglass
Uunet
Netscape
$17.00
$20,000,000.00
$0.40
$14.00
$47,250,000.00
$0.17
14
3500000
28
0.39
1995
1996 (F)
1997
1998
1999
2000
$695,871.00
$378,490.00
$317,381.00
$219,090.00
$16,625,391.00
$15,580,258.00
$1,045,133.00
$1,735,812.00
$23,275,547.40
$21,812,361.20
$1,463,186.20
$3,252,534.00
$32,585,766.36
$30,537,305.68
$2,048,460.68
$4,769,256.00
$45,620,072.90
$42,752,227.95
$2,867,844.95
$6,285,978.00
$63,868,102.07
$59,853,119.13
$4,014,982.93
$6,285,979.00
$89,415,342.89
$83,794,366.79
$5,620,976.11
$6,285,980.00
(revenues/production costs)
Operating expenses
0.31
$9,001,566.00
0.10
$19,564,223.00
0.14
$30,126,880.00
0.15
$40,689,537.00
0.14
$51,252,194.00
0.10
$51,252,195.00
0.07
$51,252,196.00
cash to shareholders
number of shares (initial)
EPS
Discounted cash-flows (present
value of the cash flow)
FV
P/E ratio (accounting method)
DCF Model (price)
Annual discount rate
Growth rate
rate of return on new
investment
($8,524,785.00)
3500000
$0.20
($4,674,644.00)
3500000
$4.75
($10,103,866.60)
3500000
$6.65
($12,873,026.64)
3500000
$9.31
($11,918,099.10)
3500000
$13.03
$6,329,928.07
3500000
$18.25
$31,877,166.89
$3,500,000.00
$25.55
$7,749,804.55
$8,113,018.51
$25,126,820.77
$40,805,762.34
$45,178,972.37
23.72528515
28.911191
-26.75944889
2.380013833
-0.28
-0.21
0.11
0.55
($144,693,239.59)
($41.34)
13.92651662
27.82601678
22.81451097
($41.34)
0.1
0.4
earning this year/earning next year
-0.92
-0.22
-0.30
($27,568,486.93) ($155,191,399.15)
1996
$25,790
2,693
23,097
1997
$40,007
4,177
35,830
1998
$62,061
6,480
55,581
6,115
13,449
9,486
18,284
14,715
24,362
22,827
31,585
35,411
39,370
54,931
46,138
85,211
48,405
Operating income
Taxes
Net income
(4,675)
0
$(4,675)
(4,672)
0
$(4,672)
(3,247)
0
$(3,247)
1,169
0
$1,169
11,440
5
$11,435
32,680
11,111
$21,569
73,862
25,113
$48,749
$(4,675)
$7,618
918
0
$15,404
3,427
0
$17,157
5,316
0
$16,161
8,246
0
$25,070
12,792
0
$38,889
19,843
0
$60,327
30,782
0
$93,582
47,751
0
$145,170
74,073
0
$(406)
$13,654
$36,471
$56,576
$87,763
$173,587
Revenues g=55%
Cost of Goods Sold 10.4%
Gross Profit
Research and development 36.8%
Other operating expenses
$883,971
$1,057,558
$10,012
1,424
0
$12,731
2,209
0
Forecast
1999
2000
2001
2002
2003
2004
2005
$96,272 $149,342 $231,666 $359,372 $557,476 $864,785 $1,341,497
10,051
15,592
24,188
37,521
58,205
90,290
140,062
86,220
133,749
207,478
321,851
499,271
774,495
1,201,435
132,184
75,088
205,051
116,481
318,085
180,691
493,430
280,297
114,579
177,739
275,719
38,957
60,431
93,744
$75,622 $117,308 $181,975
427,708
145,421
$282,287
$136,144
32,764
5,000
37,764
$28.00
Assumptions
Riskless rate
Discounted rate
Growth rate of sales
Terminal value perpetual
growth rate
Changes in net working
capital
6.71%
12.00%
55.12%
4.00%
Cost of revenues
R&D
Other operating expenses
Capital expenditures
Depreciation
10.4% of sales
36.8% of revenues
Decline to 20.9% of sales by 2001
45.8% Decline to 10.8% of revenues by 2001
5.5% of revenues
0.00%
$211,190
2,745,481
Netscape Strategies
Netscape position/strategies/etc