Value Chain AssignmentContinued October 1, 2008

2008 MBA/ENG 290G International Competition in

Technology

Team 1

Semiconductor Foundries:

Industry AnalysisMBA 290G.1Oct. 1, 2008

Franck Formis, Robert Kong, Vincent Ng, Jameson Slattery & Chuohao Yeo

PC Market

2006 2007 2008 2009 20100

50

100

150

200

250

300

350

PC

Sh

ipm

en

ts (

mil

-li

on

s)

Source: Gartner and Team 1 estimates

1Q

2008 G

lobal PC

Mark

et

Share

Other Semiconductor Markets

Sources: Deutsche Bank and Lyra Research

Mobile Phones

Digital Cameras

Market Analysis Slowing global PC shipment growth

Developed markets nearly fully reliant on replacement sales Room for growth remains in developing economies

Mobile phone shipments totaled >1B in 2007 Slowing growth (5-10% per year) through 2010 Emphasis on cost reduction for emerging economies

Consumer electronics revenue to grow 6.1% in 2008

Medical devices market shows strong growth Top 25 companies reported 9.7% revenue growth in 2007

(sales of $173.5 billion) E.g. Sales of electronic handheld blood pressure devices to

reach $793 million by 2010

Foundry Industry Background (1)

Semiconductors are critical components in many electronics

Highly competitive Pure-play: TSMC, UMC, SMIC, Chartered Integrated: TI, IBM

Cyclical nature of industry Y2Y Growth: 2003: 18%, 2004: 28%, 2005: 7%,

2006: 9%, 2007: 3% Economic conditions Seasonal demands Customer shifts between internal and outsourcing

Foundry Industry Background (2)

Substantial fixed-capital expenditures Cost of new fab about $3-$5 billion Dependent on financing ability to implement growth plan History of loss, Question in profitability, and high level of debt

makes financing not easy

Need to maintain high fab utilization, overcapacity during downturn hurts net income

Dependent on technology partner to advance technology TI: Analog and Mixed signal technology development remain in-

house, Exit process development, and rely on Foundry partners instead

UMC: In-house R&D augmented by patent cross-licensing agreements with other companies

Dependent on small amount of customers

Major Customers TSMC

Fabless: Altera, Broadcom, Marvell, Microsoft, nVIDIA, Qualcomm, etc ~67%

Integr. Dev. Manuf.: Adv. Micro Devices, Analog Devices, Freescale, etc. ~33%

UMC Infineon, LSI Logic, STMicroelectronics, TI, AMD etc Top 10 accounts for 60%, top 2 accounts for ~13.5% each

SMIC: TI, IBM, Broadcom, Infineon, Samsung, Toshiba 5 largest customers account for ~60% of revenue

Chartered Broadcom and AMD each contributes more than 10% Top 10 accounts for 72%, top 5 accounts for 61%

Texas Instrument Nokia, L.M. Ericsson

Geographic Breakdown

Americas72%

Asia19%

Europe8%

Japan1%

TICharteredSMIC

UMCTSMC

Major Suppliers TSMC (silicon wafers)

Shin-Etsu Handotai and SUMCO Corporation (JA), Siltronic (GE), MEMC Electronic Materials (US), and Formosa SUMCO Technology (TW) ~90%

UMC (silicon wafers, equipments, chemicals) Silicon wafer: Shin-Etsu, MEMC Electronic Materials, Inc.

SMIC (silicon wafers, gases, chemicals) Largest supplier ~14% and top 5 suppliers ~48% of all raw materials

purchases

Chartered Limited number of suppliers, lead time of ~ 15 months Technology partners: IBM, Infineon, Samsung, Freescale, Toshiba, ST

Micro.

Texas Instrument Toppan (photomask), Siltronic (bare wafers), Varian Semiconductor

Equipment Associates (ion-implanters)

Financial Ratios    TI SMIC TSMC Chartered UMCProfitability                         Revenue Growth -3.04% 5.48% 2.11% -4.36% 1.14%  Gross Margin 53.00% 9.87% 44.12% 19.16% 20.78%  EBITDA Margin 32.66% -0.58% 59.43% 35.70% 17.37%  Net Income Margin 19.20% -1.23% 22.21% 7.50% 14.97%             Liquidity Ratios                         Quick Ratio 3.42 1.16 5.13 2.00 1.79  Debt/Value Ratio 0.00 0.04 0.00 0.18 0.01             Management                         Return on Assets (ROA) 0.21 0.00 0.13 0.03 0.06             Power                         Accounts Payable Days 36.88 78.90 23.43 70.82 23.08  Accounts Receivable Days 45.96 70.17 0.29 63.90 48.37             Inventory                         Inventory Turnover Days 79.60 64.80 48.31 71.12 48.26             Equity                         Enterprise Value/Revenue 3.62 9.93 25.45 6.31 9.87  Enterprise Value/EBITDA 11.08 -1710.33 42.82 17.68 56.81  Price/Earnings 19.44 -800.58 115.50 74.17 67.79  Price/Earnings to Growth -6.41 -145.99 54.85 -17.03 59.21

  Earnings per Share 1.88 0.00 0.09 0.04 0.03

Profitability Analysis

    TI SMIC TSMC Chartered UMCIncome Statement                         Last Reported Total Revenue 13,835.00 1,550.00 9,948.50 1,355.49 3,494.00  Total Revenue Reported 1 Year Earlier 14,255.00 1,465.00 9,739.00 1,414.53 3,454.00               Cost of goods sold 6,502.00 1,397.00 5,559.10 1,095.83 2,768.00  Gross Profit 7,333.00 153.00 4,389.40 259.66 726.00               Operating Expenses 3,836.00 189.00 944.40 270.46 537.00  Operating Income (a.k.a. EBIT) 3,497.00 -36.00 3,445.00 -10.80 189.00               Depreciation & Amortization 1,022.00 27.00 2,467.00 494.77 418.00  EBITDA 4,519.00 -9.00 5,912.00 483.98 607.00               Net Income 2,657.00 -19.00 2,210.00 101.69 523.00             Balance Sheet                         Total Assets 12,667.00 4,708.00 17,603.00 4,025.56 9,237.00  Cash and Cash Equivalents 1,596.00 469.00 2,929.00 743.17 1,470.00  Current Assets 6,918.00 1,075.00 7,703.40 1,353.73 2,501.00  Accounts Receivable 1,742.00 298.00 7.80 237.31 463.00  Inventory 1,418.00 248.00 735.80 213.52 366.00               Total Liabilities 12,667.00 1,661.00 2,472.40 2,228.58 1,744.00  Long term Debt 0.00 616.00 748.80 1,499.92 231.00  Minority Interest 0.00 35.00 110.80 0.00 201.00  Preferred Stock 0.00 0.00 0.00 255.84 71.00  Current Liabilities 2,025.00 930.00 1,501.90 675.91 1,396.00  Accounts Payable 657.00 302.00 356.90 212.62 175.00             Stock Market                         Number of Shares (in millions) 1,417 18,550.00 25,627.10 2,539.63 15,618.00  Market Price 36.46 0.82 9.96 2.97 2.27  Market Capitalization 51,663.82 15,211.00 255,245.95 7,542.69 35,452.86  Enterprise Value 50,067.82 15,393.00 253,176.55 8,555.27 34,485.86

Financial Data

Team 2

Disk Drive Industry AnalysisIndustry Statistics• Global Computer Storage and Peripherals - $135.9 billion. Storage - $80.• US Computer Storage and Peripherals - $60.3 billion in 2008.• Hard Disk Drives - $24.3 billion.• External drives is the fastest growing segment - $3.5 billion in 2007 to $9.8 billion in 2012.

Major Players• Seagate (Maxtor), Western Digital.• Captive suppliers - Hitachi, Fujitsu, Samsung.

New Markets• Communications equipment - $125 billion.• Consumer electronics - $264 billion.

Changes in Industry• Commodity product, constant innovation.• SG&A ↑, R&D ↑, COGS ↑, Rev ↑, G Margin ↑..• Move to consumer electronics & data security. • Move from PC solutions to mobile solutions.

Major Customers

Financial ModelSeagate 2008

Seagate 2007

Seagate 2006

Western Digital 2008

Western Digital 2007

Western Digital 2006

Revenue Growth 10.61% 18.96% 17.99% 32.28% 20.61% 16.17%Gross Margin 25.22% 19.23% 23.21% 21.54% 16.46% 19.10%EBITDA Margin 10.46% 4.95% 10.04% 17.57% 11.43% 12.12%Net Income Margin 9.93% 8.04% 9.12% 10.74% 10.31% 9.10%                          Quick Ratio 1.30 1.43 1.30 1.75 1.80 1.73Debt/Value Ratio 0.22 0.12 0.00 0.12 0.00 0.00                          Return on Assets (ROA) 0.12 0.10 0.09 0.18 0.19 0.19                          Accounts Payable Days 63.45 51.76 87.36 68.04 70.48 65.68Accounts Receivable Days 40.50 44.44 57.29 45.66 46.53 40.44                          Inventory Turnover Days 36.30 31.59 46.01 26.27 20.70 21.31                          Enterprise Value/Revenue 0.60 1.30 1.32 0.51 0.89 0.94Enterprise Value/EBITDA 5.75 26.35 13.16 2.89 7.82 7.77Price/Earnings 4.66 14.21 14.37 5.45 9.89 11.69Price/Earnings to Growth 0.44 0.75 0.80 0.17 0.48 0.72Earnings per Share 2.60 1.71 1.46 3.91 2.58 1.78

• Western Digital growing faster and with higher margins. They have also taken less debt• Very similar cash cycle.• Inventory better managed by Western Digital• Current Market Price: Seagate = $12.12 and Western Digital = $21.32

Financial Model for Next Year

• Source: Google Finance, Yahoo Finance, Seagate & WD 2008 Quarter results & MarketWatch Analyst estimates• Industry is not growing! • Poor results for Seagate estimated, Western Digital stays stable.

Seagate 2009 (projected) WD 2009 (projected)Profitability      Revenue Growth 0% 5%  Gross Margin 14% 21%  EBITDA Margin 10% 16%  Net Income Margin 5.4% 10.70%Liquidity Ratios      Quick Ratio 1.3 1.75  Debt/Value Ratio 0.2 0.1Management      Return on Assets (ROA) 0.08 0.14Power        Accounts Payable Days 66 68  Accounts Receivable Days 42 45Inventory      Inventory Turnover Days 45 28Equity        Enterprise Value/Revenue 0.7 0.5  Enterprise Value/EBITDA 5.9 2.9  Price/Earnings 7.53 5.18  Price/Earnings to Growth 0.55 0.36  Earnings per Share 1.63 3.67

Team 3

Team 4

Graphics/Display Chips Industry Analysis

Christian HuthLakshmi Jagannathan Christopher Quek Daisuke TanakaJohn Michael Wyrwas

2005 2006 2007 Competitor0

50

100

150

200

250

300

350

400

PC GPU market in M units

SiSVIA/S3AMDNvidiaIntelSeries1

Market analysis for graphic/display chips shows a stable market dominated by big players

2005 2006 20070

200

400

600

800

1000

1200

1400

Other GPU markets in M units

LCD TVCameraMobile

Use of graphic chips in a broad spectrum of products

Strong R&D leads to continuous improvement of chip performance

Cost effective manufacturing

Reduced sales and general expenses

Overall decreasing

prices

CAGR(05-07)19%

CAGR(05-07)15%

Overall stable market size with strong volume growth and declining prices

GPU chips are increasingly used in other applications

Changes in industry lead to cheaper chips with higher performance and an overall very competitive situation

Source: Jon Peddie Research; team analysis

Geographic Breakdowns, Suppliers, and Customers

NVidiaTSMC, United Micrelectronics Corporation (UMC), Chartered, SMIC, Austria Micro Systems (Manufacturing)

Advanced Semiconductor Engineering, Amkor, JSI Logistics, King Yuan Electronics, Siliconware Precision Industries, Limited (SPIL), STATS ChipPAC (Assembly, Testing and Packaging)

CEMs. Distributors, Motherboard manufacturers, Add-in board manufacturers

AMD/ATITSMC, UMC, Chartered (Manufacturing)

Advanced Semiconductor Eng, AMKOR, King Yuan, SPIL (Test Assembly)

Celestica, FOXCON, PC Partner (Packaging)

OEMs – Dell, HP(10%), AIB’s (Add-in Board Retailers)

ZoranTSMC (Manufacturing)

Advanced Semiconductor Eng (Test and Assembly)

BenQ, Canon, HP, Samsung, Tosibha, Flextronics, Maxtek

IntelSumitomo (Wafers), NTK (Packaging)

Dell, HP

TridentUMC, SPIL (Manufacturing)

3rd Party Contractors (Test and Packaging)

OEM’s (Samsung, Midoriya, Philips), ODM’s, and System Integrators Worldwide

Suppliers Geographic Breakdown Customers

Financial Analysis

Team 5

Group 5:

Varun Boriah

Sonia Fereres

Dilip Joseph

Brendan Quinn

Ada Zheng

PC Value Chain:Flash Memory

R & DAssembly

&Testing

Services

Flash Memory1. NAND : Data Storage2. NOR : Program Execution

Semi-conductor

Samsung 32%

Toshiba 20%

Hynix 13%

Spansion 10%

Intel 9%

Controller WafersTSMC,SMIC, Tower, UMC

Memory Wafers

Major Suppliers

Toshiba, Ardentec

StatsChipPac, SPIL, United

Test, Flextronics

SanDisk slotMusic

OEM

Mobile Phone, audio/video

players & digital camera makers

Ericsson, Sony, Microsoft, Kodak

Apple : 3rd largest OEM buyer of Flash memory ($1.2b)

Distri-bution

End Users

Retail is 2/3 of SanDisk revenues

WalMart : 19.6% of Lexar sales

BestBuy : 11% of SanDisk sales

Major Customers

US

Japan

EMEA APAC & rest

$3.4bGeographic Spread

2008 is projected to be a bad year. Pressures:• Rapidly declining Price/MB due to commoditization & excessive competition• Competing standards• R&D is expensive and risky

Reactions• Pursuing future growth opportunities

– Mobile Phones, Video players, E-books, GPS, NetBooks

– SSD replacing HDD– Developing regions

• Consolidation– Micron > Lexar– Samsung > SanDisk (trying)

• Joint Ventures– Micron+Intel, SanDisk+Toshiba

• Move mfg to lower cost locations• Move up value chain

$14b

$8b

2007

$22b

SanDisk : $3.9b,19% growth in 2007Grew 41% in 2006 and 30% in 2005

12.5% growth

Industry Size

Flash Memory MarketSamsung 32%

Toshiba 20%

Hynix 13%

Spansion 10%

Intel 9%

Q3 2007 Flash Memory Market Share

• Types– NAND Flash (Storage) $13.9b revenue 2007Samsung, Toshiba, Hynix(Intel + Micron), Sandisk– NOR Flash (Mobile Devices) $8b revenue 2007Spansion,Samsung, Numonyx (Intel+STMicroelec.)

• Market Growth: one of the fastest semiconductor growing segments

• New Market Perspectives: consumer electronics (Sandisk’s SlotMusic, audio players, Livescribe's Pulse smartpen, GPS traffic navigation, game consoles, ebooks), portable computing (PDAs, Netbooks), replacement for HDD (SDD), multifunction mobile phones.

• Major Customers (SanDisk): OEM/ODMs (Mobile Phone, audio/video players & digital camera makers: Siemens, Ericsson, Sony, Microsoft, Matsushita, Kodak), Retailers worldwide.

– Apple (flash-memory based iPods): world's 3rd largest OEM buyer of NAND flash memory in 2007, purchases of $1.2 billion, representing 13.1 percent of the global market

• Major Suppliers (SanDisk): Memory Wafers (Samsung, Hynix), Controller Wafers (UMC, Towers, SMIC, TSMC), Sort & Test (Toshiba, Ardentec), Assembly (SanDisk, Silicon Precision Industries), Final Test (SanDisk, Flextronics, SPIL).

• Pressures: Rapidly declining ASP/MB (3rd year of 60% annual ASP decline), economic slowdown, cyclic semiconductor industry downturns, commoditization and fierce competition.

• Latest News:– Projected flat revenue growth for 2008 (slowdown from 2007)– Samsung recently tried to buy SanDisk, who rejected the offer despite plummeting stock prices

Detailed Slides

Flash Memory Value Chain

R & DSemi-

conductorAssembly

&Testing

OEM ServicesDistri-bution

• § PC Market Industry Size, Growth, Competitor Concentration • § New market industry size and growth (Cell phones, MP3 players, pdas,

servers etc.) • § What changes are going on in the industry and what areas are facing

pressures (compare SG&A, R&D and COGS for year over year trends). • § Major customers for each company • § Geographic breakdown (US, EMEA, Asia) for each company • § Major suppliers to the industry

Market Size & GrowthNAND Flash = one of fastest. Application: storage.

NAND = Samsung, Toshiba, Hynix (Intel + Micron) Revenue 2007: $13.9b

NOR flash = flat & declining revenues. Application: program execution, key component in mobile phones. NOR = Spansion, Intel, Samsung, ST (ST + INTel = Numonyx)Revenue 2007: $8b

Ref : http://www.isuppli.com/news/default.asp?id=8805

MARKET PROJECTION/GROWTH

Semiconductor /memory chip index:

“Statement” : As 2008 shapes up to be a poor year for NAND, suppliers are likely to look back at 2007 with nostalgia. In 2007, NAND flash memory revenue grew by 12.5 percent to reach $13.9 billion. Six of the Top-8 suppliers achieved revenue growth for the year. Along with Intel and Micron, Toshiba and STMicroelectronics managed to outgrow the market and gain share

Q3 2007 Flash Memory Market Share

Total Q3 07 Revenue = $6.06b

Samsung

ToshibaHynix

Spansion

Intel

STMicron

Macronix Silicon Storage TechSharp

32.2%

19.7%13.3%

10.1%

9.1%

% growth from Q3 06 = 24.9%

Src: iSuppli Flash Memory Market Shares, 2008

Competition

Competition – Comparing with SanDisk

Toshiba, Hynix, IM Flash, Micron, Samsung, STMicro

A-Data, Buffalo, Chips and More, Dane-Elec, Elecom, FUJI, Hagiwara, Imation

Corporation, or Imation, Memorex, I/O Data, Kingmax, Kingston, Kodak, Lexar,

Panasonic, Netac, PNY, RITEK, Samsung, Sony, Toshiba, Tradebrands, Transcend,

Verbatim

phase-change technology, charge-trap flash, millipedes/probes

New Storage Technologies

Semiconductor Manufacturers HDDsSeagate, Western

Digital, Hitachi

Content ServicesiTunes, Rhapsody

Memory Card & USB drive Manufacturers

Apple, ARCHOS, Creative, Microsoft, Samsung and Sony

Digital Audio/Video Players

New Growth Markets• Consumer Electronics

– GPS : On-board GPS will be a multi-billion dollar industry– Video Players : More memory required as video players gain popularity– E-Books : a new market– Digital Interactive TV– Intelligent pens

• Portable Computing– Emerging NetBook category : Sales predicted to rise too 18m in 2009 from 0.5m in 2007 (Src:

Taiwan MIC)– PDAs

• Multifunction Mobile Phones– Smart phones = 28% of US shipments– 80% of cell phones will have memory slots by 2012 (Gartner)– $8b for NOR flash

• SSD as replacement for HDD– 10% share of HDD market = huge rise in Flash demand– 1 in 5 computing devices to have SSD by 2011/12 (Gartner)– In both servers (better R/W speeds) and laptops (lighter)

• Developing countries– Rising demand for consumer electronics from 1b strong middleclass in 10 years– OLPC

Pressures• Rapidly declining Price/MB

– Commoditization & excessive competition

– Supply glut– 3rd year of 60% annual ASP

decline– Production savings cannot keep

up– Slowing economy– Falling US consumer confidence

• Cyclic semiconductor industry downturns

• Competing standards

• R&D is expensive and risky– Expiry of key patents– New technology crucial to

decrease costs and overcome commoditization

• Consolidation – Micron acquired Lexar– Samsung trying to acquire

SanDisk

• Joint Ventures– Micron-Intel IM Flash JV– SanDisk JV with Toshiba– Capital efficient model for capacity

expansion to drive scale– R&D co-development reduces

cost• Shift to low cost locations

– For example, away from Japan

• Move up the value chain– Avoid depending on OEMs like

Apple and Sony for hit products– Sansa MP3 players– SanDisk slotMusic – SD cards

preloaded with music albums

Changes

Major Customers

Src: iSuppli OEM Semiconductor Spend Analysis tool. SanDisk & Lexar 10-K

Retail

BestBuy accounts for 11% of sales

WalMart accounts for 19.6% of sales

North America : BestBuy, CircuitCity, Walmart, Costco

Europe & Asia : Duttenhofer, Hama, Nokia, Ericsson, Twinmos, Zenitron

Retail is 2/3 of SanDisk’s total revenues

OEMs & ODMs

Sells cards under Kodak Brand

Mobile Phone, audio/video players & digital camera makers:

Siemens, Ericsson, Sony, Microsoft, Matsushita, Kodak

Apple (world’s 3rd largest OEM buyer of Flash memory, $1.2b, 13.1% of global market) buys directly from semiconductor manufacturers like Samsung, Hynix

Common

US, 532, 61%

Japan, 34.744, 4%

EMEA, 118.336, 14%

APAC & other, 185.377, 21%

Revenues by Geography ($m)

US, 1193, 35%

Japan, 283, 8%EMEA, 889,

26%

APAC & other, 1079, 31%

2007

US, 1719, 30%

Japan, 477, 8%

EMEA, 932, 16%

APAC & other, 2560, 46%

$5688m$3444m

* Includes Micron DRAM sales

$852m

2005

2007Including subsidiary

Major SuppliersMemory Wafers Controller

WafersSort & Test

Assembly Final Test

JV with Toshiba provides a captive supplier from which SanDisk got 95% of its requirements in 2007

Samsung and Hynix guarantee a fraction of their output

TSMC, SMIC, Tower, UMC

Toshiba, Ardentec

SanDisk, StatsChipPac, Silicon Precision Industries

SanDisk,SPIL, United TestBeautiful EnterprisesFlextronics, GlobalBrands Mfg,StatsChipPAC

Parent MicronJV with IntelCaptive supplier: JV with Tech Semiconductor

Detailed information about Lexar’s suppliers was not available in the Lexar/Micron 10-Ks or online

Micron

Products• Our products

– Removable cards– USB drives– Embedded– Digital media players– slotMusic

• Primary Markets– Consumer– Mobile phones– Digital Audio and Video players– Computing

• Sales Channels– Retail – Americas, Europe, Middle East and Africa, APAC, Japan– OEM – manufacturers of mobile phones, digicams, PCs, GPS, gaming devices.

190% increase in no of MB sold., 60% reduction in ASP/MBUnit sales increase 75% in 2007.Strongest unit growt coming from mobile cards.Retail – Mobile cards and USB flash drivees.

Team 6

PC Market: Dell, HP, Acer, Lenov, Asus

Team 6Ankit GuptaWan-Lin TsengToru YamagishiNuttapong ChentanezJim Miller

PC Market

• Market Size & Growth▫ $32.8B in 2008, with 7.2% growth 2007-2008▫ >50% from HP, Dell, Acer, Lenovo

• New markets: Net-books, WiMAX, 3.5G phones, Advanced LED • Changes:

• Major customers: Mostly business-business• Geographics breakdown:

• Major suppliers: CPU: Intel, AMD Logic IC: Winbond, Newland Graphics: NVIDIA, AMD, Intel, Sis PCG: NPC, Yahsin Conectors Foxconn, AMP DRAM: Winbond, Qimonda, Hynix, NPC Monitor: Samsung, LG

Dell HP Lenovo Acer Asus

US 63.40 30.00 28.00 24.40 17.83

EMEA 23.80 70.00 21.00 54.30 76.84

Asia 12.80 51.00 21.40 5.30

Dell HP Lenovo Acer Asus % of r evenue growth % of r evenue growth % of r evenue growth % of r evenue growth % of r evenue growth

SG&A 12.35 26.73 12.00 10.00 10.39 11.71 7.98 21.63

R&D 1.00 22.49 3.50 10.80 1.41 17.09 0.08 -9.14 6.10 -9.56

COGSS 80.91 3.25 75.37 13.78 85.02 14.97 89.74 26.20 93.09 52.94

I

Financials

Team 7

Dell, HP, Acer, Asus, and Lenovo Value Chain (cont.)

KC Chen, Anthony Goodrow, Andrew Liao, Piyapat Tantiwong, Sha Tao

(Team 7)

PC Market Size and Growth

Changes and Pressure

Increased COGS ratio • 1. Price cut to maintain the market share when PC industry gets mature • 2. Increased operation costs running cutting edged fab

Increased COGS, R&D and SG&A ratios • 1. Price cut to gain market share • 2. Increased operation costs running cutting edged fab • 3. More R&D and marketing resources allocated to new products

Increased R&D and SG&A ratio • 1. More R&D and marketing resources allocated to new products, eg. EEE PC

CPU • 2. COGS ratio stable probably because of fabless model

2007 2006 2005COGS 48.1% 44.8% 41.2%R&D 15.0% 15.3% 13.4%SG&A 14.1% 15.9% 14.8%

COGS 62.4% 47.5% 57.5%R&D 30.7% 20.0% 19.0%SG&A 22.8% 19.0% 16.9%

COGS 76.5% 75.0% 76.0%R&D 15.4% 12.0% 13.0%SG&A 13.7% 13.0% 12.0%

2005 2006 2007E 2008F 2009F CAGRShipment Value (US$mil) 187,829 190,747 216,539 232,237 240,840 Y/Y% 0.4% 1.6% 13.5% 7.2% 3.7% 6.4%Shipment Volume (thousand units) 211,588 231,514 263,768 293,600 326,300 Y/Y% 15.4% 9.4% 13.9% 11.3% 11.1% 11.4%Source: Gartner 03/2008; DIRA forecast

New Market- Handset

New Market- WLAN

2004 2005 2006 2007E 2008E CAGRVolume sales 655.9 803.8 1003.9 1202.3 1379.8 20.4%Growth 31.5% 22.5% 24.9% 19.8% 14.8%

2004 2005 2006 2007E 2008E 2009E 2010E CAGRValue sales 781 917 1255 1506 1772 2141 2492 21.3%Growth 76.7% 17.4% 36.9% 20.0% 17.7% 20.8% 16.4%

Competitor Analysis

Intel AMD VIA FreescaleCPU sales breakdown by geography (2007) Americas 20% 25% NA Europe 19% 24% NA Japan 11% 2% NA Asia-Pacific 50% 26% NA Others 23%100% (Taiwan)

Competitor concentration Desktop Desktop DesktopMobile Mobile Mobile (EEE)Server ServerEmbedded Embedded Embedded Embedded

Key customers

PC and networkcommunicationproductsOEMs/ODMs

Selectedregional OEMs

IBM

Standard: BoschNetwork: Nortel, CiscoWireless: Motorola,Qualcomm

Motherboards MotherboardsWYSE

Type of operation IDM IDM Fabless IDMKey suppliers AMTL TSMC AMTL

IBMASE

Intel Corp AMD VIA Freescale (MOT)

2007 2006 2005 2007 2006 2005 2006 2005 2007 2006

Profitability 　 　 　 　 　 　 　 　 　 　　 　 　 　 　 　 　 　 　 　 　　 Revenue Growth 7.70% -9.73% 11.89% 6.05% -3.52% 14.48% 10.52% -1.14% -11.13% 8.11%

　 Gross Margin 51.92% 51.49% 59.36% 37.62% 49.44% 40.90% 25.33% 24.38% 33.22% 42.99%

　 EBITDA Margin 23.41% 17.47% 33.21% -25.94% 13.98% 24.81% 2.76% 2.86% 7.64% -20.43%

　 Net Income Margin 18.20% 14.26% 22.31% -56.19% -2.94% 2.82% -5.53% 0.66% -28.08% -31.36%

　 　 　 　 　 　 　 　 　 　 　 　Liquidity Ratios 　 　 　 　 　 　 　 　 　 　　 　 　 　 　 　 　 　 　 　 　　 Quick Ratio 2.79 2.15 2.30 1.45 1.36 1.95 2.20 1.86 2.65 2.10

　 Debt/Value Ratio 0.01 0.02 0.02 0.42 0.22 0.21 0.06 0.09 N/A N/A

　 　 　 　 　 　 　 　 　 　 　 　Management 　 　 　 　 　 　 　 　 　 　　 　 　 　 　 　 　 　 　 　 　　 Return on Assets (ROA) 0.13 0.10 0.18 -0.29 -0.01 0.02 -0.05 0.00 -0.11 -0.11

　 　 　 　 　 　 　 　 　 　 　Power 　 　 　 　 　 　 　 　 　 　 　　 　 　 　 　 　 　 　 　 　 　　 Accounts Payable Days 46.76 47.97 52.03 98.18 171.00 65.80 78.54 163.84 36.78 56.18

　 Accounts Receivable Days 24.53 27.95 36.80 39.46 74.50 51.06 18.70 60.95 34.57 36.45

　 　 　 　 　 　 　 　 　 　 　 　

Inventory 　 　 　 　 　 　 　 　 　 　　 　 　 　 　 　 　 　 　 　 　　 Inventory Turnover Days 66.74 91.74 72.32 79.89 104.03 41.08 95.44 108.84 74.41 119.62

　 　 　 　 　 　 　 　 　 　 　Equity 　 　 　 　 　 　 　 　 　 　 　　 　 　 　 　 　 　 　 　 　 　

　 Enterprise Value/Revenue 3.78 2.97 3.56 2.00 3.02 1.07 1.39 1.14 N/A N/A

　 Enterprise Value/EBITDA 16.16 17.02 10.72 -7.71 21.61 4.30 50.25 39.98 N/A N/A

　 Price/Earnings 21.56 21.80 16.55 -2.42 -87.62 32.20 -28.76 217.36 N/A N/A

　 Price/Earnings to Growth 2.80 -2.24 1.39 -0.40 24.87 2.22 -2.73 -190.14 N/A N/A

　 Earnings per Share 1.21 0.87 1.47 -5.58 -0.30 0.34 -0.03 0.00 N/A N/A

Comparable Companies Analysis

Intel Corp 　 　 AMD 　 　 VIA 　 Freescale (MOT) 　

2007 2006 2005 2007 2006 2005 2006 2005 2007 2006

Income Statement 　 　 　 　 　 　 　 　 　 　　 　 　 　 　 　 　 　 　 　 　 　　 Last Reported Total Revenue 38,334.00 35,382.00 38,826.00 6,013.00 5,649.00 5,848.00 669.03 598.62 5,722.00 6,359.00　 Total Revenue Reported 1 Year Earlier 35,382.00 38,826.00 34,209.00 5,649.00 5,848.00 5,001.00 598.62 605.46 6,359.00 5,843.00　 　 　 　 　 　 　 　 　 　 　 　　 Cost of goods sold 18,430.00 17,164.00 15,777.00 3,751.00 2,856.00 3,456.00 499.56 452.67 3,821.00 3,625.00　 Gross Profit 19,904.00 18,218.00 23,049.00 2,262.00 2,793.00 2,392.00 169.47 145.94 1,901.00 2,734.00　 　 　 　 　 　 　 　 　 　 　 　　 Operating Expenses 11,688.00 12,566.00 10,959.00 5,127.00 2,840.00 2,160.00 165.66 148.52 3,614.00 4,820.00　 Operating Income (a.k.a. EBIT) 8,216.00 5,652.00 12,090.00 -2,865.00 -47.00 232.00 3.81 -2.58 -1,713.00 -2,086.00　 　 　 　 　 　 　 　 　 　 　 　　 Depreciation & Amortization 759.00 530.00 806.00 1,305.00 837.00 1,219.00 14.68 19.69 2,150.00 787.00　 EBITDA 8,975.00 6,182.00 12,896.00 -1,560.00 790.00 1,451.00 18.49 17.11 437.00 -1,299.00　 　 　 　 　 　 　 　 　 　 　 　　 Net Income 6,976.00 5,044.00 8,664.00 -3,379.00 -166.00 165.00 -37.02 3.92 -1,607.00 -1,994.00　 　 　 　 　 　 　 　 　 　 　 　Balance Sheet 　 　 　 　 　 　 　 　 　 　　 　 　 　 　 　 　 　 　 　 　 　　 Total Assets 55,651.00 48,368.00 48,314.00 11,550.00 13,147.00 7,288.00 778.14 833.88 15,103.00 17,719.00　 Cash and Cash Equivalents 7,307.00 6,598.00 7,324.00 1,432.00 1,380.00 633.00 192.54 233.46 206.00 177.00　 Current Assets 23,885.00 18,280.00 21,194.00 3,816.00 3,963.00 3,559.00 523.32 506.10 2,790.00 2,850.00　 Accounts Receivable 2,576.00 2,709.00 3,914.00 650.00 1,153.00 818.00 34.28 99.96 542.00 635.00　 Inventory 3,370.00 4,314.00 3,126.00 821.00 814.00 389.00 130.62 134.99 779.00 1,188.00　 　 　 　 　 　 　 　 　 　 　 　　 Total Liabilities 12,889.00 11,616.00 12,132.00 8,560.00 7,362.00 3,936.00 320.51 347.38 11,927.00 13,022.00　 Long term Debt 1,980.00 1,848.00 2,106.00 5,031.00 3,672.00 1,327.00 57.29 64.59 9,380.00 9,415.00　 Minority Interest 0.00 0.00 0.00 265.00 237.00 235.00 0.00 0.00 0.00 0.00　 Preferred Stock 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00　 Current Liabilities 8,571.00 8,514.00 9,234.00 2,625.00 2,905.00 1,822.00 237.77 272.63 1,052.00 1,359.00　 Accounts Payable 2,361.00 2,256.00 2,249.00 1,009.00 1,338.00 623.00 107.50 203.20 385.00 558.00　 　 　 　 　 　 　 　 　 　 　 　Stock Market 　 　 　 　 　 　 　 　 　 　　 　 　 　 　 　 　 　 　 　 　 　　 Number of Shares (in millions) 5,788.00 5,767.00 5,883.00 605.55 554.93 480.89 1,325.39 1,333.38 N/A N/A　 Market Price 25.98 19.07 24.38 13.48 26.21 11.05 0.80 0.64 N/A N/A　 Market Capitalization 150,372.24 109,976.69 143,427.54 8,162.88 14,544.69 5,313.09 1,064.49 852.99 N/A N/A　 Enterprise Value 145,045.24 105,226.69 138,209.54 12,026.88 17,073.69 6,242.09 929.24 684.11 N/A N/A

Comparable Companies Analysis

Team 8

Operating Systems Market Analysis

MBA 290GProf. Charles Wu

Fuat E. CelikGopal ChaudhooryIgnacio ContrerasFrancois GalletCamilo Mendez

PC and OS Market Sizing:

PC Market * (# Units) 1

OS MarketPC OS(# Units) 2

OS MarketSmart Phones OS(# Units) 3

Industry Size(Year 2008)

293 millions Consumer (111)Commercial (176) 1.1 billion (Total)

293 millions 140 millions

Growth rate 11 % annually 11% annually 52% annually

Competitor Concentration

Dell (34%) HP (20%) Gateway (7%) Apple (5%) Others (30%)

Windows (91%) Mac (7%) Linux (1%) Others (1%)

Symbian (57%)Linux (17%)RIM (15%)Windows (10%)Others(1%)

*PCs include Desktop, Notebook, Ultra Portable, and x86 Servers.

1IDC's Worldwide Quarterly PC Tracker (Sept.14, 2006) and Dell, HP, Apple Annual report.

2Operating System Market Share by Ron Schenone and MSFT and Apple annual report.

3Symbian Market Round-up.

Industry ChallengesChallenge Effect

on Sales

Effect on Op. Margin

Effect on COGS

Effect on R&D

Notes

Open Source

↓ ↓ → ↓ Challenge for MSFT. R&D decreases due to free collaboration from developers

IP Violation ↓ ↓ ↑ ↑ Anti-Piracy features increase COGS. Opportunity for new models in emerging markets

Virtualization ↑ ↑ ↓ ↑ More OS licenses in the same computer

Cloud Computing / SAAS

↓ ↓ → → Destroys value of the OS transforming the computer into a dumb terminal

Smartphone Devices

↑ ↑ → ↑ Several players (NOK, GOOG) destroying the value of the OS in phones to block MSFT dominance

Major Customers

MSFT – No concerns in disclosing customers due to strong positioning APPLE – Pursuing direct strategy and reducing dependence on retailers RED HAT – No significant customers in the Linux services model SUN – OS used to support own products, no major OS customers

MSFT

OEMs: Acer, Dell, Fujitsu, Fujitsu Siemens Computers, Gateway, Hewlett-Packard, Lenovo, NEC, Samsung, Sony, Toshiba

Distributors: Ingram Micro, Tech Data

Resellers: CDW, Dell, Insight Enterprises, Software House International, Software Spectrum

No customer accounts for more than 10% of sales

APPLEDirect (Apple stores & ITunes), wholesalers, resellers, retailers and cataloguers

No customer accounts for more than 10% of sales

RED HAT Resellers and corporationsNo customer accounts for more than 10% of sales

SUN Avnet (distributor)No other customer account for more than 10% of sales

Major Customers

Revenues by geography

53%

47%

Microsoft

U.S.

International

48%

23%

5%

7%

17%

Apple

Americas

Europe

Japan

Others

Retail

65%

21%

14%

Red Hat

Americas

EMEA

Asia Pacific

37%

7%38%

18%

Sun

US

Canada and Latin America

EMEA

Asia, Australia and New Zealand

US is still a critical market for all companies Apple and Sun numbers reflect hardware or services sales (OS is bundled) Apple retail sales are mostly US sales Opportunity overseas

OS Industry Suppliers

No relevant material suppliers in this knowledge-based industry

Developers (individuals and companies) can be considered the most important suppliers

IP licenses as a supply may become relevant in the future – especially for smartphone OSes

Summary of OS Manufacturer Financials Microsoft (MSFT)

Windows OS for PCs and handhelds

OS Industry leader OS is major business

component

Apple (AAPL) Mac OS and Safari for

Computers and iPhone Small presence in OS

market No “OS sales” –

preinstalled sales only

Sun Microsystems (JAVA)

Solaris OS OS makes a small, but

growing, part of business

Red Hat (RHT) Linux OS, wide

applications Tiny player Focus on support/service

MSFT AAPL JAVA RHT

Revenue Growth 15.39% 19.54% 0.05% 23.40%

Gross Margin 80.80% 33.97% 46.51% 84.58%

EBITDA Margin 40.63% 19.69% 6.11% 19.76%

Net Income Margin 29.26% 14.56% 2.90% 14.66%

Quick Ratio 1.45 2.36 1.38 1.23

Debt/Value Ratio 0.00 0.00 0.29 0.01

Management Return on Assets (ROA) 0.24 0.14 0.03 0.04

Accounts Payable Days 126.95 114.44 68.18 78.48

Accounts Receivable Days 82.09 24.89 79.39 88.63

Inventory Inventory Turnover Days 31.00 7.97 33.43 0.00

Enterprise Value/Revenue 3.49 4.11 0.32 4.69

Enterprise Value/EBITDA 8.60 20.87 5.18 23.75

Price/Earnings 13.28 32.61 14.46 44.67

Price/Earnings to Growth 0.86 1.67 286.64 1.91

Earnings per Share 1.94 3.95 0.54 0.40

Equity

Liquidity Ratios

2008

Profitability

Power

Major handheld OS producer, Symbian, is privately held by Nokia No data available

Summary of OS Manufacturer Financials

MSFT AAPL JAVA RHT

Revenue Growth 13.38% 27.87% 5.80% 30.53%

Gross Margin 79.08% 28.98% 45.16% 83.84%

EBITDA Margin 39.05% 13.86% 5.95% 19.01%

Net Income Margin 34.59% 10.30% 3.41% 14.95%

Quick Ratio 1.69 2.25 1.71 3.35

Debt/Value Ratio 0.00 0.00 0.50 0.00

Management Return on Assets (ROA) 0.28 0.12 0.03 0.03

Accounts Payable Days 110.83 90.21 66.21 68.01

Accounts Receivable Days 8.13 23.66 77.98 80.15

Inventory Inventory Turnover Days 38.47 7.18 25.14 0.00

Enterprise Value/Revenue 4.14 5.38 0.18 6.36

Enterprise Value/EBITDA 10.59 38.80 3.04 33.45

Price/Earnings 13.28 57.33 12.32 57.17

Price/Earnings to Growth 0.99 2.06 2.12 1.87

Earnings per Share 1.94 2.25 0.63 0.31

Equity

Liquidity Ratios

2007

Profitability

Power

Team 9

64

PC Value Chain 2008

10.1.2008

Group 9

James AnZishan KhanJames SuBoaz Ur

Company Main Businesses

CompetitorsTo Specific Businesses

Customers Geographic BreakdownOperations & Revenue

Intuit Payroll and Payments Microsoft, ADP Tax customers, small and medium sized businesses, accounting professionals, small and medium sized financial institutions, retail

Mainly located in U.S.. A few offices in the U.K. and Canada. International total net revenue was less than 5% for 2007 (of ~2.7B), 2006, 2005

Tax H&R Block, TaxCut

Financial Institutions Fidelity

Symantec Security Cisco, McAfee, Microsoft, Trend Micro

Businesses, government, individuals, retail

Operates in 40 countries. Revenue: 53% Americas, 33% EMEA, 14% Asia in 2008

Storage and Server Management

HP, IBM, Microsoft, Oracle, Sun

Adobe Creative Solutions Apple, Google, Microsoft

Creative professionals, businesses, government, retail

Operates in 31 countries. Revenue: 48% Americas, 32% EMEA, 20% Asia in 2008

Business Productivity Solutions

Microsoft, IBM

• Highly competitive industry because products are quickly made obsolete. Revenues and earnings are seasonal. The industry is composed of large multiple software companies and specific software companies

• Emerging industry growth is in data loss prevention, endpoint virtualization, Software-as-a-Service and consumer services.• The SG&A, R&D, and COGS for all three companies increased from 2006 to 2008. Intuit had the largest expenditure increase

in R&D. Symantec in SG&A. Adobe in COGS.• Each company has its own manufacturing suppliers and distributors. Most of the software was developed in-house or

gained through acquisition.

Comparable Companies AnalysisApplication Software

(in thousands, except per share amounts)

Company Ticker Stock PriceShares Outst.

Market Cap Total DebtEnterprise

ValuePrice/Earnings

(close on 9/29/08)

Intuit INTU 29.92 328,545 9,830,066 1,119,485 10,121,718 20.6

Symantec SYMC 18.62 839,387 15,629,386 7,118,911 20,858,072 33.7

Adobe ADBE 36.15 571,409 20,656,435 1,063,693 20,773,706 28.5

Total Net Revenue EBITDA

2008 2007 2006 2008 2007 2006

Intuit 3,070,974 2,672,947 2,293,010 867,267 796,170 692,294

Symantec 4,654,089 3,983,540 3,161,523 1,426,389 1,331,185 913,781

Adobe 2,803,187 2,282,843 1,853,743 1,173,049 859,115 811,209

Earnings Cash and cash equivalents

2008 2007 2006 2008 2007 2006

Intuit 476,762 440,003 416,963 827,833 1,303,671 1,197,200

Symantec 463,850 404,380 156,852 1,890,225 2,559,034 2,315,622

Adobe 723,807 505,809 602,839 946,422 772,500 420,818

Team 9 – James An, Zishan Khan, James Su, Boaz Ur

*All information taken from most recent company 10-K’s.

Team 9 – James An, Zishan Khan, James Su, Boaz Ur

*All information taken from most recent company 10-K’s.

Adobe Symantec IntuitProfitability

Revenue Growth 18.45% 11.49% 12.96%Gross Margin 88.77% 79.23% 79.67%EBITDA Margin 31.74% 14.08% 23.01%Net Income Margin 0.08% 0.05% 0.12%

Liquidity Ratios

Quick Ratio 3.02 0.98 1.21Debt/Value Ratio 0.00 0.01 0.05

Power

Accounts Payable Days 68.81 50.74 67.36Accounts Receivable Days 41.94 47.11 15.12

Equity

Enterprise Value/Revenue 17.13 14.82 6.47Enterprise Value/EBITDA 53.97 105.21 28.10Price/Earnings 49.19 55.17 17.72Price/Earnings to Growth 2.67 4.80 1.37Earnings per Share 1.24 0.53 1.45

Financial Ratio’s based on New Financial Model

Team 10

TEAM 10Anirban SenElihu Luna-ThomasRaluca ScarlatYilun Hu (Alan)

Retail Electronics Industry

Retail Electronics Industry

The global computer and electronics retail sector grew by 6.7% in 2007 to reach a value of $489.9 billion

Reasons for growth: technological advancements lowering the cost of more standardized products, and increased borrowing

Market Segmentation

Asia-Pacific is the largest computer and electronics retail sector, accounting for 30.5% of the global sector’s value.

Market Insights

Highly fragmented, but with oligopolies in many individual countries: UK: Dixons, Curry’s and Comet US: Best Buy, RadioShack and CompUSA

New entrants are unlikely to arrive on a large scale due to incumbent adversity and economies of scale

Retail brand loyalty is comparatively weak, buyers are sale hunters

Supermarkets are beginning to carve out a slice of the market share

Sony and Apple provide single-brand stores to showcase their latest products

Value Chain

A large sway of the power is in the hands of the suppliers

Biggest suppliers, such as Compaq and Panasonic, use their influence to shape what is sold on the shop forecourt and at what price

Capital spent on advertising and marketing is colossal

Costs for switching from one supplier to another are influenced by long-term contacts, as market players are often tied down for a certain period of time to ensure long-run efficacy

Backward integration appears unlikely due to the highly technical and specialized nature of the products supplied for sale

Fixed costs on the surface seem low but outlay is needed to secure deals with suppliers

Comparative Company Analysis

Best Buy 2008 Best Buy 2007 Best Buy 2006

Profitability      

       

  Revenue Growth 10.22% 14.15% 11.07%

  Gross Margin 23.85% 24.40% 25.05%

  EBITDA Margin 6.85% 6.98% 6.81%

  Net Income Margin 3.52% 3.83% 3.70%

         

Liquidity Ratios      

       

  Quick Ratio 1.08 1.44 1.32

  Debt/Value Ratio 0.04 0.03 0.01

         

Management      

       

  Return on Assets (ROA) 0.11 0.10 0.10

       

Power        

       

  Accounts Payable Days 6.36 6.66 51.05

  Accounts Receivable Days 5.01 5.57 5.99

         

Inventory      

       

  Inventory Turnover Days 56.38 54.12 52.69

       

Equity        

       

  Enterprise Value/Revenue 0.37 0.52 0.70

  Enterprise Value/EBITDA 5.36 7.48 10.27

  Price/Earnings 10.98 14.04 19.36

  Price/Earnings to Growth 1.07 0.99 1.75

  Earnings per Share 3.42 3.34 2.77

Best Buy

Best Buy 2008 Best Buy 2007 Best Buy 2006Income Statement Last Reported Total Revenue 40,023.00 35,934.00 30,848.00 Total Revenue Reported 1 Year Earlier 35,934.00 30,848.00 27,433.00 Cost of goods sold 30,477.00 27,165.00 23,122.00 Gross Profit 9,546.00 8,769.00 7,726.00 Operating Expenses 7,385.00 6,770.00 6,082.00 Operating Income (a.k.a. EBIT) 2,161.00 1,999.00 1,644.00 Depreciation & Amortization 580.00 509.00 456.00 EBITDA 2,741.00 2,508.00 2,100.00 Net Income 1,407.00 1,377.00 1,140.00 Balance Sheet Total Assets 12,578.00 13,570.00 11,864.00 Cash and Cash Equivalents 1,438.00 1,205.00 681.00 Current Assets 7,342.00 9,081.00 7,985.00 Accounts Receivable 549.00 548.00 506.00 Inventory 4,708.00 4,028.00 3,338.00 Total Liabilities 12,758.00 13,570.00 11,864.00 Long term Debt 627.00 590.00 178.00 Minority Interest 40.00 35.00 0.00 Preferred Stock 0.00 0.00 0.00 Current Liabilities 6,769.00 6,301.00 6,056.00 Accounts Payable 531.00 496.00 3,234.00 Stock Market Number of Shares (in millions) 412 412 412 Market Price 37.50 46.94 53.56 Market Capitalization 15,450.00 19,339.28 22,066.72 Enterprise Value 14,679.00 18,759.28 21,563.72

Wal Mart 2008 Wal Mart 2007 Wal Mart 2006

Profitability      

       

  Revenue Growth 7.96% 10.48% 7.68%

  Gross Margin 24.36% 24.24% 23.86%

  EBITDA Margin 7.47% 7.44% 7.48%

  Net Income Margin 3.36% 3.24% 3.60%

         

Liquidity Ratios      

       

  Quick Ratio 0.81 0.90 0.90

  Debt/Value Ratio 0.12 0.15 0.13

         

Management      

       

  Return on Assets (ROA) 0.08 0.07 0.08

       

Power        

       

  Accounts Payable Days 38.69 39.36 38.97

  Accounts Receivable Days 3.52 2.97 3.11

         

Inventory      

       

  Inventory Turnover Days 44.82 46.55 49.01

       

Equity        

       

  Enterprise Value/Revenue 0.64 0.52 0.64

  Enterprise Value/EBITDA 8.60 6.94 8.58

  Price/Earnings 17.08 14.04 15.94

  Price/Earnings to Growth 2.15 1.34 2.08

  Earnings per Share 3.51 3.11 3.09

Wal Mart

Wal Mart 2008 Wal Mart 2007 Wal Mart 2006 Last Reported Total Revenue 378,799.00 348,650.00 312,101.00Total Revenue Reported 1 Year Earlier 348,650.00 312,101.00 288,132.00 Cost of goods sold 286,515.00 264,152.00 237,649.00Gross Profit 92,284.00 84,498.00 74,452.00 Operating Expenses 70,288.00 64,001.00 55,739.00Operating Income (a.k.a. EBIT) 21,996.00 20,497.00 18,713.00 Depreciation & Amortization 6,317.00 5,459.00 4,645.00EBITDA 28,313.00 25,956.00 23,358.00 Net Income 12,731.00 11,284.00 11,231.00 Total Assets 163,514.00 151,587.00 138,187.00Cash and Cash Equivalents 5,569.00 7,767.00 6,414.00Current Assets 47,585.00 46,982.00 43,824.00Accounts Receivable 3,654.00 2,840.00 2,662.00Inventory 35,180.00 33,685.00 31,910.00 Total Liabilities 163,514.00 151,687.00 138,187.00Long term Debt 29,799.00 27,222.00 26,429.00Minority Interest 1,939.00 2,160.00 1,467.00Preferred Stock 0.00 0.00 0.00Current Liabilities 58,454.00 52,148.00 48,826.00Accounts Payable 30,370.00 28,484.00 25,373.00 Number of Shares (in millions) 3,630 3,630 3,630Market Price 59.89 43.65 49.32Market Capitalization 217,400.70 158,449.50 179,031.60Enterprise Value 243,569.70 180,064.50 200,513.60

Circuit City2008 Circuit City2007 Circuit City2006

Profitability      

       

  Revenue Growth -5.84% 7.37% 9.55%

  Gross Margin 20.66% 23.56% 24.41%

  EBITDA Margin 1.59% 1.46% 1.42%

  Net Income Margin -2.72% -0.06% 1.22%

         

Liquidity Ratios      

       

  Quick Ratio 1.52 1.68 1.70

  Debt/Value Ratio -0.54 0.04 0.01

         

Management      

       

  Return on Assets (ROA) -0.09 0.00 0.03

       

Power        

       

  Accounts Payable Days 35.72 35.42 35.64

  Accounts Receivable Days 10.26 11.22 6.97

         

Inventory      

       

  Inventory Turnover Days 61.62 62.85 71.21

       

Equity        

       

  Enterprise Value/Revenue -0.01 0.10 0.34

  Enterprise Value/EBITDA -0.56 6.83 24.27

  Price/Earnings -0.42 -165.90 30.13

  Price/Earnings to Growth 0.07 -22.51 3.15

  Earnings per Share -1.90 -0.05 0.83

Circuit City

Circuit City2008 Circuit City2007 Circuit City2006 Last Reported Total Revenue 11,744.00 12,430.00 11,514.00Total Revenue Reported 1 Year Earlier 12,430.00 11,514.00 10,414.00 Cost of goods sold 9,318.00 9,501.00 8,704.00Gross Profit 2,426.00 2,929.00 2,810.00 Operating Expenses 2,426.00 2,928.00 2,810.00Operating Income (a.k.a. EBIT) 0.00 1.00 0.00 Depreciation & Amortization 187.00 180.00 163.00EBITDA 187.00 181.00 163.00 Net Income -319.00 -8.00 140.00 Total Assets 3,745.00 4,007.00 4,069.00Cash and Cash Equivalents 296.00 141.00 315.00Current Assets 2,439.00 2,883.00 2,833.00Accounts Receivable 330.00 382.00 220.00Inventory 1,573.00 1,636.00 1,698.00 Total Liabilities 2,242.00 2,216.00 2,114.00Long term Debt 57.00 50.00 52.00Minority Interest 0.00 0.00 0.00Preferred Stock 0.00 0.00 0.00Current Liabilities 1,605.00 1,714.00 1,662.00Accounts Payable 912.00 922.00 850.00 Number of Shares (in millions) 168 168 168Market Price 0.80 7.90 25.11Market Capitalization 134.40 1,327.20 4,218.48Enterprise Value -104.60 1,236.20 3,955.48