Using the P/E Ratio to Evaluate Stocks

Motorola Acquires Terayon

2007-07-07T18:31:00.000-07:00

Case Background: Motorola is about to acquire Terayon Communication System, Inc. for something like $140 million. Upon this purchase, Motorola will pay cash for all of Terayon's common stock, at $1.80 per share. Discussion: Terayon is a manufacturer of video processing products, which, by optimizing bandwidth, allow viewers access to content of regional or local interest. The acquisition of this

Home Depot Inc.

2007-07-03T15:17:00.000-07:00

Case Background: Three private equity firms have joined together in a $10B deal to purchase the supply division of Home Depot Inc. The sale price was lower than analysts and investors had expected. The company offered no comment on its decision, but it is thought that the move is designed to appeal to shareholders looking for positive action. Discussion: It seems that recent troubles in the

The Buyout of Sallie Mae

2007-04-16T13:46:00.000-07:00

Case Background: Sallie Mae has been the world's largest originator of student loans for some time. However, there have been some problems with school officials referring students toward specific lenders. Nevertheless, this has not stopped J.C. Flowers and the firm of Friedman, Fleischer, and Lowe to buy them out in a $25 billion deal. Discussion: After the buyout (which was at $60 per share)

Nestle Now King of Baby Food

2007-04-14T11:56:00.000-07:00

Case Background: Nestle is already the world's largest food company. Now, with the acquisition of Gerber Baby Food, it's going to become the world's largest baby food company as well. The price tag is hefty, as one would expect: $5.5 billion. Discussion: With such a staggering cost, is this actually a good move? It seems so. This new addition is not really out of place, as Nestle is the current

Is Best Buy the Best Buy?

2007-04-06T12:32:00.000-07:00

Case Background: Best Buy has been able to capitalize on a key component of retail success--customer service--which has vaulted it ahead of competitors such as Circuit City, Costco, and Fry's. This has translated to a fourth quarter-gain of 18 percent. Discussion: The attention to customer needs is noticeable from the time one enters a Best Buy store. A friendly greeting is followed by a

What to Do with DaimlerChrysler?

2007-03-26T10:13:00.000-07:00

Case Background:DaimlerChrysler hasn't been doing as well as its shareholders might have expected. Amid recent problems with its US operations, GM has placed a bid to buy the struggling auto giant. Another potential buyer, Magna International, Inc. (of Canada), along with an unnamed partner, has shown an interest. This latter possibility led to DaimlerChrysler stock reaching a 52-week high on

Netflix: Hold or Sell?

2007-03-16T12:01:00.000-07:00

Case Background: Netflix stock has done very well. At its IPO in 2002, it started at $8 per share (split-adjusted). By the fourth quarter of 2003, it had enjoyed exponential growth. In fact, its upward trend has been consistent for years. The company's idea of having movies available online, and being able to order and return movies by mail, has been a very popular strategy that has led to

Is AMD Losing the Processor War with Intel?

2007-03-05T13:40:00.000-08:00

Case Background: Having recently fallen to a new 52-week low in morning trading, it looks like Advanced Micro Devices will miss its first-quarter target of $1.6 billion to $1.7 billion. The burgeoning company's problems originated from a product line perceived to be out of date, resulting in a reluctance on the part of investors to keep faith. AMD shares fell 24 cents to $13.94 in afternoon

What's Next for America's Largest Bank?

2007-02-24T19:09:00.000-08:00

Case Background: Will Citigroup, America's largest banking institution, really take over Nikko Cordial Corp.? Yes, according to a variety of Japanese publictions, including the Asahi and Yomiuri newspapers, as well as the Mainichi, Nikkei and Sankei. To avoid being delisted from the Japanese stock exchange, the embattled brokerage firm is hoping to elicit the assistance necessary to improving

M’m! M’m! Good Time to Invest in Campbell’s?

2007-02-16T16:12:00.000-08:00

Case Background: Everyone knows that soup is good food. But it may be time to think of it as a good stock investment, considering brand leader Campbell’s recent run.Campbell executives have, until recently, been reluctant to comment directly about the success of its new lower-sodium soup products, saying it was too early to tell about them. Company president Douglas R. Conant noted Friday,

Apple's New Reach

2007-01-10T10:28:00.000-08:00

Case Background: Apple (AAPL) has stormed the market with a new name (Apple, Inc.) and a phenomenal new device: the iPhone. According to Apple, Inc. CEO Steve Jobs, the iPhone is nothing short of revolutionary. The level of improvement over current smart phone technology is portrayed as something like that of the horseless carriage over…well, the horse. New features include

Open Source Software Leader, Red Hat, Inc. – Time to Buy?

2006-11-22T13:21:00.000-08:00

Case Background: Red Hat, Inc. (RHAT) is an open source solution provider of Linux. Currently, the company shares trade on the NASDAQ, but it will begin trading on the NYSE on December 12, 2006, under the ticker symbol, RHT. Red Hat, Inc. provides operating system platforms, middleware, applications, and management solutions. The majority of revenue is derived from support,

Chevron Finds Black Gold – Time to Buy?

2006-11-13T17:09:00.000-08:00

Case Background:Chevron Corporation (CVX) was founded in 1879 with an oil discovery at Pico Canyon (north of Los Angeles). This discovery was the foundation for the formation of Standard Oil Company, which later became Chevron Corporation. In 2001, Chevron Corporation merged with Texaco, followed by its merger with Unocal Corporation in 2005. Chevron Corporation produces 2.5

Caterpillar - Time to Buy?

2006-10-24T11:30:00.000-07:00

Case Background:Caterpillar, Inc. (CAT) was founded in 1925 with the merger of Holt Manufacturing Company and C.L. Best Tractor Co. Caterpillar, Inc. is best known for its yellow Medium Wheel Loaders. However, it offers several products and services: machines, engines, generators, rental power, financial services, maintenance/support, logistics, apparel, and remanufacturing.

Business Services, Medical – Analysis

2006-10-12T10:39:00.000-07:00

Case Background: Health Grades, Inc. (HGRD) and WebMD Health Corp. (WBMD) share similar business models. WebMD Health Corp. provides health information to both consumers and physicians via its web portals, most notably www.WebMD.com and www.Medscape.com. Health Grades, Inc. provides objective ratings of hospitals and nursing homes; in addition it publishes detailed information on physicians (