Palm Inc. In 2000 the firm 3Com spun out its personal digital assistant division as Palm Inc. On February 23, 2001, the financial services firm Telerate reported the following information about Palm. The closing price for a share of Palm was $21.69. Palm had 565,946,000 shares outstanding. Its book value of equity was $1,110,640,000. It held $742,888,000 in cash. Its trailing P/E was 181. Palm was an all-equity financed firm and had no debt. During a presentation to investors, Palm’s CFO Judy Bruner was asked two questions. (1) What is Palm’s cost of capital? (2) What is Palm’s return on equity likely to be over the next several years? Palm’s CFO responded by saying that she thought that the firm’s cost of equity was 16 percent and that her best estimate for ROE was 26 percent per year for the next six years. The length of the horizon during which the expected ROE exceeds the required return on equity is called the CAP (an acronym for competitive advantage period). Assume that Palm’s managers plan to maintain its dividend payout ratio at zero for six years, the length of the CAP. The CFO of Palm also remarked that in view of recent volatility in the price of Palm stock, her firm was trying to understand how the market values Palm, relative to the right factors to value Palm. Its current price of about $22 was below the offer price of $38 that prevailed when Palm had gone public a year earlier. Palm’s CFO indicated that she focused on trailing P/E and price-to-sales, noting that these may send conflicting signals. For example, she indicated that the market assigned Palm a high P/E ratio (145 at the time) but, relative to other firms such as Handspring, a low price-to-sales ratio (8 at the time). (In 2001, Handspring was a separate firm, which competed with Palm. Palm acquired Handspring in 2003. Subsequently, the firm split itself into two, becoming PalmOne and PalmSource.) Case Analysis Questions On the basis of the data presented in the…
At 111papers.com, we value all our customers, and for that, always strive to ensure that we deliver the best top-quality content that we can. All the processes, from writing, formatting, editing, and submission is 100% original and detail-oriented. With us, you are, therefore, always guaranteed quality work by certified and experienced writing professionals. We take pride in the university homework help services that we provide our customers.
As the best homework help service in the world, 111 Papers ensures that all customers are completely satisfied with the finished product before disbursing payment. You are not obligated to pay for the final product if you aren’t 100% satisfied with the paper. We also provide a money-back guarantee if you don’t feel that your paper was written to your satisfaction. This guarantee is totally transparent and follows all the terms and conditions set by the company.Read more
All products that we deliver are guaranteed to be 100% original. We check for unoriginality on all orders delivered by our writers using the most advanced anti-plagiarism programs in the market. We, therefore, guarantee that all products that we submit to you are 100% original. We have a zero-tolerance policy for copied content. Thanks to our strict no plagiarized work rule, you can submit your homework to your professor without worrying.Read more
TThis is one of the most cherished courtesy services that we provide to help ensure that our customers are completely satisfied with our finished products. Delivering the best final product to our customers takes multiple inputs. 111papers.com prides itself on delivering the best university homework help services in the writing industry. And, in part, our free revision policy is how we do it. What’s more, all our revisions are 100% free without any strings attached.Read more
Client privacy is important to use. We know and understand just how important customers value their privacy and always want to safeguard their personal information. Thus, all the information that you share with us will always remain in safe custody. We will never disclose your personal information to any third party or sell your details to anyone. 111 Papers uses the most sophisticated, top-of-the-line security programs to ensure that our customers’ information is safe and secured.Read more
Placing your order with us means that you agree with the homework help service we provide. We, in turn, will endear to ensure that we do everything we can to deliver the most comprehensive finished product as per your requirements. We will also count on your cooperation to help us deliver on this mandate. Yes, we also need you to ensure that you have the highest-quality paper.Read more