Palm Inc Analysis Essays - 1589 Words

Palm, Inc. Minicase Introduction Palm Inc. is a division of 3Com. Because of stock price volatility, the CFO is looking into better understanding how Palm is valued in the market. Managers/CFOs often use heuristics for valuation purposes as opposed to traditional methods such as the DCF. Metrics such as the ones used by Palms CFO, the P/E and price-to-sales, are often easier to use and require less research and fewer variables. However, relying on such metrics can lead to the affect heuristic. DCF is the methodology that should be used to ensure the fundamental value is accurate. The application of heuristics in valuation is often subject to bias. The bias can stem from incorrect assumptions made in regards to inputs for†¦show more content†¦Managers rely on unpolished heuristics to measure fundamental value, because they are considered simpler and more intuitive than the DCF approach. Some of the biases that can cause valuations to be affected are misframing, growth opportunities, the 1/n He uristic and excessive optimism. These biases stem from poor assumptions, leading to biased inputs. Furthermore, it is believed financial executives and analysts who make biased forecast of future earnings and P/E ratios will typically end up with biased valuations. Managers rely on unpolished heuristics to measure fundamental value, because they are considered simpler and more intuitive than the DCF approach. Heuristics and Biases Applied to Palm, Inc. Palm Inc. relied on valuation heuristics rather than discounted cash flow methods. Its valuation was based on two heuristics methods The P/E, and the PEG ratios. Since information on the sales of Palm are not provided no conclusions can be drawn from a price-to-sales heuristic, although it was a consideration for the CFO. DCF Analysis There are several things that can be determined from the information obtained through our review. The first is in relation to the P/E ratio. The market price is $21.69, with an EPS of $.0.51. This leads to a P/E Ratio of 42.51. This is significantly higher than the P/E ratio of 5.76 based off the fundamental value. Since the share price of $2.94 is significantly lower, the P/E ratio is alsoShow MoreRelatedPda Connector Case3428 Words   |  14 PagesConglomerate Inc – New PDA 1 Introduction Conglomerate Inc., a major U.S. wireless carrier, has teamed up with a PC manufacturer to form a joint venture, Netlink, to develop, produce and market a hybrid product integrating a Personal Digital Assistant (PDA) with a â€Å"smart† cellular phone. Its first product is tentatively called ConneCtor. ConneCtor directly transmits and receives both data and voice. It is lightweight but heavier than a cell phone whose shape it emulates. It comes with a backlitRead MorePalm Case Study1203 Words   |  5 PagesStudy Report, Palm Inc. BACKGROUND: Jeff Hawkins founded Palm Computing Inc, a hand-held computer business, in 1992 which has since changed names (Yoffie Kwak, 2001). In 1999 it changed to Palm Inc (Yahoo Finance, 2006). The case study concentrated on Jeff Hawkins, the founder of Palm, and Donna Dubinsky the former CEO of the company. These two left Palm in 1998 and founded a company called Handspring, the only company as of 2001 to take a meaningful share of the market away from Palm (Yoffie,Read MoreEssay about McDonalds Business Analysis1311 Words   |  6 Pagesopening rapid expanision of the company. Today, there are over 70 SWOT ANALYSIS: Strengths: The biggest strength that the case study focused on was strategy. Palm employed a judo strategy starting with the puppy-dog ploy (Yoffie, 2001, p. 56). This strategy allowed Palm to stay in business and stay undetected as a threat to their competition, especially Microsoft, for quite some time. Yoffie (2001) stated that strength of Palm was their tightly integrated software and hardware design (p. 59).Read MoreHow Performance And Employee Satisfaction?957 Words   |  4 Pages This essay is composed so as to comprehend and investigate the key elements that help in the understanding of work motivation utilizing confirmations from occasions which happened in Palm Troy Inc., a manufacturing company that focuses on one division of the organization where all the employees are women. Furthermore, it incorporates how motivation and organization behavior are associated, tossing the light on effect of supervision on organization environment coming about performance of the workersRead MoreToys R Us Inc. : Research Proposal1107 Words   |  5 PagesChapter 1: Research Proposal and Introduction Introduction The Corporate name, founding date, founding leaders. Toys R Us Inc., founding date was 1948 and the founding leader was Charles P Lazarus. The company, which was originated in Washington D.C. was named Children’s Bargain Town. Initial Products Toys â€Å"R† Us origins go back to the first store named Children’s Bargain Town. The first products which were sold were baby furniture and cribs. To keep its customers satisfied it introduced infantRead MoreToys R Us Research Proposal And Introduction1146 Words   |  5 PagesChapter 1: Research Proposal and Introduction Introduction The Corporate name, founding date, founding leaders. Toys R Us Inc., founding date was 1948 and the founding leader was Charles P Lazarus. The company, which was originated in Washington D.C. was named Children’s Bargain Town. Initial Products Toys â€Å"R† Us origins goes back to the first store named Children’s Bargain Town. The first products which were sold were baby furniture and cribs. To keep their customers satisfied they introducedRead MoreStrategic Plan of Hp1092 Words   |  5 PagesAnalysis and Strategic Plan of Hewlett-Packard Hewlett-Packard’s operations are organized into seven segments: Services, Enterprise Storage and Servers (ESS), HP Software, the Personal Systems Group (PSG), the Imaging and Printing Group (IPG), HP Financial Services (HPFS), and Corporate Investments. Services, ESS and HP Software are reported collectively as a broader HP Enterprise Business. In April 2010, the Company completed its acquisition of 3Com Corporation. In July 2010, the Company completedRead MoreMarketing1467 Words   |  6 PagesCase Study 1 (20%) Due Week 5 |BEO 6501 Quantitative Analysis |Semester 2, 2014 | Part A (5) Drink-At-Home, Inc. Drink-At-Home, Inc. (DAH, Inc.), develops, processes, and markets mixes to be used in nonalcoholic cocktails and mixed drinks for home consumption. Mrs. Lee, who is in charge of research and development at DAH, Inc., this morning notified Mr. Dick Jones, the president, that excitingRead MoreSwot Analysis Of Staples Inc1582 Words   |  7 PagesStaples, Inc. was originally founded in 1986 and is known worldwide. Staples was the first company to have an office supply superstore. When they first opened its doors to customers, office supplies were offered at the lowest costs, which is what they have been known for. Over the years Staples has had successful ventures domestically and internationally. However, with the changing times due to the technological era, the demand for traditional offices has been low which has resulted in Staples sufferingRead MoreBlackberry Limited s Current Market Position And Strategy1533 Words   |  7 Pagesreturn to dominancy again. My conclusion is that BlackBerry needs to take drastic measures to remain a viable company. The company must seriously consider which line of business will help it stay afloat and derive a plan of action through strategic analysis. I recommend that the company consider moving away from the cellphone business and focus on its strengths in security management through partnerships with other companies. Company History and Background BlackBerry Limited, formerly known as Research