nokia - sample case analysis - 2008
TRANSCRIPT
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 1/17
Sample Case Analysis
Pentti Kukkola, Chief Financial Officer of Nokia, the Finnish telecommunications equipmentcompany, was concerned. He and his colleagues were on a flight back from meeting withanalysts in Dallas, and were discussing an issue that had been raised by some analysts, a questionthat he had not been able to answer: namely, what was the company’s cost of equity? Andfollowing that, what was the company’s overall cost of capital? And finally, what was thecompany doing to improve shareholder value by minimizing the cost of financing.
Kukkola had attempted to answer these questions by pointing to the very low interest rates that Nokia had been able to negotiate on its debt. For example, the company had recently succeededin placing a €100 million, 3-year bond at a rate only 105 basis points above the yield onequivalent German government bonds. This sort of answer, however, had not satisfied thequestioners. They wanted a more comprehensive picture of Nokia’s cost of capital.
Nokia’s financial management had traditionally been conservative, taking the attitude that the
risks should be taken on the business side, not in the corporate treasury department. Still,Kukkola wondered aloud, what kind of capital structure – debt versus equity – should a companyin our line of business have? He determined to look into this further, and to compare Nokia’scapital structure to those of other major European multinationals.
Kukkola tapped on his laptop computer. He decided to gather some information and hand it over to one of his bright assistants. He wrote:
1. Who Are Our Shareholders?2. Do They Care About Our Cost Of Capital? Why?3. What Is Our Cost Of Debt Financing?
4. What Is Our Cost Of Equity Financing?5. What Is Our Overall Cost Of Capital?6. Could We Lower This By Changing Our Capital Structure?7. How Would A Financial Restructuring Affect The Value Of Our Company?8. Would More Debt Create Unnecessary Risk?9. What Does The Competition Do?10. Is Our Stock Price Fairly Valued?
1
Advance Financial Management Case Analysis/Assignment
Read the following case carefully. Then, choose two publicly traded companies of the samesize from the same industry, do similar analysis and answer the following questions for eachcompany. After each question, choose one company that you favor and explain very briefly
why. At the end of your report, choose the best based on overall analysis and discussion.
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 2/17
1. Who Are Our Shareholders?
Major Holders
% of Shares Held by All Insider and 5% Owners:
0%
% of Shares Held by Institutional & Mutual Fund Owners: 21%
% of Float Held by Institutional & Mutual Fund Owners: 21%
Number of Institutions Holding Shares: 766
TOP INSTITUTIONAL HOLDERS
Holder Shares % Out Value* Reported
FMR LLC 143,862,921 3.51 $3,524,641,564 30-Jun-08
Capital World Investors 106,537,334 2.60 $2,610,164,683 30-Jun-08
BANK OF AMERICA CORPORATION 23,874,242 .58 $584,918,929 30-Jun-08
Capital Research Global Investors 22,586,674 .55 $553,373,513 30-Jun-08
FISHER INVESTMENTS, INC. 20,578,746 .50 $504,179,277 30-Jun-08
NEUBERGER BERMAN, LLC 20,407,033 .50 $499,972,308 30-Jun-08
JENNISON ASSOCIATES LLC 19,048,630 .47 $466,691,435 30-Jun-08
Legg Mason Capital Management, Inc. 15,614,503 .38 $382,555,323 30-Jun-08
BARROW, HANLEY MEWHINNEY &STRAUSS, INC.
14,014,042 .34 $343,344,029 30-Jun-08
Invesco Ltd. 13,876,334 .34 $339,970,183 30-Jun-08
9.77%
TOP MUTUAL FUND HOLDERS
Holder Shares % Out Value* Reported
FIDELITY MAGELLAN FUND INC 74,018,200 1.81 $2,022,177,224 31-Jul-08
GROWTH FUND OF AMERICA INC 40,197,174 .98 $984,830,763 30-Jun-08
AMERICAN BALANCED FUND 24,759,000 .60 $606,595,500 30-Jun-08
Capital Research Global Investors 22,586,674 .55 $553,373,513 30-Jun-08
FIDELITY DIVERSIFIEDINTERNATIONAL FUND
15,800,000 .39 $431,656,000 31-Jul-08
FUNDAMENTAL INVESTORS INC 12,196,000 .30 $298,802,000 30-Jun-08
AMERICAN FDS INSURANCE SER-GROWTH FD
11,830,000 .29 $289,835,000 30-Jun-08
FIDELITY CONTRAFUND INC 8,824,286 .22 $241,079,493 31-Jul-08
CAPITAL WORLD GROWTH ANDINCOME FUND
8,169,800 .20 $200,160,100 30-Jun-08
VARIABLE INSURANCE PRODUCTSFD-GROWTH PORTFOLIO
7,674,041 .19 $209,654,800 31-Jul-08
5.53%
Source: http://finance.yahoo.com/q/mh?s=NOK viewed on 9/24/2008.
2. Why Do Investors Care About Our Capital Structure?
2
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 3/17
The optimal debt ratio leads to the minimal cost of capital. If the value of the firm is the net present value of future cash flows, then the lowest cost of capital results in the maximal firmvalue. The cost of capital is higher with both too little and too much debt.
Advantages of debt:- Tax savings. Interest expenses are tax deductible while cash flows to equity (dividends) are not.This benefit increases with the tax rate.- Added discipline by increasing the cost of failure.
Disadvantages of debt:
- Higher expected bankruptcy cost (probability of bankruptcy times the cost). The probability of default is greater for firms that have volatile cash flows.- Agency costs. Debt exposes the firm to the possibility of conflicts between stock- and bondholders over investment, financing, and dividend decisions. The covenants that bondholders
write into bond agreements to protect themselves against expropriation cost the firm in bothmonitoring costs and lost flexibility.- Loss of flexibility. This is more likely to be a problem for firms that have substantial andunpredictable investment opportunities.
The following factors have an influence on the optimal debt ratio, i.e. they determine
whether the advantages outweigh the disadvantages of taking on debt.
Tax rate
It has a direct influence on tax savings. If the tax rate is high, the optimal debt ratio is alsohigher, because the tax savings increase by taking on more debt (until the point when the cost of debt gets too high).
The ability to pay interest
as reflected in the EBITA/Firm value ratio (pretax returns on the firm) or the interest coverageratio. If the company is able to pay interest easily (high coverage ratio), it can take on more debt.
Variance in operating income
This is shown in the beta reflecting the default risk. The beta increases with higher debt ratiosand at the same time raises the cost of equity. The cost of equity increases with higher debtrates. The variance also influences the bond rating - reflecting the interest rate, probability of bankruptcy and estimated cost of bankruptcy and therefore also the flexibility for the future. Thehigher the probability and cost of bankruptcy, the less the optimal debt.
Default spreads
of different ratings classes decrease the optimal debt ratio as they tend to increase duringrecessions (penalizing companies that borrow money) or increase the ratio as they go down .
3
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 4/17
Firm projects
Does the company need much flexibility in the future? if so, the optimal debt ratio is lower toallow for future borrowings. Firms operating in businesses where projects earn substantiallyhigher returns than their hurdle rate should value flexibility more than those that operate in stable businesses where excess returns are small.
3. What Is Our Cost Of Debt Financing?
Cost of Debt --Assumption:
The mobile phone portion of Nokia’s business is both young and very dynamic; thus one couldargue it makes little sense to apply a long-term analysis to both Nokia’s historical data andforward debt estimation. Although Nokia has issued some bonds that are openly documented intheir annual report, they are nominated among others in Finish Markka, German Deutschmarksand British Pounds.
We use the A-1 short-term debt rating that the company has from S & P. (AnnualReport 1998) with spread of 1.25 % over the T bond rate.
Using the risk free rate of 5.7% for 1-Year (short term) Government bond (H.15Daily Update) gives a pre tax cost of borrowing of 6.95 % which we shall call 7.0 %.
After Tax cost of Debt
The tax rate in Finland where Nokia pays two thirds of its taxes is 28 %. We shallround up the marginal tax rate to 30 percent to allow for the tax differentials in other countries where Nokia is also liable for tax.
After Tax cost of debt = 0.07 (1 – 0.30) = 4.9 %
Note: Nokia’s effective tax rate over the last five years was 24.57 %. For the last quarter it was30.02: Source www.marketguide.com. Detailed financial statistics are included in the appendix tothis report.
4. What Is Our Cost Of Equity Financing?
The Capital Asset Pricing Model is used to calculate the cost of equity.
R j = R f + β (R m-R f ) = R f (1-β ) + β R m
Using historical data collected from www.yahoo.com, Nokia stock returns (R j) are regressed againstreturns on the Standard and Poor’s 500 index (R m).
Regression equation R j = a + β R m
4
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 5/17
Where the slope b corresponds to the stocks β5 Year Monthly Return
Alpha (a) = 2.4% R Square = 33.69 Standard Error = 0.384Beta (b) = 1.993 No of points = 56
Looking at the intercept a of the
regression compared to R f (1-β ) givesus a measure of the Nokia’s stocks performance relative to the CAPM.Assuming a monthly risk free rate ( R f )equal to 0.4 %
a - R f (1-β ) = 2.8%
This suggests that Nokia performed
2.8% better on a monthly basis and 39.3% on an annual basis, compared tomonthly expectations generated using the CAPM between April 1995 and November 1999.
The value R2 provides an estimate of the proportion of the risk that can be attributed to marketrisk and the proportion that can be attributed to the firm risk. In the case of Nokia, 33.69 % of therisk (variance) comes from market sources (interest rate risk, inflation risk, etc.). The remaining portion (100 – 33.69 = 66.31% ) can be attributed to the firm specific risk, which is diversifiableand therefore not rewarded in the CAPM.
The standard error of the b estimate equals 0.384. Under the assumption of a normal distribution,
the true β for Nokia could range from 1.993-0.384=1.609 to 1.993+0.384=2.377 with 67%confidence and from 1.993-
2*0.384=1.225 to 1.993+2*0.384
=2.761 with 95% confidence.
2 Year Weekly Return
A second regression was madeusing weekly data over a period of two years
Alpha = 1.66Beta = 1.62R Squared = 46.38 No. of points = 110
This reduction of the Beta from1.99 to 1.62 when looking at the last two years compared with the last five years could beattributed to the fact that Nokia has grown considerably. This generally implies less risk.
5
NOKIA / S&P500 (2 Year Weekly)
Beta = 1.619
y = 1.6191x + 0.0166
R2
= 0.4638
-0.2
-0.15
-0.1
-0.05
0
0.05
0.1
0.15
0.2
-0.08 -0.06 -0.04 -0.02 0 0.02 0.04 0.06 0.08 0.1
S&P500 (SPC)
N O K I A
( N O K )
Series1
Linear (Series1)
Beta Calculation Nokia vs. S&P500 (5 Year - Month End)
Beta = 1.993
y = 1.9934x + 0.024
R2 = 0.3369
-0.4
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
-0.2 -0.15 -0.1 -0.05 0 0.05 0.1
S&P500 (SPC)
N O K I A
( N O K )
Series1
Linear (Series1)
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 6/17
Analyst Research
As a comparison for our results, a survey of the following web sites gave the following betavalues for Nokia;
Newsalert.com (www.newsalert.com)
Data Broadcasting Corporation (www.dbc.com)Market Guide Inc 1.97
Bloomberg.comMultex Broker Research 1.96
Bottom-Up Approach
Using the bottom up approach – (reference beta.xls )
Business u.Beta Weight %
Mobile Phones Foreign Electronic/Entertainment 0.78 60TelecommunicationsProducts
Telecom. Equipment 1.28 33
Communications Computers and Peripherals 1.33 7
Weighted Average 0.468 + 0.4224 + 0.0931 = 0.98
Comment:
Selecting the industry category for the mobile phone area of business proved difficult. We feel
that comparison to well followed American equities are not valid for several reasons. The market penetration for mobiles phones is significantly higher in Europe and Asia, especially for non- business users, where fashion plays an important role. Furthermore, the fierce competition between mobile phone operators has created the unusual scenario of one industry heavilysubsidizing another. In order to attract customers, operators discount heavily, in many casescompletely, the cost of a new mobile telephone. This allows customers to replace their handsetsfar more frequently than would normally be the case. We would argue that his lends the businesssome unusual market characteristics, which are not adequately reflected in any of the listsgenerated by American research bodies.
Using an expected risk premium of stocks over T-bonds of 5.5 % (based on the geometric mean):
5. Cost of Equity
The Cost of Equity = Risk Free Rate + (Beta * Expected Risk Premium)17.85 = 7.0 + 1.97 ( 5.5)
6
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 7/17
6. What Is Our Overall Cost Of Capital?
Market capitalization:
Company Financial Statement, Dec 31 1998:
Total Number of Shares: 605,596,564Shares outstanding: 573,436,000Average for 1998 569,170,000Market Capitalization $70,399,490,000
Equity and Debt Ratios
Market Value of Debt (D) $302,940,000Market Value of Equity (E) $70,399,490,000Preferred Stock (PS) $23,778,300,000
Total $94,480,730,000
Debt Ratio (D/(D+E+PS) 0.32 %Equity Ratio (E/D+E+PS) 74.5 %Preferred Stock Ratio (PS/D+E+PS) 25.1%
Cost of Capital
The cost of capital is the weighted average cost of equity, debt and preferred stock:
4.9 (0.32) + 17.85 (74.4) + 0.00034 (25.1) = 13.2 %
The above figures were calculated using the 1998 annual report and looking at interest bearinglong term debt
7. Could We Lower The Cost Of Capital By Changing Our Capital Structure?
The input numbers for the analyses have been taken from the 1998 annual report. Nokia should
take on more debt (up to 20 %) according to the two calculations below.
Using capstru.xls:
INPUTS FOR ANALYSIS
Capital Structure Financial Market Income Statement Current MV of Equity $68,760 Current Beta for Stock 1.99 Current EBITDA $3,529
Current Outstanding Debt $1,549 Current Bond Rating A- Current Depreciation $600
# of Shares Outstanding 573 Current T.Bill Rate 5.70% Current Tax Rate 30%
Riskless rate to use in CAPM 6.30% Current T. Bond Rate 6.30% Current Capital Spending $896
Risk Premium 5.50% Current Interest Rate 7.50% Current Interest Expense $246
7
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 8/17
RESULTS FROM ANALYSISCurrent Optimal Change
D/(D+E) Ratio 2.20% 20.00% 17.80%
Beta for the Stock 1.99 2.30 0.31
Cost of Equity 17.25% 18.96% 1.72%
AT Interest Rate on Debt 4.62% 6.16% 1.54%
WACC 16.97% 16.40% -0.57%Implied Growth Rate 6.00%Market Value of Firm (C) $70,309 $72,737 $2,428
Market Value of Firm (G) $70,309 $74,367 $4,058Market Price/share (C) $120.00 $124.24 $4.24
Market Price/share (G) $120.00 $127.08 $7.08
using apv.xls:
ANALYZING CAPITAL STRUCTURE
INPUTS FOR ANALYSISCapital Structure Financial
Market Income Statement
Current MV of Equity $68,760 Current Betafor Stock
1.99 Current EBITDA $3,529
Current OutstandingDebt
$1,836 Current BondRating
AA- Current Depreciation $600
# of SharesOutstanding
573 Current T.BillRate
5.00% Current Tax Rate 30.00%
Riskless rate to use in
CAPM
6.30% Current T.
Bond Rate
6.30% Current Capital Spending $896
Risk Premium 5.50% Current InterestRate
7.50% Current Interest Expense $246.00
Summary of Firm Values at Different Debt RatiosDebtRatio
$ Debt TaxRate
UnleveredFirm Value
TaxBenefits
BondRating
Probabilityof Default
ExpectedBankruptcyCost
Value of LeveredFirm
0 $0 30.% $70,094 $0 A+ 0.40% $71 $70,023
0.1 $7,060 30.% $70,094 $2,118 A+ 0.40% $71 $72,141
0.2 $14,119 30.% $70,094 $4,236 BB 12.20% $2,153 $72,177
0.3 $21,179 30.% $70,094 $6,354 CCC 50.00% $8,824 $67,623
0.4 $28,238 27.5% $70,094 $7,777 CCC 50.00% $8,824 $69,0470.5 $35,298 18.% $70,094 $6,368 C 80.00% $14,119 $62,343
0.6 $42,357 15.% $70,094 $6,368 C 80.00% $14,119 $62,343
0.7 $49,417 12.9% $70,094 $6,368 C 80.00% $14,119 $62,343
0.8 $56,476 11.3% $70,094 $6,368 C 80.00% $14,119 $62,343
0.9 $63,536 10.% $70,094 $6,368 C 80.00% $14,119 $62,343
8
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 9/17
8. Would More Debt Create Unnecessary Risk?
The value of Nokia would be the highest with a debt ratio of 20 %, but this would lead to asignificantly worse rating (BB). In order to remain with the same ranking, Nokia could take adebt ratio of 10 %, or a little more, resulting in only a slightly smaller firm value than with the
optimal debt ratio of 20 %. Nokia’s reason for a low debt ratio is twofold. They want to maintaintheir good bond rating and allow for high flexibility to invest in potential projects with high thanexpected returns.
9. What Do Other Companies Do?
An Industry Comparison
The following numbers have been taken from Morningstar Quicktake Reports based on the thirdquarter of 1999. Since we used the annual report of 1998 throughout this case study, Nokia’snumbers as of September 1999 are also shown to allow for an up-to-date direct comparison.
(Other sources for information and analysis like these include, www.Moneycentral.msn.com,www.finance.yahoo.com, www.marketguide.com, www.zacks.com )
The comparison shows that Nokia has considerably less long-term liabilities than Ericsson or Motorola, whereas the short-term liabilities are more comparable but exceeding the competitors’.
Comparison with companies of different industries:
Nokia’s long-term debt seems extremely low also compared to other companies of differentsectors like Novartis (17.8 %) and IBM (32.5 %).
Nokia And Its Main Competitors
DIRECT COMPETITOR COMPARISON
NOK ERIC MOT Pvt1 Industry
Market Cap: 73.91B N/A 16.99B N/A 103.55M
Employees: 117,212 N/A 66,000 254,0001 334
Qtrly Rev Growth (yoy): 4.50% N/A -7.40% N/A 12.80%
Revenue (ttm): 80.57B N/A 33.99B 105.21B1 128.73M
Gross Margin (ttm): 35.65% N/A 29.18% N/A 35.65%
EBITDA (ttm): 11.55B N/A 1.71B N/A 5.36M
Oper Margins (ttm): 11.90% N/A 2.46% N/A -0.49%
Net Income (ttm): 8.47B N/A -39.00M 8.46B 1 N/A
EPS (ttm): 2.19 N/A -0.013 N/A N/A
P/E (ttm): 9.10 N/A N/A N/A 17.06
PEG (5 yr expected): 0.71 1.49 9.99 N/A 0.95
P/S (ttm): 0.91 N/A 0.49 N/A 0.82
ERIC = LM Ericsson Telephone Co.
MOT = Motorola Inc.
Pvt1 = Samsung Electronics Co., Ltd.
9
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 10/17
Industry = Communication Equipment1 = As of 2007
:Nokia Mil $ % Ericsson Mil $ % Motorola Mil $ %
Assets
Cash 3544.7 26.2 1436.8 6.8 3527.0 10.3
Other Current Assets 6676.6 49.2 14040.2 66.8 12488.0 36.4
Long-term Assets 3294.7 24.4 5552.5 26.4 18257.0 53.3
Total 13516.0 100.0 21029.5 100 34272.0 100.0
Liabilities and Equity
Current Liabilities 6216.0 46.0 8575.1 40.8 11898.0 34.7
Long-term Liabilities 521.3 3.9 5262.8 25.0 7938.0 23.2
Shareholders’ Equity 6778.7 50.2 7191.6 34.2 14436.0 42.1
Total 13516.0 100.0 21029.5 100.0 34272.0 100
10. Valuation: Is Nokia’s Stock Fairly Priced? This section is intentionally left blank forstudent to complete.
_______________________________________________________________________ Ian Giddy; Work done by: Michael Osborne; Sonja Buchegger; Jan Van Lunteren
1
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 11/17
APPENDIX
Key Statistics
Data provided by Capital IQ, except where noted.
VALUATION MEASURES
Market Cap (intraday)5: 74.54B
Enterprise Value (24-Sep-08)3: 63.52B
Trailing P/E (ttm, intraday): 9.16
Forward P/E (fye 31-Dec-09) 1: 8.26
PEG Ratio (5 yr expected): 0.71
Price/Sales (ttm): 0.91
Price/Book (mrq): 4.16
Enterprise Value/Revenue (ttm)3: 0.79
Enterprise Value/EBITDA (ttm)3: 5.498
FINANCIAL HIGHLIGHTS
Fiscal Year
Fiscal Year Ends: 31-Dec
Most Recent Quarter (mrq): 30-Jun-08
Profitability
Profit Margin (ttm): 10.52%
Operating Margin (ttm): 11.90%
Management Effectiveness
Return on Assets (ttm): 12.41%
Return on Equity (ttm): 46.97%
Income Statement
Revenue (ttm): 80.57B
Revenue Per Share (ttm): 21.11
Qtrly Revenue Growth (yoy): 4.50%
Gross Profit (ttm): 25.49B
EBITDA (ttm): 11.55B
Net Income Avl to Common (ttm): 8.47B
Diluted EPS (ttm): 2.19
Qtrly Earnings Growth (yoy): -61.00%
Balance Sheet
Total Cash (mrq): 12.06B
Total Cash Per Share (mrq): 3.252
Total Debt (mrq): 2.01B
Total Debt/Equity (mrq): 0.114
Current Ratio (mrq): 1.409
Book Value Per Share (mrq): 4.77
Cash Flow Statement
1
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 12/17
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 13/17
NOKIA Balance SheetView: Annual Data | Quarterly Data All numbers in thousands
PERIOD ENDING 31-Dec-07 31-Dec-06 31-Dec-05
Assets
Current Assets
Cash And Cash Equivalents 3,129,913 1,952,724 1,853,586
Short Term Investments 14,181,081 9,465,231 9,883,818
Net Receivables 16,726,252 7,773,926 6,331,802
Inventory 4,236,060 2,051,746 1,975,579
Other Current Assets 4,873,826 3,295,469 2,400,779
Total Current Assets 43,147,133 24,539,096 22,445,564
Long Term Investments 995,680 336,677 371,902
Property Plant and Equipment 2,816,185 1,980,450 1,877,274
Goodwill 2,038,494 1,304,456 716,562
Intangible Assets 4,029,854 580,932 373,086
Accumulated Amortization - - -
Other Assets 64,808 48,851 (58,036)
Deferred Long Term Asset Charges 2,287,414 1,260,887 917,910
Total Assets 55,379,567 30,051,348 26,644,262
Liabilities
Current Liabilities
Accounts Payable 20,897,505 9,939,218 8,070,502
Short/Current Long Term Debt 1,577,476 326,114 446,519
Other Current Liabilities 5,474,769 3,150,236 2,936,128
Total Current Liabilities 27,949,750 13,415,568 11,453,148
Long Term Debt - 91,101 -
Other Liabilities 474,274 161,077 138,575
Deferred Long Term Liability Charges 1,418,403 270,662 178,844
Minority Interest 3,777,989 121,468 -
Negative Goodwill - - -
Total Liabilities 33,620,415 14,059,875 11,770,567
Stockholders' Equity
Preferred Stock - - -
Common Stock 362,333 324,794 315,050
Retained Earnings 20,429,123 14,685,697 15,579,598Treasury Stock (4,633,743) (2,719,818) (4,282,790)
Capital Surplus 948,548 3,574,052 2,911,255
Other Stockholder Equity 4,652,891 126,749 350,582
Total Stockholder Equity 21,759,152 15,991,474 14,873,695
Net Tangible Assets $15,690,804 $14,106,085 $13,784,047
1
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 14/17
LM Ericsson Telephone Co. (ERIC)
View: Annual Data |Quarterly Data
All numbers in thousands
PERIOD ENDING 31-Dec-07 31-Dec-06 31-Dec-05
Assets
Current Assets
Cash AndCashEquivalents
4,424,853 4,378,471 5,246,467
Short TermInvestments
4,835,297 5,529,593 4,998,712
NetReceivables
11,544,162 8,775,935 7,220,208
Inventory 3,512,843 3,136,767 2,414,446
Other
CurrentAssets 394,970 323,173 -
Total Current
Assets24,712,124 22,143,939 19,879,832
Long TermInvestments
2,433,747 2,112,606 1,502,618
Property Plantand Equipment
1,454,215 1,123,509 856,268
Goodwill 3,567,704 1,331,117 1,265,422
IntangibleAssets
4,316,850 3,016,088 892,470
AccumulatedAmortization
- - -
Other Assets - - (404,880)
Deferred LongTerm AssetCharges
1,827,147 1,981,700 2,253,173
Total Assets 38,311,787 31,708,960 26,244,903
Liabilities
Current Liabilities
AccountsPayable
6,847,034 5,989,808 1,581,809
Short/CurrentLong TermDebt
1,110,668 374,454 1,355,549
Other CurrentLiabilities
4,183,057 3,909,636 7,364,637
1
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 15/17
Total Current
Liabilities12,140,759 10,273,898 10,301,995
Long TermDebt
3,332,316 1,885,274 1,783,055
Other Liabilities 1,292,601 1,565,169 850,863
Deferred LongTerm LiabilityCharges
437,484 61,070 49,149
MinorityInterest
146,922 114,250 106,845
NegativeGoodwill
- - -
Total
Liabilities17,350,082 13,899,662 13,091,906
Stockholders' Equity
Misc Stocks Options Warrants -
-
-
Common Stock 2,521,432 2,356,885 2,027,792
Retained Earnings 15,517,777 12,263,926 8,422,654
Treasury Stock - - -
Capital Surplus 3,865,455 3,613,199 3,108,687
Other Stockholder Equity
(942,958) (424,713) (406,137)
Total Stockholder
Equity20,961,706 17,809,298 13,152,997
Net Tangible Assets $13,077,152 $13,462,092 $10,995,105
1
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 16/17
Alcatel-Lucent (ALU) Balance SheetView: Annual Data | Quarterly Data All numbers in thousands
PERIOD ENDING 31-Dec-07 31-Dec-06 31-Dec-05
Assets
Current AssetsCash And Cash Equivalents 6,446,883 6,267,000 5,341,000
Short Term Investments 1,316,773 1,643,000 758,000
Net Receivables 7,418,997 6,381,000 5,336,000
Inventory 3,343,483 5,775,000 1,762,000
Other Current Assets 1,645,229 1,328,000 979,000
Total Current Assets 20,171,366 21,394,000 14,176,000
Long Term Investments 1,991,361 7,322,000 967,000
Property Plant and Equipment 2,103,301 2,646,000 1,315,000
Goodwill 10,793,411 14,486,000 4,467,000
Intangible Assets 6,230,367 6,880,000 970,000
Accumulated Amortization - - -
Other Assets 6,723,789 4,981,000 3,958,000
Deferred Long Term Asset Charges 1,814,613 1,894,000 2,094,000
Total Assets 49,828,207 59,603,000 27,947,000
Liabilities
Current Liabilities
Accounts Payable 7,351,244 5,755,000 4,727,000
Short/Current Long Term Debt 711,411 1,532,000 1,239,000
Other Current Liabilities 7,922,729 8,780,000 5,561,000
Total Current Liabilities 15,985,384 16,067,000 11,527,000
Long Term Debt 6,723,789 6,662,000 3,259,000
Other Liabilities 7,022,787 7,090,000 2,079,000
Deferred Long Term Liability Charges 2,794,091 3,331,000 192,000
Minority Interest 758,544 657,000 565,000
Negative Goodwill - - -
Total Liabilities 33,284,594 33,807,000 17,622,000
Stockholders' Equity
Misc Stocks Options Warrants - - -
Redeemable Preferred Stock - - -
Preferred Stock - - -
Common Stock 6,826,892 6,096,000 3,383,000
Retained Earnings (10,743,333) (4,891,000) (5,282,000)
Treasury Stock (2,308,034) (2,075,000) (1,865,000)
Capital Surplus 24,366,185 21,700,000 9,838,000
1
8/6/2019 Nokia - Sample Case Analysis - 2008
http://slidepdf.com/reader/full/nokia-sample-case-analysis-2008 17/17
Other Stockholder Equity (1,598,097) 4,966,000 4,251,000
Total Stockholder Equity 16,543,613 25,796,000 10,325,000
Net Tangible Assets ($480,165) $4,430,000 $4,888,000
1