1. NASDAQ: GOOG
Richard Chan - richchan@scarletmail.rutgers.edu
Stan Ivaciov - sivaciov@gmail.com
Sarah Jeffers - sarahavisjeffers@gmail.com
Haiyan Zhang - haiyanzhang@gmail.com
12/4/13

2. Agenda
•
Company Profile
•
Business Analysis
•
Valuation
•
Financial Analysis
•
Risks
Analysis as of 11/11/13

3. Company Profile
US Technology Company with a global presence

US comprises 46% of company’s total revenue
Four Business Segments




Search
Advertising
Operating Systems and Platforms
Enterprise
Active Venture Capital Arm

4. Company Profile - Business Segments
Search
Advertising
• Dominant Industry
Player
• Google Now,
Google Knowledge
Graph
• 95% of company’s
total revenue
• Advertisers pay
Google per click
• AdWords,
AdSense,YouTube
Operating
Systems and
Platforms
Enterprise
• Free services that
protect advertising
revenue
• Social
media, Chrome, An
droid
• Geared toward end
user collaboration
• Google Docs,
Google Earth,
Google Calendar,
Gmail, Google
Groups

5. Company Profile - Venture Capital
Google Glass
Driverless Cars
Anti-Aging Technology

6. Business Analysis - Industry and Market
•
Demand for Online Video
•
Google, led by YouTube, accounts for
nearly 88% of the 189 million U.S.
viewers registered by video sites in
September 2013
•
Smartphone and Tablet
Market
•
Google CEO Larry Page: “6% of traffic
for the Google-owned video service
came from mobile devices in 2011,
but the figure is now 41%”.

7. Business Analysis – Search Engine
Sources: Netmarketshare, Market Watch, webpronews, clickz, OneStat, and Websidestory

8. Business Analysis – Products and Services

9. Business Analysis – R&D/Investments
•
Robust R&D capacity and high investment
•
Google spent 13.5% of its total revenue in research and development in 2012
Google made many mergers and acquisitions in the past several years
•

10. Business Analysis – Brand Value
Source: BrandZ 2013

11. Valuation - Summary
Target Price
$
917.73
Google
Yahoo!
Microsoft
Time Warner
Baidu.com
Oracle
IBM
Apple
News Corp
Nokia
Potential Change
-9.2%
Last Price
Riskiness
$ 1,010.59
Medium
Cash Flow
Comparative
Conclusion
Analysis (rating, weight, potential)
75%
25%
-2%
-31%
100%
-9%
Important Statistics & Analysis
WACC
9.6%
Div Yield
Cost of Debt
2.3%
ROIC
Cost of Equity
10.0%
PEG Ratio
Implied Debt Cost
-4.9%
Market Cap
Risk Free Rate
2.6%
Reinvest
Interest Coverage
n/a
Beta
$
0.0%
3.5%
7.49
335,824
28%
1
Competitors
GOOG
YHOO
MSFT
TWX
BIDU
ORCL
IBM
AAPL
NWSA
NOK
-9.2%
-65.6%
14.0%
68.8%
-45.3%
10.4%
1.4%
83.3%
-2.8%
-66.6%
Financial Stats
Revenue Growth
EBITDA Margin
EBIT Margin
Cash Flow Margin
Taxes
Debt / Equity
Return On Equity
Competitors
GOOG
13.5%
25.1%
29.9%
36.7%
22.4%
31.3%
21.0%
23.6%
25.0%
22.5%
12.8%
1.6%
4.5%
2.5%
Multiple Stats
Revenue (x)
EBITDA (x)
EBIT (x)
Cash Flow (x)
Book Value (x)
PE Ratio (x)
Competitors
GOOG
4.74
5.85
14.65
19.85
14.86
22.98
15.66
30.20
0.99
0.87
130.34
39.49

12. Valuation – Multistage DCF Business P&L
Millions USD
2008
2009
Actuals
2010
2011
2012
2013
2014
2015
2016
Best View Estimates
2017
2018
2019
2020
2021
Assump.
Total Revenue
% growth rate
$ 21,796 $ 23,651 $ 29,321 $ 37,905 $ 50,175
31.3%
8.5%
24.0%
29.3%
32.4%
$ 58,002 $ 64,789 $ 68,579 $ 72,008 $ 75,608 $ 79,388 $ 83,358 $ 87,526 $ 91,902 $ 96,497
15.6%
11.7%
5.9%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
- COGS
% of revenue
$ 8,622 $ 8,844 $ 10,417 $ 13,188 $ 20,634
39.6%
37.4%
35.5%
34.8%
41.1%
$ 23,853 $ 26,644 $ 28,202 $ 29,612 $ 31,093 $ 32,648 $ 34,280 $ 35,994 $ 37,794 $ 39,684
41.1%
41.1%
41.1%
41.1%
41.1%
41.1%
41.1%
41.1%
41.1%
41.1%
Gross Profit
% of revenue
$ 13,174 $ 14,806 $ 18,904 $ 24,717 $ 29,541
60.4%
62.6%
64.5%
65.2%
58.9%
$ 34,149 $ 38,145 $ 40,376 $ 42,395 $ 44,515 $ 46,741 $ 49,078 $ 51,532 $ 54,108 $ 56,814
58.9%
58.9%
58.9%
58.9%
58.9%
58.9%
58.9%
58.9%
58.9%
58.9%
- Operating Exp
% of revenue
$ 6,816 $ 6,768 $ 8,523 $ 12,475 $ 16,781
31.3%
28.6%
29.1%
32.9%
33.4%
$ 18,017 $ 20,125 $ 21,302 $ 22,367 $ 23,486 $ 24,660 $ 25,893 $ 27,188 $ 28,547 $ 29,974
31.1%
31.1%
31.1%
31.1%
31.1%
31.1%
31.1%
31.1%
31.1%
31.1%
- SG&A (Op Ex)
% of revenue
$ 5,316 $ 5,244 $ 7,127 $ 10,464 $ 14,769
24.4%
22.2%
24.3%
27.6%
29.4%
$ 14,593 $ 16,256 $ 17,159 $ 17,968 $ 18,814 $ 19,700 $ 20,628 $ 21,599 $ 22,615 $ 23,680
25.2%
25.1%
25.0%
25.0%
24.9%
24.8%
24.7%
24.7%
24.6%
24.5%
EBITDA
% of revenue
$ 7,858 $ 9,563 $ 11,777 $ 14,253 $ 14,772
36.1%
40.4%
40.2%
37.6%
29.4%
$ 19,557 $ 21,889 $ 23,217 $ 24,428 $ 25,701 $ 27,041 $ 28,450 $ 29,933 $ 31,493 $ 33,134
33.7%
33.8%
33.9%
33.9%
34.0%
34.1%
34.1%
34.2%
34.3%
34.3%
- D & A (Op Ex)
% of revenue
$ 1,500 $ 1,524 $ 1,396 $ 1,851 $ 2,962
6.9%
6.4%
4.8%
4.9%
5.9%
$
EBIT (oper profits)
% of revenue
$ 6,358 $ 8,038 $ 10,381 $ 12,242 $ 12,760
29.2%
34.0%
35.4%
32.3%
25.4%
$ 16,133 $ 18,020 $ 19,074 $ 20,028 $ 21,029 $ 22,081 $ 23,185 $ 24,344 $ 25,561 $ 26,839
27.8%
27.8%
27.8%
27.8%
27.8%
27.8%
27.8%
27.8%
27.8%
27.8%
- Taxes
% of EBIT
$ 1,627 $ 1,861 $ 2,291 $ 2,589 $ 2,598
25.6%
23.1%
22.1%
21.1%
20.4%
$
NOPAT
% of revenue
$ 4,732 $ 6,178 $ 8,090 $ 9,653 $ 10,162
21.7%
26.1%
27.6%
25.5%
20.3%
$ 12,509 $ 13,972 $ 14,790 $ 15,529 $ 16,306 $ 17,121 $ 17,977 $ 18,876 $ 19,820 $ 20,811
21.6%
21.6%
21.6%
21.6%
21.6%
21.6%
21.6%
21.6%
21.6%
21.6%
3,424 $ 3,869 $ 4,143 $ 4,400 $ 4,672 $ 4,960 $ 5,265 $ 5,589 $ 5,932 $ 6,295
5.9%
6.0%
6.0%
6.1%
6.2%
6.2%
6.3%
6.4%
6.5%
6.5%
3,624 $ 4,048 $ 4,284 $ 4,499 $ 4,724 $ 4,960 $ 5,208 $ 5,468 $ 5,742 $ 6,029
22.5%
22.5%
22.5%
22.5%
22.5%
22.5%
22.5%
22.5%
22.5%
22.5%

13. Valuation – Multistage DCF Cash Flow
Free Cash Flow to the Firm Analysis
+D&A
% of revenue
2008
2009
2010
2011
2012
$ 1,500 $ 1,524 $ 1,396 $ 1,851 $ 2,962
6.9%
6.4%
4.8%
4.9%
5.9%
- CapEx
% of revenue
$ 2,358 $
10.8%
Working Capital
% of revenue
$ 2,030 $ 1,935 $
9.3%
8.2%
810 $ 4,018 $ 3,438 $ 3,273
3.4%
13.7%
9.1%
6.5%
$
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
Assump.
3,424 $ 3,869 $ 4,143 $ 4,400 $ 4,672 $ 4,960 $ 5,265 $ 5,589 $ 5,932 $ 6,295
5.9%
6.0%
6.0%
6.1%
6.2%
6.2%
6.3%
6.4%
6.5%
6.5%
3,784 $ 4,226 $ 4,474 $ 4,697 $ 4,932 $ 5,179 $ 5,438 $ 5,709 $ 5,995 $
6.5%
6.5%
6.5%
6.5%
6.5%
6.5%
6.5%
6.5%
6.5%
56 $
0.2%
437 $
1.2%
578
1.2%
$
668 $
1.2%
746 $
1.2%
790 $
1.2%
830 $
1.2%
871 $
1.2%
915 $
1.2%
960 $ 1,008 $ 1,059
1.2%
1.2%
1.2%
- WC Investment
% of revenue
n/a $
(96) $ (1,879) $
n/a
-0.4%
-6.4%
381 $
1.0%
141
0.3%
$
90 $
0.2%
78 $
0.1%
44 $
0.1%
40 $
0.1%
41 $
0.1%
44 $
0.1%
46 $
0.1%
FCF
% of revenue
n/a $ 6,988 $ 7,347 $ 7,685 $ 9,710
n/a
29.5%
25.1%
20.3%
19.4%
6,295
6.5%
Present Value factor
Industry WACC
9.6%
Present Value of FCF
LTG (est)
5.0%
$ 992.77
91.2%
$ 1,010.59
Fair Value/Share
83.2%
75.9%
69.3%
63.2%
57.6%
Working Capital
$ 329,903
Last Stock Price
Divide: Shares Outstanding
53
0.1%
52.6%
48.0%
43.8%
43.8%
$ 11,001 $ 11,266 $ 10,945 $ 10,523 $ 10,113 $ 9,718 $ 9,339 $ 8,975 $ 8,625 $ 196,846
Invested Capital (Equity and Debt) Value
$ 287,352
+ Excess Cash
$ 48,088
- Interest Bearing Debt, Preferred and Minority Interest 5,537
$
Equity Value (Net Present Value)
50 $
0.1%
$ 12,059 $ 13,537 $ 14,415 $ 15,192 $ 16,004 $ 16,859 $ 17,759 $ 18,707 $ 19,706 $ 20,758
20.8%
20.9%
21.0%
21.1%
21.2%
21.2%
21.3%
21.4%
21.4%
21.5%
Per Share Value
Est. Price
48 $
0.1%
2008
Current Assets
- Excess Cash
- Current Liabilities
+ Short Term Debt
Working Capital
% of revenue
$
$
$
$
$
Interest Exp (net)
Total Debt
$
$
20,178
15,846
2,302
2,030
9.3%
2009
$
$
$
$
$
29,167
24,485
2,747
1,935
8.2%
2010
$
$
$
$
$
41,562
34,975
9,996
3,465
56
0.2%
2011
$
$
$
$
$
52,758
44,626
8,913
1,218
437
1.2%
2012
$ 60,454
$ 48,088
$ 14,337
$ 2,549
$
578
1.2%
332
$ 992.77
390 $
230 $ (579) $ (754) $
$ 1,392 $ 3,465 $ 4,204 $
5,537

14. Valuation - Google WACC Industry Discount Rate
WACC
9.6%
WACC Assumptions
Risk Free Rate (10yr)
Cost of Debt (est.)
Equity Risk Prem*
Alpha
Country Risk Premium
2.60%
2.33%
7.5%
0.0%
0.0%
Industry WACC
Beta (unlevered)
Industry D/E
Tax Rate (5 yrs)
Beta (relevered)
0.95
5.3%
23.8%
0.99
Cost of Debt (after-tax)
Debt / Capital
WAC (debt)
1.78%
5.06%
0.09%
Industry Average Estimates for the WACC Calculation (Millions USD)
Company
Cost of Equity (capm)
Equity / Capital
WAC (equity)
10.03%
94.94%
9.53%
Industry Level WACC
9.6%
Google
Yahoo!
Microsoft
Time Warner
Baidu.com
Oracle
IBM
Apple
News Corp
Nokia
Median
Price
$1,010.59
$ 33.81
$ 37.59
$ 67.50
$ 151.60
$ 34.37
$ 182.88
$ 519.05
$ 17.42
$
7.74
Beta
levered
1.000
0.920
0.790
1.440
2.110
1.260
0.650
0.610
0.703
1.690
Debt
Shares
Equity
$ 5,537
$ 181
$ 5,939
$ 16,554
$
13
$ 15,056
$ 28,750
$ $ 13,748
$ 10,160
332
1,203
8,470
976
3,498
4,844
1,155
945
2,633
3,745
$335,824
$ 40,670
$318,387
$ 65,900
$530,297
$166,488
$211,309
$490,689
$ 45,867
$ 28,986
0.960 $ 8,049
Capital
$
$
$
$
$
$
$
$
$
$
Debt
Equity
Debt
Capital
Tax %
Beta
unlever
341,361
40,851
324,326
82,454
530,310
181,544
240,059
490,689
59,615
39,146
1.65%
0.45%
1.87%
25.12%
0.00%
9.04%
13.61%
0.00%
29.97%
35.05%
1.62%
0.44%
1.83%
20.08%
0.00%
8.29%
11.98%
0.00%
23.06%
25.95%
22.46%
38.28%
17.53%
25.20%
14.49%
20.25%
26.68%
27.43%
34.71%
20.00%
0.987
0.917
0.778
1.212
2.110
1.175
0.591
0.610
0.588
1.320
1,918 $188,898 $ 210,801
5.45%
5.06%
23.83%
0.952

15. Valuation - Comparative EV Multiples
Stock Research
Google
Yahoo!
Microsoft
Time Warner
Baidu.com
Oracle
IBM
Apple
News Corp
Nokia
Average Value
Financial Analysis
Revenue EBITDA EBIT
FCFF
$
$
$
$
$
$
$
$
$
$
50,175
6,325
62,484
26,888
1,201
37,121
99,871
65,225
32,778
56,943
$ 14,772
$ 1,221
$ 24,730
$ 14,011
$ 12,332
$ 16,622
$ 25,119
$ 58,518
$ 3,391
$ 1,018
$ 12,760
$ 566
$ 21,763
$ 5,909
$ 11,051
$ 13,706
$ 20,443
$ 55,241
$ 2,212
$ (735)
$ 9,710
$ (1,217)
$ 19,921
$ 11,532
$ 6,323
$ 13,368
$ 16,591
$ 36,170
$ 734
$ 1,148
$ 43,901 $ 17,173 $ 14,292 $ 11,428
Enterprise Value Calculation
Rev
EBITDA
EBIT
FCF
Current Financial Results
Multiple x
Multiple Calculation
$ 50,175 $ 14,772 $ 12,760 $ 9,710
4.67
13.14
14.04
14.71
$ 234,400 $ 194,071 $ 179,113 $ 142,856
Enterprise Value
Less: Total Debt
Plus: Excess Cash
= Stock Holder's Equity Capital
$ 5,537 $ 5,537 $ 5,537 $ 5,537
$ 48,088 $ 48,088 $ 48,088 $ 48,088
$ 276,951 $ 236,622 $ 221,664 $ 185,407
Divide: Shares Outstanding
= Fair Value per Share
332
332
332
332
$ 833.42 $ 712.06 $ 667.05 $ 557.94
Current Stock Price
Potential Stock Increase
$1,010.59 $1,010.59 $1,010.59 $1,010.59
-17.5%
-29.5%
-34.0%
-44.8%

16. Valuation – Comparative EV Multiples
Ent Value
Current
Multiples Potential
-31.5%
Potential Price
$
Revenue Growth
-1yr
-5yr
+5yr
EBITDA Margin
-1yr
-5yr
+5yr
EBIT Margin
-1yr
-5yr
+5yr
Cash Flow Margin
-1yr
-5yr
+5yr
Google
Yahoo!
Microsoft
Time Warner
Baidu.com
Oracle
IBM
Apple
News Corp
Nokia
$293,273
$ 37,967
$287,538
$ 78,791
$529,066
$163,075
$228,408
$465,069
$ 50,906
$ 22,171
32.4%
0.1%
5.4%
-0.8%
53.8%
4.2%
-2.3%
44.6%
0.9%
-20.5%
25.1%
-6.0%
7.8%
-6.9%
70.0%
16.1%
1.3%
47.4%
3.6%
-11.5%
8.6%
5.0%
3.5%
0.0%
11.4%
2.4%
2.2%
9.0%
2.0%
-5.0%
33.7%
29.1%
38.0%
48.0%
55.9%
46.7%
24.4%
41.1%
16.8%
7.7%
36.7%
22.9%
39.7%
42.0%
49.2%
41.7%
22.8%
28.7%
15.6%
6.0%
33.9%
26.4%
35.5%
48.0%
57.6%
43.3%
25.4%
39.4%
18.0%
6.4%
27.8%
16.3%
34.1%
19.7%
49.5%
39.5%
19.9%
38.6%
13.3%
3.7%
31.3%
11.0%
35.7%
13.7%
44.4%
36.4%
18.0%
27.0%
11.9%
3.7%
27.8%
14.2%
31.8%
19.7%
49.9%
37.5%
21.0%
36.2%
14.5%
3.0%
20.8%
12.5%
29.0%
40.6%
37.9%
36.9%
15.2%
31.7%
9.4%
4.8%
31.3%
-1.8%
26.9%
43.6%
40.5%
33.2%
14.3%
20.7%
8.0%
3.9%
21.0%
10.6%
27.2%
40.6%
39.2%
33.4%
15.4%
25.8%
10.2%
3.7%
Low Value
High Value
Average Value
Median Value
$ 22,171
$529,066
$206,999
$163,075
-20.5%
53.8%
9.5%
0.9%
-11.5%
70.0%
13.5%
3.6%
-5.0%
11.4%
3.4%
2.4%
7.7%
55.9%
34.2%
38.0%
6.0%
49.2%
29.9%
28.7%
6.4%
57.6%
33.3%
35.5%
3.7%
49.5%
26.1%
19.9%
3.7%
44.4%
22.4%
18.0%
3.0%
49.9%
25.3%
21.0%
4.8%
40.6%
24.2%
29.0%
-1.8%
43.6%
21.0%
20.7%
3.7%
40.6%
22.9%
25.8%
692.62
Last Stock Price
$ 1,010.59
Ent Value
Low Value
+
High Value
Average Value
+
Median Value
+
Advantages v. Competitors
75%
Google vs. Competitors
EBITDA Margin
Revenue Growth
+
+
+
+
+
+
+
+
+
75%
=
Average
+
EBIT Margin
Cash Flow Margin
+
+
+
+
+
+
56%
+
+
+
+
+
+
+
+
=
Average
75%
=
Average
+
+
+
+
+
50%
=
Average

17. Financial Analysis - Highlights
•
Increasing cash from operations
•
$56.52 billion of cash, cash equivalents, and marketable
securities
•
High earnings quality: operating cash flow as a
percentage of sales was 34%.
Source: Google 2013 3Q earnings report

18. Financial Analysis – FY12 Sources of Revenue
$5.1B
$2.1B
$1.0B
$4.1B
$50.2B
$37.9B
2012
Motorola Mobile
Other Revenues
Google Network
Members
Google Websites
2011
-$3.5B

19. Financial Analysis – Ratios
2008-12
2009-12
2010-12
2011-12
2012-12
8.77
8.03
8.25
44.2
n/m
n/m
10.62
10.07
8.13
44.9
n/m
n/m
4.16
3.92
7.89
46.2
n/m
n/m
5.92
5.62
7.83
46.6
n/m
n/m
4.22
3.90
7.54
48.4
81.7
4.5
Liquidity
Profit Margin
Asset Turnover
Return on Assets
Return on Equity
Earnings per share ($)
Price Earnings Ratio
Payout Ratio
19.4%
68.6%
13.3%
15.0%
$ 13.46
75.08
n/m
27.6%
65.5%
18.0%
20.3%
$ 20.62
49.01
n/m
29.0%
59.6%
17.3%
20.7%
$ 26.69
37.86
n/m
25.7%
58.1%
14.9%
18.7%
$ 30.17
33.50
n/m
21.4%
60.3%
12.9%
16.5%
$ 32.81
30.80
n/m
Profitability
Debt to Assets
Interest Coverage Ratio
Free Cash Flow ($MM)
11.1%
$ 2,024
11.1%
20.1%
19.9%
23.5%
0.00
0.01
$ (111) $ (106) $
(80) $ (404)
Solvency
Current Ratio
Acid Test/Quick Ratio
Receiveables Turnover
Average Collection Period
Inventory Turnover
Days in Inventory

20. Financial Analysis – Stock Price Trend
Google 2-year
$1,200.00
$1,000.00
$800.00
$600.00
$400.00
$200.00
$-
Larry Page becomes CEO
Google Inc Buys Machine Learning Startup
Apple buys startup Topsy; gets rich Twitter data
Acquisition of beatthatquote
Google buys Channel Intelligence
(GOOG), (FB) Potential Players In TV Ad
Working on mobile payments
Acquires Social Ad Start-Up Wildfire
Google Chrome The Most Popular Web Browser
Verifone/Sprint partners on mobile pay
Google Inc. Unveils First Tablet PC
Google Inc (GOOG) Reveals Google Wallet Debit Card
Google Labs winds down
Buys Social Media Startup Meebo
Google Inc Pitches Online TV Service To Media Cos.
Acquisition of Zagat
Google Inc. Acquires Quickoffice
Google Inc Takes 7% Stake In Vevo
Visa/Google Partnership
Acquires Motorola Mobility
Source: Reuters, Google Finance News
Google Inc Seals Waze Acquisition

21. Financial Analysis – Insider Ownership
Source: Morningstar

22. Risk Analysis
•
•
Declining Operations Efficiency
Dependence on Advertising Business

23. Risk Analysis
•
•
Issues With
Chinese
Government and
Other Litigations
Invalid Clicks

24. Questions?

25. Appendix

26. Apple
Millions USD
2008
2009
Actuals
2010
2011
2012
2013
2014
2015
2016
Best View Estimates
2017
2018
2019
2020
2021
Assump.
Total Revenue
% growth rate
$
32,479 $
35.3%
36,537 $
12.5%
65,225 $ 108,249 $ 156,508
78.5%
66.0%
44.6%
$ 191,395 $ 212,726 $ 224,581 $ 230,839 $ 237,764 $ 244,897 $ 252,244 $ 259,811 $ 267,605 $ 275,633
22.3%
11.1%
5.6%
2.8%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
- COGS
% of revenue
$
21,334 $
65.7%
23,397 $
64.0%
39,541 $
60.6%
64,431 $
59.5%
87,846
56.1%
$ 107,428 $ 118,207 $ 123,546 $ 125,719 $ 128,195 $ 130,721 $ 133,296 $ 135,922 $ 138,599 $ 142,757
56.1%
55.6%
55.0%
54.5%
53.9%
53.4%
52.8%
52.3%
51.8%
51.8%
Gross Profit
% of revenue
$
11,145 $
34.3%
13,140 $
36.0%
25,684 $
39.4%
43,818 $
40.5%
68,662
43.9%
$
83,967 $
43.9%
94,520 $ 101,035 $ 105,120 $ 109,569 $ 114,176 $ 118,948 $ 123,889 $ 129,006 $ 132,876
44.4%
45.0%
45.5%
46.1%
46.6%
47.2%
47.7%
48.2%
48.2%
- Operating Exp
% of revenue
$
4,870 $
15.0%
5,482 $
15.0%
7,299 $
11.2%
10,028 $
9.3%
13,421
8.6%
$
10,028 $
9.7%
20,585 $
9.7%
21,732 $
9.7%
22,337 $
9.7%
23,007 $
9.7%
23,698 $
9.7%
24,408 $
9.7%
25,141 $
9.7%
25,895 $
9.7%
26,672
9.7%
- SG&A (Op Ex)
% of revenue
$
4,397 $
13.5%
4,779 $
13.1%
6,272 $
9.6%
8,214 $
7.6%
10,144
6.5%
$
5,321 $
2.8%
14,576 $
6.9%
14,568 $
6.5%
14,131 $
6.1%
13,687 $
5.8%
13,203 $
5.4%
12,678 $
5.0%
12,109 $
4.7%
11,495 $
4.3%
11,840
4.3%
EBITDA
% of revenue
$
6,748 $
20.8%
8,361 $
22.9%
19,412 $
29.8%
35,604 $
32.9%
58,518
37.4%
$
78,646 $
41.1%
79,943 $
37.6%
86,467 $
38.5%
90,989 $
39.4%
95,882 $ 100,973 $ 106,270 $ 111,780 $ 117,511 $ 121,036
40.3%
41.2%
42.1%
43.0%
43.9%
43.9%
- D & A (Op Ex)
% of revenue
$
473 $
1.5%
703 $
1.9%
1,027 $
1.6%
1,814 $
1.7%
3,277
2.1%
$
4,707 $
2.5%
6,008 $
2.8%
7,163 $
3.2%
8,206 $
3.6%
9,321 $
3.9%
10,495 $
4.3%
11,731 $
4.7%
13,032 $
5.0%
EBIT (oper profits)
% of revenue
$
6,275 $
19.3%
7,658 $
21.0%
18,385 $
28.2%
33,790 $
31.2%
55,241
35.3%
$
73,939 $
38.6%
73,935 $
34.8%
79,303 $
35.3%
82,783 $
35.9%
86,561 $
36.4%
90,478 $
36.9%
94,539 $
37.5%
98,748 $ 103,111 $ 106,204
38.0%
38.5%
38.5%
- Taxes
% of EBIT
$
2,061 $
32.8%
2,280 $
29.8%
4,527 $
24.6%
8,283 $
24.5%
14,030
25.4%
$
20,282 $
27.4%
20,281 $
27.4%
21,753 $
27.4%
22,708 $
27.4%
23,744 $
27.4%
24,819 $
27.4%
25,932 $
27.4%
27,087 $
27.4%
28,284 $
27.4%
29,132
27.4%
NOPAT
% of revenue
$
4,214 $
13.0%
5,378 $
14.7%
13,858 $
21.2%
25,507 $
23.6%
41,211
26.3%
$
53,657 $
28.0%
53,655 $
25.2%
57,550 $
25.6%
60,075 $
26.0%
62,817 $
26.4%
65,660 $
26.8%
68,607 $
27.2%
71,661 $
27.6%
74,827 $
28.0%
77,072
28.0%
14,400 $
5.4%
14,832
5.4%

27. Apple
Free Cash Flow to the Firm Analysis
2008
2009
2010
2011
2012
473 $
703 $
1,027 $
1,814 $
3,277
1.5%
1.9%
1.6%
1.7%
2.1%
+D&A
% of revenue
$
- CapEx
% of revenue
$
1,199 $
3.7%
1,213 $
3.3%
2,121 $
3.3%
Working Capital
% of revenue
$
(3,892) $
-12.0%
(6,481) $
-17.7%
(4,664) $
-7.2%
- WC Investment
% of revenue
n/a $
n/a
(2,589) $
-7.1%
FCF
% of revenue
n/a $
n/a
7,457 $
20.4%
7,452 $
6.9%
9,402
6.0%
$
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
Assump.
4,707 $ 6,008 $ 7,163 $ 8,206 $ 9,321 $ 10,495 $ 11,731 $ 13,032 $ 14,400 $ 14,832
2.5%
2.8%
3.2%
3.6%
3.9%
4.3%
4.7%
5.0%
5.4%
5.4%
7,452 $
5.4%
13,981 $
5.4%
14,400 $
5.4%
14,832
5.4%
$
(9,706) $
-5.1%
(2,198) $
-1.0%
(1,222) $
-0.5%
(645) $
-0.3%
(714) $
-0.3%
(735) $
-0.3%
(757) $
-0.3%
(780) $
-0.3%
(803) $
-0.3%
(827)
-0.3%
10,947 $
16.8%
24,139 $
22.3%
36,170
23.1%
$
60,618 $
31.7%
50,414 $
23.7%
53,850 $
24.0%
56,504 $
24.5%
60,057 $
25.3%
63,712 $
26.0%
67,521 $
26.8%
71,492 $
27.5%
75,630 $
28.3%
77,899
28.3%
3.0%
91.2%
$
55,300 $
Conclusion: Per Share Value
83.2%
75.9%
41,957 $
40,886 $
69.3%
39,138 $
63.2%
57.6%
37,950 $
Working Capital
Invested Capital (Equity and Debt) Value
+ Excess Cash
- Interest Bearing Debt, Preferred and Minority Interest
$ 870,256
$ 29,129
$
-
Equity Value (Net Present Value)
$ 899,385
Last Stock Price
Divide: Shares Outstanding
Fair Value/Share
13,573 $
5.4%
(1,084)
-0.7%
LTG (est)
519.05
13,178 $
5.4%
(4,270) $
-3.9%
Present Value of FCF
$
12,794 $
5.4%
1,817 $
2.8%
9.6%
951.37
12,422 $
5.4%
$ (19,724) $ (21,922) $ (23,144) $ (23,788) $ (24,502) $ (25,237) $ (25,994) $ (26,774) $ (27,577)
-10.3%
-10.3%
-10.3%
-10.3%
-10.3%
-10.3%
-10.3%
-10.3%
-10.3%
Industry WACC
$
12,085 $
5.4%
(8,934) $ (10,018)
-8.3%
-6.4%
Present Value factor
Potential Price
11,447 $
5.4%
52.6%
36,727 $
2008
48.0%
35,509 $
2009
43.8%
34,299 $
2010
Current Assets
- Excess Cash
- Current Liabilities
+ Short Term Debt
Working Capital
% of revenue
$
$
$
$
$
34,690
24,490
14,092
(3,892)
-12.0%
$
$
$
$
$
36,265
23,464
19,282
(6,481)
-17.7%
$
$
$
$
$
Interest Exp (net)
Total Debt
$
$
-
$
$
-
$
$
41,678
25,620
20,722
(4,664)
-7.2%
43.8%
33,102 $ 515,388
2011
$
$
$
$
$
44,988
25,952
27,970
(8,934)
-8.3%
2012
$ 57,653
$ 29,129
$ 38,542
$
$ (10,018)
-6.4%
945
$
951.37
(311) $
$
(519) $
$
6
-

28. IBM
Millions USD
2008
2009
Actuals
2010
2011
2012
2013
2014
2015
2016
Best View Estimates
2017
2018
2019
2020
2021
Assump.
Total Revenue
% growth rate
$ 103,630 $
4.9%
95,758 $
-7.6%
99,871 $ 106,916 $ 104,507
4.3%
7.1%
-2.3%
$ 107,642 $ 109,795 $ 111,991 $ 114,231 $ 116,515 $ 118,846 $ 121,223 $ 123,647 $ 126,120 $ 128,642
3.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
- COGS
% of revenue
$
57,969 $
55.9%
51,973 $
54.3%
53,857 $
53.9%
56,778 $
53.1%
54,209
51.9%
$
55,835 $
51.9%
56,382 $
51.4%
56,935 $
50.8%
57,493 $
50.3%
58,056 $
49.8%
58,625 $
49.3%
59,200 $
48.8%
59,780 $
48.3%
60,366 $
47.9%
61,573
47.9%
Gross Profit
% of revenue
$
45,661 $
44.1%
43,785 $
45.7%
46,014 $
46.1%
50,138 $
46.9%
50,298
48.1%
$
51,807 $
48.1%
53,413 $
48.6%
55,056 $
49.2%
56,738 $
49.7%
58,459 $
50.2%
60,220 $
50.7%
62,023 $
51.2%
63,867 $
51.7%
65,754 $
52.1%
67,069
52.1%
- Operating Exp
% of revenue
$
29,723 $
28.7%
26,772 $
28.0%
27,863 $
27.9%
29,852 $
27.9%
29,855
28.6%
$
30,361 $
28.2%
30,968 $
28.2%
31,588 $
28.2%
32,219 $
28.2%
32,864 $
28.2%
33,521 $
28.2%
34,191 $
28.2%
34,875 $
28.2%
35,573 $
28.2%
36,284
28.2%
- SG&A (Op Ex)
% of revenue
$
24,273 $
23.4%
21,778 $
22.7%
23,032 $
23.1%
25,037 $
23.4%
25,179
24.1%
$
25,540 $
23.7%
26,046 $
23.7%
26,562 $
23.7%
27,088 $
23.7%
27,625 $
23.7%
28,172 $
23.7%
28,730 $
23.7%
29,300 $
23.7%
29,880 $
23.7%
30,478
23.7%
EBITDA
% of revenue
$
21,388 $
20.6%
22,007 $
23.0%
22,982 $
23.0%
25,101 $
23.5%
25,119
24.0%
$
26,267 $
24.4%
27,367 $
24.9%
28,494 $
25.4%
29,649 $
26.0%
30,834 $
26.5%
32,048 $
27.0%
33,292 $
27.5%
34,567 $
28.0%
35,874 $
28.4%
36,591
28.4%
- D & A (Op Ex)
% of revenue
$
5,450 $
5.3%
4,994 $
5.2%
4,831 $
4.8%
4,815 $
4.5%
4,676
4.5%
$
4,821 $
4.5%
4,922 $
4.5%
5,026 $
4.5%
5,131 $
4.5%
5,239 $
4.5%
5,349 $
4.5%
5,461 $
4.5%
5,576 $
4.5%
5,693 $
4.5%
5,806
4.5%
EBIT (oper profits)
% of revenue
$
15,938 $
15.4%
17,013 $
17.8%
18,151 $
18.2%
20,286 $
19.0%
20,443
19.6%
$
21,446 $
19.9%
22,444 $
20.4%
23,468 $
21.0%
24,519 $
21.5%
25,595 $
22.0%
26,699 $
22.5%
27,831 $
23.0%
28,992 $
23.4%
30,181 $
23.9%
30,785
23.9%
$
4,381 $
27.5%
4,713 $
27.7%
4,890 $
26.9%
5,148 $
25.4%
5,297
25.9%
$
5,723 $
26.7%
5,989 $
26.7%
6,262 $
26.7%
6,542 $
26.7%
6,830 $
26.7%
7,124 $
26.7%
7,426 $
26.7%
7,736 $
26.7%
8,054 $
26.7%
8,215
26.7%
$
11,557 $
11.2%
12,300 $
12.8%
13,261 $
13.3%
15,138 $
14.2%
15,146
14.5%
$
15,723 $
14.6%
16,455 $
15.0%
17,206 $
15.4%
17,976 $
15.7%
18,766 $
16.1%
19,575 $
16.5%
20,405 $
16.8%
21,256 $
17.2%
22,128 $
17.5%
22,570
17.5%
- Taxes
% of EBIT
NOPAT
% of revenue
adjustments to
op income @ IBM

29. IBM
Free Cash Flow to the Firm Analysis
2006
2007
2008
2009
2010
5,450 $
4,994 $
4,831 $
4,815 $
4,676
5.3%
5.2%
4.8%
4.5%
4.5%
$
- CapEx
% of revenue
$
4,887 $
4.7%
4,077 $
4.3%
4,754 $
4.8%
4,667 $
4.4%
4,717
4.5%
$
4,100 $
4.5%
4,956 $
4.5%
5,055 $
4.5%
5,156 $
4.5%
5,259 $
4.5%
5,364 $
4.5%
5,471 $
4.5%
5,581 $
4.5%
5,693 $
4.5%
Working Capital
% of revenue
$
4,898 $
4.7%
3,127 $
3.3%
2,681 $
2.7%
5,346 $
5.0%
3,860
3.7%
$
3,976 $
3.7%
4,055 $
3.7%
4,136 $
3.7%
4,219 $
3.7%
4,304 $
3.7%
4,390 $
3.7%
4,477 $
3.7%
4,567 $
3.7%
4,658
3.7%
- WC Investment
% of revenue
n/a $
n/a
(1,771) $
-1.8%
(446) $
-0.4%
2,665 $
2.5%
(1,486)
-1.4%
$
116 $
0.1%
80 $
0.1%
81 $
0.1%
83 $
0.1%
84 $
0.1%
86 $
0.1%
88 $
0.1%
90 $
0.1%
91 $
0.1%
93
0.1%
FCF
% of revenue
n/a $
n/a
14,988 $
15.7%
13,784 $
13.8%
12,621 $
11.8%
16,591
15.9%
$
16,329 $
15.2%
16,342 $
14.9%
17,096 $
15.3%
17,868 $
15.6%
18,661 $
16.0%
19,473 $
16.4%
20,307 $
16.8%
21,161 $
17.1%
22,037 $
17.5%
22,477
17.5%
Present Value factor
Industry WACC
9.6%
Present Value of FCF
LTG (est)
2.0%
$
2011
2012
2013
2014
2015
2016
2017
2018
2019
Assump.
4,821 $ 4,922 $ 5,026 $ 5,131 $ 5,239 $ 5,349 $ 5,461 $ 5,576 $ 5,693 $ 5,806
4.5%
4.5%
4.5%
4.5%
4.5%
4.5%
4.5%
4.5%
4.5%
4.5%
+D&A
% of revenue
91.2%
$
14,896 $
Conclusion: Per Share Value
Potential Price
Invested Capital (Equity and Debt) Value
+ Excess Cash
- Interest Bearing Debt, Preferred and Minority Interest
$ 236,531
$ 11,129
$ 33,393
$ 214,267
Last Stock Price
Divide: Shares Outstanding
$ 182.88
Fair Value/Share
75.9%
13,601 $
12,980 $
69.3%
12,377 $
63.2%
57.6%
11,792 $
Working Capital
Equity Value (Net Present Value)
$ 185.44
83.2%
52.6%
11,226 $
2008
48.0%
10,679 $
2009
Current Assets
- Excess Cash
- Current Liabilities
+ Short Term Debt
Working Capital
% of revenue
$
$
$
$
$
49,004
12,907
42,435
11,236
4,898
4.7%
$
$
$
$
$
Interest Exp (net)
Total Debt
$
$
673 $
34,044 $
48,935
13,974
36,002
4,168
3,127
3.3%
43.8%
10,152 $
2010
$
$
$
$
$
48,116
11,651
40,562
6,778
2,681
2.7%
43.8%
9,645 $ 129,183
2011
$
$
$
$
$
5,806
4.5%
50,928
11,922
42,123
8,463
5,346
5.0%
2012
$
$
$
$
$
49,433
11,129
43,625
9,181
3,860
3.7%
411 $
31,418 $
596
33,393
1,155
$
185.44
402 $
26,218 $
368 $
28,750 $

30. Oracle
Millions USD
2008
2009
Actuals
2010
2011
2012
2013
2014
2015
2016
Best View Estimates
2017
2018
2019
2020
2021
Assump.
Total Revenue
% growth rate
$
22,430 $
24.6%
23,252 $
3.7%
26,820 $
15.3%
35,622 $
32.8%
37,121
4.2%
$
37,180 $
0.2%
38,295 $
3.0%
39,444 $
3.0%
40,628 $
3.0%
41,846 $
3.0%
43,102 $
3.0%
44,395 $
3.0%
45,727 $
3.0%
47,099 $
3.0%
48,511
3.0%
- COGS
% of revenue
$
4,191 $
18.7%
4,794 $
20.6%
5,764 $
21.5%
8,398 $
23.6%
7,858
21.2%
$
7,113 $
19.1%
7,957 $
20.8%
8,196 $
20.8%
8,442 $
20.8%
8,695 $
20.8%
8,956 $
20.8%
9,224 $
20.8%
9,501 $
20.8%
9,786 $
20.8%
10,080
20.8%
Gross Profit
% of revenue
$
18,239 $
81.3%
18,458 $
79.4%
21,056 $
78.5%
27,224 $
76.4%
29,263
78.8%
$
30,067 $
80.9%
30,338 $
79.2%
31,248 $
79.2%
32,186 $
79.2%
33,152 $
79.2%
34,146 $
79.2%
35,170 $
79.2%
36,226 $
79.2%
37,312 $
79.2%
38,432
79.2%
- Operating Exp
% of revenue
$
9,605 $
42.8%
10,137 $
43.6%
11,218 $
41.8%
14,983 $
42.1%
15,557
41.9%
$
15,383 $
41.4%
16,186 $
42.3%
16,671 $
42.3%
17,171 $
42.3%
17,686 $
42.3%
18,217 $
42.3%
18,763 $
42.3%
19,326 $
42.3%
19,906 $
42.3%
20,503
42.3%
- SG&A (Op Ex)
% of revenue
$
9,337 $
41.6%
9,874 $
42.5%
8,947 $
33.4%
12,187 $
34.2%
12,641
34.1%
$
12,715 $
34.2%
13,697 $
35.8%
14,376 $
36.4%
15,083 $
37.1%
15,820 $
37.8%
16,587 $
38.5%
17,386 $
39.2%
18,218 $
39.8%
19,084 $
40.5%
19,657
40.5%
EBITDA
% of revenue
$
8,902 $
39.7%
8,584 $
36.9%
12,109 $
45.1%
15,037 $
42.2%
16,622
44.8%
$
17,352 $
46.7%
16,641 $
43.5%
16,873 $
42.8%
17,103 $
42.1%
17,332 $
41.4%
17,559 $
40.7%
17,785 $
40.1%
18,008 $
39.4%
18,228 $
38.7%
18,775
38.7%
- D & A (Op Ex)
% of revenue
$
268 $
1.2%
263 $
1.1%
2,271 $
8.5%
2,796 $
7.8%
2,916
7.9%
$
2,668 $
7.2%
2,488 $
6.5%
2,295 $
5.8%
2,088 $
5.1%
1,867 $
4.5%
1,630 $
3.8%
1,378 $
3.1%
1,109 $
2.4%
822 $
1.7%
847
1.7%
EBIT (oper profits)
% of revenue
$
8,634 $
38.5%
8,321 $
35.8%
9,838 $
36.7%
12,241 $
34.4%
13,706
36.9%
$
14,684 $
39.5%
14,153 $
37.0%
14,577 $
37.0%
15,015 $
37.0%
15,465 $
37.0%
15,929 $
37.0%
16,407 $
37.0%
16,899 $
37.0%
17,406 $
37.0%
17,928
37.0%
- Taxes
% of EBIT
$
2,313 $
26.8%
2,241 $
26.9%
2,108 $
21.4%
2,864 $
23.4%
2,981
21.7%
$
2,973 $
20.2%
3,220 $
22.8%
3,316 $
22.8%
3,416 $
22.8%
3,518 $
22.8%
3,624 $
22.8%
3,733 $
22.8%
3,845 $
22.8%
3,960 $
22.8%
4,079
22.8%
NOPAT
% of revenue
$
6,321 $
28.2%
6,080 $
26.1%
7,730 $
28.8%
9,377 $
26.3%
10,725
28.9%
$
11,711 $
31.5%
10,933 $
28.5%
11,261 $
28.5%
11,599 $
28.5%
11,947 $
28.5%
12,305 $
28.5%
12,674 $
28.5%
13,055 $
28.5%
13,446 $
28.5%
13,850
28.5%

31. Oracle
Free Cash Flow to the Firm Analysis
2008
2009
2010
2011
2012
268 $
263 $
2,271 $
2,796 $
2,916
1.2%
1.1%
8.5%
7.8%
7.9%
$
- CapEx
% of revenue
$
243 $
1.1%
529 $
2.3%
230 $
0.9%
450 $
1.3%
648
1.7%
$
650 $
1.7%
669 $
1.7%
689 $
1.7%
709 $
1.7%
730 $
1.7%
752 $
1.7%
775 $
1.7%
798 $
1.7%
Working Capital
% of revenue
$
(2,166) $
-9.7%
(2,191) $
-9.4%
(3,011) $
-11.2%
(2,716) $
-7.6%
(3,091)
-8.3%
$
(3,096) $
-8.3%
(3,189) $
-8.3%
(3,284) $
-8.3%
(3,383) $
-8.3%
(3,484) $
-8.3%
(3,589) $
-8.3%
(3,697) $
-8.3%
(3,808) $
-8.3%
- WC Investment
% of revenue
n/a $
n/a
(25) $
-0.1%
(820) $
-3.1%
295 $
0.8%
(375)
-1.0%
$
(5) $
0.0%
(93) $
-0.2%
(96) $
-0.2%
(99) $
-0.2%
(101) $
-0.2%
(105) $
-0.2%
(108) $
-0.2%
(111) $
-0.2%
(114) $
-0.2%
(118)
-0.2%
FCF
% of revenue
n/a $
n/a
5,839 $
25.1%
10,591 $
39.5%
11,428 $
32.1%
13,368
36.0%
$
13,734 $
36.9%
12,846 $
33.5%
12,963 $
32.9%
13,076 $
32.2%
13,185 $
31.5%
13,287 $
30.8%
13,385 $
30.1%
13,476 $
29.5%
13,560 $
28.8%
13,967
28.8%
Present Value factor
Industry WACC
9.6%
Present Value of FCF
LTG (est)
3.0%
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
Assump.
2,668 $ 2,488 $ 2,295 $ 2,088 $ 1,867 $ 1,630 $ 1,378 $ 1,109 $
822 $
847
7.2%
6.5%
5.8%
5.1%
4.5%
3.8%
3.1%
2.4%
1.7%
1.7%
+D&A
% of revenue
91.2%
$
12,529 $
Conclusion: Per Share Value
Potential Price
Invested Capital (Equity and Debt) Value
+ Excess Cash
- Interest Bearing Debt, Preferred and Minority Interest
$ 169,958
$ 30,676
$ 16,873
$ 183,761
Last Stock Price
Divide: Shares Outstanding
$ 34.37
Fair Value/Share
10,691 $
69.3%
63.2%
57.6%
52.6%
48.0%
43.8%
9,842 $
9,057 $
8,331 $
7,660 $
7,039 $
6,465 $
5,935 $
2008
2009
Current Assets
- Excess Cash
- Current Liabilities
+ Short Term Debt
Working Capital
% of revenue
$
$
$
$
$
12,883
7,020
9,387
1,358
(2,166)
-9.7%
$
$
$
$
$
Interest Exp (net)
Total Debt
$
$
731 $
11,236 $
18,581
12,624
9,149
1,001
(2,191)
-9.4%
2010
$
$
$
$
$
27,004
18,469
14,691
3,145
(3,011)
-11.2%
43.8%
2011
$
$
$
$
$
847
1.7%
(3,922)
-8.3%
75.9%
Working Capital
Equity Value (Net Present Value)
$ 37.94
83.2%
822 $
1.7%
39,174
28,848
14,192
1,150
(2,716)
-7.6%
92,408
2012
$
$
$
$
$
40,023
30,676
15,388
2,950
(3,091)
-8.3%
808 $
16,391 $
1
16,873
4,844
$
37.94
630 $
12,661 $
754 $
15,056 $

32. BAIDU
Millions USD
2008
2009
Actuals
2010
2011
2012
2013
2014
2015
2016
Best View Estimates
2017
2018
2019
2020
2021
Assump.
Total Revenue
% growth rate
$
3,198 $
96.0%
4,448 $
39.1%
7,915 $
77.9%
14,501 $
83.2%
22,306
53.8%
$
28,309 $
26.9%
32,118 $
13.5%
34,279 $
6.7%
35,993 $
5.0%
37,793 $
5.0%
39,682 $
5.0%
41,667 $
5.0%
43,750 $
5.0%
45,937 $
5.0%
48,234
5.0%
- COGS
% of revenue
$
1,155 $
36.1%
1,616 $
36.3%
2,149 $
27.2%
3,897 $
26.9%
4,519
20.3%
$
5,735 $
20.3%
6,442 $
20.1%
6,806 $
19.9%
7,075 $
19.7%
7,355 $
19.5%
7,645 $
19.3%
7,947 $
19.1%
8,261 $
18.9%
8,588 $
18.7%
9,017
18.7%
Gross Profit
% of revenue
$
2,043 $
63.9%
2,832 $
63.7%
5,766 $
72.8%
10,604 $
73.1%
17,787
79.7%
$
22,574 $
79.7%
25,676 $
79.9%
27,473 $
80.1%
28,918 $
80.3%
30,438 $
80.5%
32,037 $
80.7%
33,719 $
80.9%
35,489 $
81.1%
37,350 $
81.3%
39,217
81.3%
- Operating Exp
% of revenue
$
946 $
29.6%
1,227 $
27.6%
1,807 $
22.8%
3,027 $
20.9%
6,736
30.2%
$
8,549 $
30.2%
9,699 $
30.2%
10,352 $
30.2%
10,869 $
30.2%
11,413 $
30.2%
11,983 $
30.2%
12,583 $
30.2%
13,212 $
30.2%
13,872 $
30.2%
14,566
30.2%
- SG&A (Op Ex)
% of revenue
$
775 $
24.2%
958 $
21.5%
1,501 $
19.0%
2,596 $
17.9%
5,455
24.5%
$
6,742 $
23.8%
7,443 $
23.2%
7,725 $
22.5%
7,881 $
21.9%
8,033 $
21.3%
8,180 $
20.6%
8,323 $
20.0%
8,459 $
19.3%
8,588 $
18.7%
9,017
18.7%
EBITDA
% of revenue
$
1,268 $
39.6%
1,874 $
42.1%
4,265 $
53.9%
8,008 $
55.2%
12,332
55.3%
$
15,832 $
55.9%
18,233 $
56.8%
19,748 $
57.6%
21,037 $
58.4%
22,405 $
59.3%
23,857 $
60.1%
25,396 $
61.0%
27,030 $
61.8%
28,762 $
62.6%
30,200
62.6%
- D & A (Op Ex)
% of revenue
$
171 $
5.3%
269 $
6.0%
306 $
3.9%
431 $
3.0%
1,281
5.7%
$
1,807 $
6.4%
2,256 $
7.0%
2,627 $
7.7%
2,989 $
8.3%
3,380 $
8.9%
3,803 $
9.6%
4,260 $
10.2%
4,753 $
10.9%
5,284 $
11.5%
5,549
11.5%
EBIT (oper profits)
% of revenue
$
1,097 $
34.3%
1,605 $
36.1%
3,959 $
50.0%
7,577 $
52.3%
11,051
49.5%
$
14,025 $
49.5%
15,977 $
49.7%
17,121 $
49.9%
18,049 $
50.1%
19,025 $
50.3%
20,054 $
50.5%
21,137 $
50.7%
22,277 $
50.9%
23,478 $
51.1%
24,651
51.1%
- Taxes
% of EBIT
$
116 $
10.6%
198 $
12.3%
536 $
13.5%
1,189 $
15.7%
1,574
14.2%
$
2,032 $
14.5%
2,315 $
14.5%
2,481 $
14.5%
2,615 $
14.5%
2,757 $
14.5%
2,906 $
14.5%
3,063 $
14.5%
3,228 $
14.5%
3,402 $
14.5%
3,572
14.5%
NOPAT
% of revenue
$
981 $
30.7%
1,407 $
31.6%
3,423 $
43.2%
6,388 $
44.1%
9,477
42.5%
$
11,993 $
42.4%
13,662 $
42.5%
14,640 $
42.7%
15,433 $
42.9%
16,268 $
43.0%
17,148 $
43.2%
18,074 $
43.4%
19,049 $
43.5%
20,075 $
43.7%
21,079
43.7%

33. BAIDU
Free Cash Flow to the Firm Analysis
2008
2009
2010
2011
2012
171 $
269 $
306 $
431 $
1,281
5.3%
6.0%
3.9%
3.0%
5.7%
$
- CapEx
% of revenue
$
577 $
18.0%
477 $
10.7%
450 $
5.7%
976 $
6.7%
2,566
11.5%
$
3,257 $
11.5%
3,695 $
11.5%
3,943 $
11.5%
4,141 $
11.5%
4,348 $
11.5%
4,565 $
11.5%
4,793 $
11.5%
5,033 $
11.5%
Working Capital
% of revenue
$
(660) $
-20.6%
(1,119) $
-25.2%
(1,928) $
-24.4%
(2,548) $
-17.6%
(679)
-3.0%
$
(862) $
-3.0%
(978) $
-3.0%
(1,044) $
-3.0%
(1,096) $
-3.0%
(1,151) $
-3.0%
(1,208) $
-3.0%
(1,269) $
-3.0%
(1,332) $
-3.0%
- WC Investment
% of revenue
n/a $
n/a
(459) $
-10.3%
(809) $
-10.2%
(620) $
-4.3%
1,869
8.4%
$
(183) $
-0.6%
(116) $
-0.4%
(66) $
-0.2%
(52) $
-0.1%
(55) $
-0.1%
(58) $
-0.1%
(60) $
-0.1%
(63) $
-0.1%
(67) $
-0.1%
(70)
-0.1%
FCF
% of revenue
n/a $
n/a
1,658 $
37.3%
4,088 $
51.6%
6,463 $
44.6%
6,323
28.3%
$
10,726 $
37.9%
12,339 $
38.4%
13,389 $
39.1%
14,333 $
39.8%
15,355 $
40.6%
16,443 $
41.4%
17,601 $
42.2%
18,832 $
43.0%
20,142 $
43.8%
21,149
43.8%
Present Value factor
Industry WACC
9.6%
Present Value of FCF
LTG (est)
5.0%
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
Assump.
1,807 $ 2,256 $ 2,627 $ 2,989 $ 3,380 $ 3,803 $ 4,260 $ 4,753 $ 5,284 $ 5,549
6.4%
7.0%
7.7%
8.3%
8.9%
9.6%
10.2%
10.9%
11.5%
11.5%
+D&A
% of revenue
91.2%
$
9,785 $
Conclusion: Per Share Value
Potential Price
Invested Capital (Equity and Debt) Value
+ Excess Cash
- Interest Bearing Debt, Preferred and Minority Interest
$ 286,994
$
5,268
$
1,933
$ 290,328
Last Stock Price
Divide: Shares Outstanding
$ 151.60
Fair Value/Share
75.9%
10,269 $
10,166 $
5,549
11.5%
(1,399)
-3.0%
69.3%
63.2%
57.6%
52.6%
48.0%
43.8%
9,928 $
9,703 $
9,479 $
9,256 $
9,035 $
8,816 $ 200,557
Working Capital
Equity Value (Net Present Value)
$ 83.00
83.2%
5,284 $
11.5%
2008
Current Assets
- Excess Cash
- Current Liabilities
+ Short Term Debt
Working Capital
% of revenue
$
$
$
$
$
Interest Exp (net)
Total Debt
$
$
2009
2,852
2,663
849
(660)
-20.6%
$
$
$
$
$
2010
4,843
4,562
1,400
(1,119)
-25.2%
$
$
$
$
$
8,782
8,158
2,552
(1,928)
-24.4%
43.8%
2011
$
$
$
$
$
15,848
14,179
4,407
190
(2,548)
-17.6%
2012
$
$
$
$
$
5,555
5,268
1,320
353
(679)
-3.0%
(10) $
2,308 $
2,414
1,933
3,498
$
83.00
-
7 $
$
-
5 $
$
(10) $
86 $

34. Nokia – pre-spin
Millions USD
2008
2009
Actuals
2010
2011
2012
2013
2014
2015
2016
Best View Estimates
2017
2018
2019
2020
2021
Assump.
Total Revenue
% growth rate
$
70,761 $
-5.10%
58,801 $
-16.9%
56,943 $
-3.2%
50,185 $
-11.9%
39,908
-20.5%
$
37,913 $
-5.0%
36,017 $
-5.0%
34,216 $
-5.0%
32,505 $
-5.0%
30,880 $
-5.0%
29,336 $
-5.0%
27,869 $
-5.0%
26,476 $
-5.0%
25,152 $
-5.0%
23,894
-5.0%
- COGS
% of revenue
$
46,518 $
65.7%
39,771 $
67.6%
39,749 $
69.8%
35,491 $
70.7%
28,812
72.2%
$
26,243 $
69.2%
25,055 $
69.6%
23,922 $
69.9%
22,839 $
70.3%
21,806 $
70.6%
20,819 $
71.0%
19,877 $
71.3%
18,977 $
71.7%
18,119 $
72.0%
17,213
72.0%
Gross Profit
% of revenue
$
24,243 $
34.3%
19,030 $
32.4%
17,195 $
30.2%
14,694 $
29.3%
11,096
27.8%
$
11,670 $
30.8%
10,962 $
30.4%
10,295 $
30.1%
9,666 $
29.7%
9,074 $
29.4%
8,517 $
29.0%
7,992 $
28.7%
7,498 $
28.3%
7,033 $
28.0%
6,682
28.0%
- Operating Exp
% of revenue
$
16,436 $
23.2%
15,968 $
27.2%
14,562 $
25.6%
15,077 $
30.0%
11,831
29.6%
$
10,285 $
27.1%
9,771 $
27.1%
9,283 $
27.1%
8,818 $
27.1%
8,378 $
27.1%
7,959 $
27.1%
7,561 $
27.1%
7,183 $
27.1%
6,824 $
27.1%
6,482
27.1%
- SG&A (Op Ex)
% of revenue
$
14,180 $
20.0%
15,968 $
27.2%
14,562 $
25.6%
13,049 $
26.0%
10,078
25.3%
$
8,737 $
23.0%
8,411 $
23.4%
8,097 $
23.7%
7,792 $
24.0%
7,498 $
24.3%
7,214 $
24.6%
6,940 $
24.9%
6,675 $
25.2%
6,419 $
25.5%
6,098
25.5%
EBITDA
% of revenue
$
10,063 $
14.2%
3,062 $
5.2%
2,632 $
4.6%
1,645 $
3.3%
1,018
2.6%
$
2,933 $
7.7%
2,550 $
7.1%
2,198 $
6.4%
1,874 $
5.8%
1,576 $
5.1%
1,303 $
4.4%
1,052 $
3.8%
824 $
3.1%
614 $
2.4%
584
2.4%
- D & A (Op Ex)
% of revenue
$
2,256 $
3.2%
$
0.0%
$
0.0%
2,028 $
4.0%
1,754
4.4%
$
1,549 $
4.1%
1,360 $
3.8%
1,186 $
3.5%
1,026 $
3.2%
879 $
2.8%
744 $
2.5%
621 $
2.2%
508 $
1.9%
405 $
1.6%
384
1.6%
EBIT (oper profits)
% of revenue
$
7,807 $
11.0%
3,062 $
5.2%
2,632 $
4.6%
(383) $
-0.8%
(735)
-1.8%
$
1,384 $
3.7%
1,190 $
3.3%
1,012 $
3.0%
848 $
2.6%
697 $
2.3%
558 $
1.9%
432 $
1.5%
316 $
1.2%
210 $
0.8%
199
0.8%
- Taxes
% of EBIT
$
1,508 $
19.3%
1,007 $
32.9%
(594) $
-22.6%
376 $
1,514
-98.2%
-205.9%
$
277 $
20.0%
238 $
20.0%
202 $
20.0%
170 $
20.0%
139 $
20.0%
112 $
20.0%
86 $
20.0%
63 $
20.0%
42 $
20.0%
40
20.0%
NOPAT
% of revenue
$
6,299 $
8.9%
2,055 $
3.5%
3,226 $
5.7%
$
1,107 $
2.9%
952 $
2.6%
810 $
2.4%
678 $
2.1%
557 $
1.8%
447 $
1.5%
345 $
1.2%
252 $
1.0%
168 $
0.7%
159
0.7%
(759) $
-1.5%
(2,250)
-5.6%

35. Nokia – pre-spin
Free Cash Flow to the Firm Analysis
2008
2009
2010
2011
2012
2,256 $
$
$
2,028 $
1,754
3.2%
0.0%
0.0%
4.0%
4.4%
$
- CapEx
% of revenue
$
1,423 $
2.0%
801 $
1.4%
911 $
1.6%
775 $
1.5%
610
1.5%
$
610 $
1.6%
579 $
1.6%
550 $
1.6%
523 $
1.6%
497 $
1.6%
472 $
1.6%
448 $
1.6%
426 $
1.6%
Working Capital
% of revenue
$
1,236 $
1.7%
343 $
0.6%
(2,098) $
-3.7%
(1,998) $
-4.0%
(4,252)
-10.7%
$
(4,039) $
-10.7%
(3,837) $
-10.7%
(3,645) $
-10.7%
(3,463) $
-10.7%
(3,290) $
-10.7%
(3,126) $
-10.7%
(2,969) $
-10.7%
(2,821) $
-10.7%
- WC Investment
% of revenue
n/a $
n/a
(893) $
-1.5%
(2,441) $
-4.3%
100 $
0.2%
(2,254)
-5.6%
$
213 $
0.6%
202 $
0.6%
192 $
0.6%
182 $
0.6%
173 $
0.6%
165 $
0.6%
156 $
0.6%
148 $
0.6%
141 $
0.6%
134
0.6%
FCF
% of revenue
n/a $
n/a
2,148 $
3.7%
4,757 $
8.4%
394 $
0.8%
1,148
2.9%
$
1,834 $
4.8%
1,531 $
4.2%
1,253 $
3.7%
999 $
3.1%
767 $
2.5%
555 $
1.9%
362 $
1.3%
186 $
0.7%
27 $
0.1%
25
0.1%
91.2%
83.2%
75.9%
1,673 $
1,274 $
Present Value factor
Industry WACC
Present Value of FCF
LTG (est)
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
Assump.
1,549 $ 1,360 $ 1,186 $ 1,026 $
879 $
744 $
621 $
508 $
405 $
384
4.1%
3.8%
3.5%
3.2%
2.8%
2.5%
2.2%
1.9%
1.6%
1.6%
+D&A
% of revenue
9.6%
-5.0%
$
Conclusion: Per Share Value
Potential Price
2.59
Invested Capital (Equity and Debt) Value
+ Excess Cash
- Interest Bearing Debt, Preferred and Minority Interest
$
$
$
5,761
13,105
9,172
$
9,694
Last Stock Price
Divide: Shares Outstanding
$
7.74
Fair Value/Share
951 $
692 $
63.2%
57.6%
484 $
Working Capital
Equity Value (Net Present Value)
$
69.3%
52.6%
320 $
2008
Current Assets
- Excess Cash
- Current Liabilities
+ Short Term Debt
Working Capital
% of revenue
$
$
$
$
$
Interest Exp (net)
Total Debt
$
$
34,145
9,517
28,403
5,011
1,236
1.7%
48.0%
190 $
2009
$
$
$
$
$
33,879
13,202
21,791
1,458
343
0.6%
89 $
36,416
16,975
23,531
1,991
(2,098)
-3.7%
43.8%
12 $
2011
$
$
$
$
$
384
1.6%
(2,680)
-10.7%
43.8%
2010
$
$
$
$
$
405 $
1.6%
33,044
14,152
22,645
1,755
(1,998)
-4.0%
76
2012
$
$
$
$
$
27,611
13,105
19,369
611
(4,252)
-10.7%
132 $
9,560 $
201
9,172
3,745
$
2.59
751 $
9,424 $
380 $
10,200 $
382 $
10,160 $

36. Microsoft
Millions USD
2008
2009
Actuals
2010
2011
2012
2013
2014
2015
2016
Best View Estimates
2017
2018
2019
2020
2021
Assump.
Total Revenue
% growth rate
$
60,420 $
18.2%
58,437 $
-3.3%
62,484 $
6.9%
69,943 $
11.9%
73,723
5.4%
$
77,849 $
5.6%
80,184 $
3.0%
82,590 $
3.0%
85,068 $
3.0%
87,620 $
3.0%
90,248 $
3.0%
92,956 $
3.0%
95,744 $
3.0%
98,617 $ 101,575
3.0%
3.0%
- COGS
% of revenue
$
11,598 $
19.2%
12,155 $
20.8%
12,395 $
19.8%
15,577 $
22.3%
17,530
23.8%
$
20,249 $
26.0%
20,856 $
26.0%
21,482 $
26.0%
22,127 $
26.0%
22,790 $
26.0%
23,474 $
26.0%
24,178 $
26.0%
24,904 $
26.0%
25,651 $
26.0%
26,420
26.0%
Gross Profit
% of revenue
$
48,822 $
80.8%
46,282 $
79.2%
50,089 $
80.2%
54,366 $
77.7%
56,193
76.2%
$
57,600 $
74.0%
59,328 $
74.0%
61,108 $
74.0%
62,941 $
74.0%
64,829 $
74.0%
66,774 $
74.0%
68,777 $
74.0%
70,841 $
74.0%
72,966 $
74.0%
75,155
74.0%
- Operating Exp
% of revenue
$
26,642 $
44.1%
25,919 $
44.4%
25,991 $
41.6%
27,205 $
38.9%
34,430
46.7%
$
31,044 $
42.0%
34,252 $
42.7%
35,279 $
42.7%
36,337 $
42.7%
37,428 $
42.7%
38,550 $
42.7%
39,707 $
42.7%
40,898 $
42.7%
42,125 $
42.7%
43,389
42.7%
- SG&A (Op Ex)
% of revenue
$
24,586 $
40.7%
23,357 $
40.0%
23,318 $
37.3%
24,439 $
34.9%
31,463
42.7%
$
27,997 $
36.0%
31,203 $
38.9%
32,230 $
39.0%
33,292 $
39.1%
34,388 $
39.2%
35,520 $
39.4%
36,688 $
39.5%
37,895 $
39.6%
39,142 $
39.7%
40,316
39.7%
EBITDA
% of revenue
$
24,236 $
40.1%
22,925 $
39.2%
26,771 $
42.8%
29,927 $
42.8%
24,730
33.5%
$
29,603 $
38.0%
28,125 $
35.1%
28,877 $
35.0%
29,649 $
34.9%
30,442 $
34.7%
31,255 $
34.6%
32,089 $
34.5%
32,945 $
34.4%
33,824 $
34.3%
34,839
34.3%
- D & A (Op Ex)
% of revenue
$
2,056 $
3.4%
2,562 $
4.4%
2,673 $
4.3%
2,766 $
4.0%
2,967
4.0%
$
3,047 $
3.9%
3,049 $
3.8%
3,049 $
3.7%
3,046 $
3.6%
3,040 $
3.5%
3,031 $
3.4%
3,018 $
3.2%
3,003 $
3.1%
2,983 $
3.0%
3,073
3.0%
EBIT (oper profits)
% of revenue
$
22,180 $
36.7%
20,363 $
34.8%
24,098 $
38.6%
27,161 $
38.8%
21,763
29.5%
$
26,556 $
34.1%
25,076 $
31.3%
25,829 $
31.3%
26,604 $
31.3%
27,402 $
31.3%
28,224 $
31.3%
29,071 $
31.3%
29,943 $
31.3%
30,841 $
31.3%
31,766
31.3%
- Taxes
% of EBIT
$
6,133 $
27.7%
5,252 $
25.8%
6,253 $
25.9%
4,921 $
18.1%
5,289
24.3%
$
5,189 $
17.5%
4,396 $
17.5%
4,527 $
17.5%
4,663 $
17.5%
4,803 $
17.5%
4,947 $
17.5%
5,096 $
17.5%
5,249 $
17.5%
5,406 $
17.5%
5,568
17.5%
NOPAT
% of revenue
$
16,047 $
26.6%
15,111 $
25.9%
17,845 $
28.6%
22,240 $
31.8%
16,474
22.3%
$
21,367 $
27.4%
20,681 $
25.8%
21,301 $
25.8%
21,940 $
25.8%
22,599 $
25.8%
23,276 $
25.8%
23,975 $
25.8%
24,694 $
25.8%
25,435 $
25.8%
26,198
25.8%

37. Microsoft
Free Cash Flow to the Firm Analysis
2008
2009
2010
2011
2012
2,056 $
2,562 $
2,673 $
2,766 $
2,967
3.4%
4.4%
4.3%
4.0%
4.0%
$
- CapEx
% of revenue
$
3,182 $
5.3%
3,119 $
5.3%
1,977 $
3.2%
2,355 $
3.4%
2,305
3.1%
$
Working Capital
% of revenue
$ (10,306) $
-17.1%
(7,201) $
-12.3%
(6,259) $
-10.0%
(6,628) $
-9.5%
(9,413)
-12.8%
$
- WC Investment
% of revenue
n/a $
n/a
3,105 $
5.3%
942 $
1.5%
(369) $
-0.5%
(2,785)
-3.8%
$
(527) $
-0.7%
(298) $
-0.4%
(307) $
-0.4%
(316) $
-0.4%
(326) $
-0.4%
(336) $
-0.4%
(346) $
-0.4%
(356) $
-0.4%
(367) $
-0.4%
(378)
-0.4%
FCF
% of revenue
n/a $
n/a
11,449 $
19.6%
17,599 $
28.2%
23,020 $
32.9%
19,921
27.0%
$
22,585 $
29.0%
21,602 $
26.9%
22,159 $
26.8%
22,729 $
26.7%
23,314 $
26.6%
23,913 $
26.5%
24,527 $
26.4%
25,156 $
26.3%
25,802 $
26.2%
26,576
26.2%
Present Value factor
Industry WACC
9.6%
Present Value of FCF
LTG (est)
3.0%
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
Assump.
3,047 $ 3,049 $ 3,049 $ 3,046 $ 3,040 $ 3,031 $ 3,018 $ 3,003 $ 2,983 $ 3,073
3.9%
3.8%
3.7%
3.6%
3.5%
3.4%
3.2%
3.1%
3.0%
3.0%
+D&A
% of revenue
2,355 $
3.0%
20,604 $
Conclusion: Per Share Value
Potential Price
Invested Capital (Equity and Debt) Value
+ Excess Cash
- Interest Bearing Debt, Preferred and Minority Interest
$ 311,754
$ 63,040
$ 11,944
$ 362,850
Last Stock Price
Divide: Shares Outstanding
$ 37.59
Fair Value/Share
2,573 $
3.0%
2,651 $
3.0%
83.2%
75.9%
17,979 $
16,824 $
69.3%
15,743 $
63.2%
2,730 $
3.0%
57.6%
14,732 $
Working Capital
Equity Value (Net Present Value)
$ 42.84
2,498 $
3.0%
2,812 $
3.0%
2,896 $
3.0%
2,983 $
3.0%
3,073
3.0%
(9,940) $ (10,238) $ (10,545) $ (10,861) $ (11,187) $ (11,523) $ (11,869) $ (12,225) $ (12,591)
-12.8%
-12.8%
-12.8%
-12.8%
-12.8%
-12.8%
-12.8%
-12.8%
-12.8%
91.2%
$
2,426 $
3.0%
52.6%
13,785 $
2008
Current Assets
- Excess Cash
- Current Liabilities
+ Short Term Debt
Working Capital
% of revenue
$ 43,242
$ 23,662
$ 29,886
$
$ (10,306)
-17.1%
Interest Exp (net)
Total Debt
$
$
48.0%
12,899 $
2009
$
$
$
$
$
49,280
31,447
27,034
2,000
(7,201)
-12.3%
43.8%
12,069 $
2010
$
$
$
$
$
55,676
36,788
26,147
1,000
(6,259)
-10.0%
43.8%
11,293 $ 175,826
2011
$
$
$
$
$
74,918
52,772
28,774
(6,628)
-9.5%
2012
$
$
$
$
$
85,084
63,040
32,688
1,231
(9,413)
-12.8%
(605) $
11,921 $
11,944
8,470
$
42.84
888 $
$
706 $
5,746 $
(692) $
5,939 $

38. News Corp (pre-spin)
Millions USD
2008
2009
Actuals
2010
Actuals
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Assump.
Total Revenue
% growth rate
$
32,996 $
15.1%
30,423 $
-7.8%
32,778 $
7.7%
33,405 $
1.9%
33,706
0.9%
$
34,380 $
2.0%
35,068 $
2.0%
35,769 $
2.0%
36,484 $
2.0%
37,214 $
2.0%
37,958 $
2.0%
38,718 $
2.0%
39,492 $
2.0%
40,282 $
2.0%
41,087
2.0%
- COGS
% of revenue
$
20,531 $
62.2%
19,563 $
64.3%
21,015 $
64.1%
21,058 $
63.0%
20,785
61.7%
$
21,201 $
61.7%
21,408 $
61.0%
21,618 $
60.4%
21,830 $
59.8%
22,044 $
59.2%
22,260 $
58.6%
22,478 $
58.1%
22,699 $
57.5%
22,921 $
56.9%
23,379
56.9%
Gross Profit
% of revenue
$
12,465 $
37.8%
10,860 $
35.7%
11,763 $
35.9%
12,347 $
37.0%
12,921
38.3%
$
13,179 $
38.3%
13,659 $
39.0%
14,151 $
39.6%
14,654 $
40.2%
15,170 $
40.8%
15,698 $
41.4%
16,239 $
41.9%
16,793 $
42.5%
17,361 $
43.1%
17,708
43.1%
- Operating Exp
% of revenue
$
7,084 $
21.5%
7,302 $
24.0%
8,057 $
24.6%
7,810 $
23.4%
10,709
31.8%
$
8,609 $
25.0%
8,781 $
25.0%
8,957 $
25.0%
9,136 $
25.0%
9,319 $
25.0%
9,505 $
25.0%
9,695 $
25.0%
9,889 $
25.0%
10,087 $
25.0%
10,289
25.0%
- SG&A (Op Ex)
% of revenue
$
6,075 $
18.4%
6,076 $
20.0%
6,788 $
20.7%
6,527 $
19.5%
9,530
28.3%
$
7,406 $
21.5%
7,549 $
21.5%
7,695 $
21.5%
7,843 $
21.5%
7,995 $
21.5%
8,149 $
21.5%
8,306 $
21.5%
8,466 $
21.4%
8,630 $
21.4%
8,796
21.4%
EBITDA
% of revenue
$
6,390 $
19.4%
4,784 $
15.7%
4,975 $
15.2%
5,820 $
17.4%
3,391
10.1%
$
5,773 $
16.8%
6,110 $
17.4%
6,456 $
18.0%
6,811 $
18.7%
7,175 $
19.3%
7,549 $
19.9%
7,933 $
20.5%
8,327 $
21.1%
8,731 $
21.7%
8,912
21.7%
- D & A (Op Ex)
% of revenue
$
1,009 $
3.1%
1,226 $
4.0%
1,269 $
3.9%
1,283 $
3.8%
1,179
3.5%
$
1,203 $
3.5%
1,232 $
3.5%
1,262 $
3.5%
1,293 $
3.5%
1,324 $
3.6%
1,356 $
3.6%
1,389 $
3.6%
1,423 $
3.6%
1,457 $
3.6%
1,493
3.6%
EBIT (oper profits)
% of revenue
$
5,381 $
16.3%
3,558 $
11.7%
3,706 $
11.3%
4,537 $
13.6%
2,212
6.6%
$
4,570 $
13.3%
4,878 $
13.9%
5,194 $
14.5%
5,518 $
15.1%
5,851 $
15.7%
6,193 $
16.3%
6,544 $
16.9%
6,904 $
17.5%
7,274 $
18.1%
7,420
18.1%
- Taxes
% of EBIT
$
1,803 $
33.5%
2,229 $
62.6%
679 $
18.3%
1,029 $
22.7%
805
36.4%
$
1,586 $
34.7%
1,693 $
34.7%
1,803 $
34.7%
1,915 $
34.7%
2,031 $
34.7%
2,150 $
34.7%
2,271 $
34.7%
2,396 $
34.7%
2,525 $
34.7%
2,575
34.7%
NOPAT
% of revenue
$
3,578 $
10.8%
1,329 $
4.4%
3,027 $
9.2%
3,508 $
10.5%
1,407
4.2%
$
2,984 $
8.7%
3,185 $
9.1%
3,391 $
9.5%
3,603 $
9.9%
3,820 $
10.3%
4,044 $
10.7%
4,273 $
11.0%
4,508 $
11.4%
4,749 $
11.8%
4,844
11.8%

39. News Corp (pre-spin)
Free Cash Flow to the Firm Analysis
2008
2009
2010
2011
2012
1,009 $
1,226 $
1,269 $
1,283 $
1,179
3.1%
4.0%
3.9%
3.8%
3.5%
$
- CapEx
% of revenue
$
1,443 $
4.4%
1,101 $
3.6%
914 $
2.8%
1,171 $
3.5%
939
2.8%
$
958 $
2.8%
977 $
2.8%
996 $
2.8%
1,016 $
2.8%
1,037 $
2.8%
1,057 $
2.8%
1,079 $
2.8%
1,100 $
2.8%
Working Capital
% of revenue
$
799 $
2.4%
742 $
2.4%
582 $
1.8%
(435) $
-1.3%
478
1.4%
$
488 $
1.4%
497 $
1.4%
507 $
1.4%
517 $
1.4%
528 $
1.4%
538 $
1.4%
549 $
1.4%
560 $
1.4%
571
1.4%
- WC Investment
% of revenue
n/a $
n/a
(57) $
-0.2%
(160) $
-0.5%
(1,017) $
-3.0%
913
2.7%
$
10 $
0.0%
10 $
0.0%
10 $
0.0%
10 $
0.0%
10 $
0.0%
11 $
0.0%
11 $
0.0%
11 $
0.0%
11 $
0.0%
11
0.0%
FCF
% of revenue
n/a $
n/a
1,511 $
5.0%
3,542 $
10.8%
4,637 $
13.9%
734
2.2%
$
3,219 $
9.4%
3,430 $
9.8%
3,647 $
10.2%
3,869 $
10.6%
4,097 $
11.0%
4,332 $
11.4%
4,572 $
11.8%
4,820 $
12.2%
5,073 $
12.6%
4,922
12.0%
91.2%
83.2%
75.9%
69.3%
63.2%
57.6%
52.6%
48.0%
43.8%
43.8%
2,937 $
2,855 $
2,769 $
2,680 $
2,589 $
2,497 $
2,405 $
2,312 $
2,220 $
Present Value factor
Industry WACC
9.6%
Present Value of FCF
LTG (est)
2.0%
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
Assump.
1,203 $ 1,232 $ 1,262 $ 1,293 $ 1,324 $ 1,356 $ 1,389 $ 1,423 $ 1,457 $ 1,493
3.5%
3.5%
3.5%
3.5%
3.6%
3.6%
3.6%
3.6%
3.6%
3.6%
+D&A
% of revenue
$
Conclusion: Per Share Value
Potential Price
Working Capital
$
$
$
51,554
9,626
16,597
Equity Value (Net Present Value)
$ 16.93
Invested Capital (Equity and Debt) Value
+ Excess Cash
- Interest Bearing Debt, Preferred and Minority Interest
$
44,583
Last Stock Price
Divide: Shares Outstanding
$ 17.42
Fair Value/Share
2008
2009
Current Assets
- Excess Cash
- Current Liabilities
+ Short Term Debt
Working Capital
% of revenue
$
$
$
$
$
14,362
4,662
9,182
281
799
2.4%
$
$
$
$
$
Interest Exp (net)
Total Debt
$
$
1,172 $
14,505 $
15,836
6,540
10,639
2,085
742
2.4%
2010
$
$
$
$
$
18,024
8,709
8,862
129
582
1.8%
1,122 $
2.8%
2011
$
$
$
$
$
21,784
12,680
9,571
32
(435)
-1.3%
1,403
3.4%
28,291
2012
$
$
$
$
$
19,448
9,626
9,617
273
478
1.4%
840 $
16,073 $
1
16,597
2,633
$
16.93
1,018 $
15,040 $
900 $
13,748 $

40. Yahoo
Millions USD
2008
2009
Actuals
2010
2011
2012
2013
2014
2015
2016
Best View Estimates
2017
2018
2019
2020
2021
Assump.
Total Revenue
% growth rate
$
7,209 $
3.4%
6,460 $
-10.4%
6,325 $
-2.1%
4,984 $
-21.2%
4,987
0.1%
$
5,236 $
5.0%
5,498 $
5.0%
5,773 $
5.0%
6,061 $
5.0%
6,364 $
5.0%
6,682 $
5.0%
7,017 $
5.0%
7,367 $
5.0%
7,736 $
5.0%
8,123
5.0%
- COGS
% of revenue
$
3,023 $
41.9%
2,872 $
44.5%
2,628 $
41.5%
1,503 $
30.2%
1,621
32.5%
$
1,503 $
31.3%
1,722 $
31.3%
1,808 $
31.3%
1,899 $
31.3%
1,994 $
31.3%
2,093 $
31.3%
2,198 $
31.3%
2,308 $
31.3%
2,423 $
31.3%
2,545
31.3%
Gross Profit
% of revenue
$
4,185 $
58.1%
3,589 $
55.5%
3,697 $
58.5%
3,481 $
69.8%
3,366
67.5%
$
3,733 $
71.3%
3,775 $
68.7%
3,964 $
68.7%
4,162 $
68.7%
4,370 $
68.7%
4,589 $
68.7%
4,818 $
68.7%
5,059 $
68.7%
5,312 $
68.7%
5,578
68.7%
- Operating Exp
% of revenue
$
3,613 $
50.1%
3,158 $
48.9%
2,867 $
45.3%
2,681 $
53.8%
2,800
56.1%
$
2,878 $
55.0%
3,022 $
55.0%
3,173 $
55.0%
3,332 $
55.0%
3,498 $
55.0%
3,673 $
55.0%
3,857 $
55.0%
4,050 $
55.0%
4,252 $
55.0%
4,465
55.0%
- SG&A (Op Ex)
% of revenue
$
2,823 $
39.2%
2,419 $
37.4%
2,184 $
34.5%
2,033 $
40.8%
2,145
43.0%
$
2,207 $
42.2%
2,335 $
42.5%
2,470 $
42.8%
2,612 $
43.1%
2,763 $
43.4%
2,922 $
43.7%
3,090 $
44.0%
3,268 $
44.4%
3,456 $
44.7%
3,629
44.7%
EBITDA
% of revenue
$
1,363 $
18.9%
1,169 $
18.1%
1,513 $
23.9%
1,448 $
29.1%
1,221
24.5%
$
1,526 $
29.1%
1,441 $
26.2%
1,494 $
25.9%
1,550 $
25.6%
1,607 $
25.3%
1,667 $
24.9%
1,728 $
24.6%
1,791 $
24.3%
1,856 $
24.0%
1,949
24.0%
- D & A (Op Ex)
% of revenue
$
790 $
11.0%
739 $
11.4%
683 $
10.8%
648 $
13.0%
655
13.1%
$
671 $
12.8%
687 $
12.5%
703 $
12.2%
719 $
11.9%
735 $
11.6%
751 $
11.2%
766 $
10.9%
782 $
10.6%
796 $
10.3%
836
10.3%
EBIT (oper profits)
% of revenue
$
573 $
7.9%
430 $
6.7%
830 $
13.1%
800 $
16.1%
566
11.4%
$
855 $
16.3%
753 $
13.7%
791 $
13.7%
831 $
13.7%
872 $
13.7%
916 $
13.7%
962 $
13.7%
1,010 $
13.7%
1,060 $
13.7%
1,113
13.7%
- Taxes
% of EBIT
$
259 $
45.2%
219 $
51.0%
222 $
26.7%
242 $
30.3%
1,940
342.5%
$
327 $
38.3%
288 $
38.3%
303 $
38.3%
318 $
38.3%
334 $
38.3%
351 $
38.3%
368 $
38.3%
387 $
38.3%
406 $
38.3%
426
38.3%
NOPAT
% of revenue
$
314 $
4.4%
211 $
3.3%
609 $
9.6%
558 $
11.2%
(1,374)
-27.5%
$
528 $
10.1%
465 $
8.5%
488 $
8.5%
513 $
8.5%
538 $
8.5%
565 $
8.5%
594 $
8.5%
623 $
8.5%
654 $
8.5%
687
8.5%

41. Yahoo
Free Cash Flow to the Firm Analysis
2008
2009
2010
2011
2012
790 $
739 $
683 $
648 $
655
11.0%
11.4%
10.8%
13.0%
13.1%
$
- CapEx
% of revenue
$
746 $
10.4%
466 $
7.2%
736 $
11.6%
605 $
12.1%
509
10.2%
$
535 $
10.2%
562 $
10.2%
591 $
10.2%
621 $
10.2%
652 $
10.2%
685 $
10.3%
720 $
10.3%
757 $
10.3%
Working Capital
% of revenue
$
(412) $
-5.7%
(414) $
-6.4%
(164) $
-2.6%
190 $
3.8%
179
3.6%
$
187 $
3.6%
197 $
3.6%
207 $
3.6%
217 $
3.6%
228 $
3.6%
239 $
3.6%
251 $
3.6%
264 $
3.6%
277
3.6%
- WC Investment
% of revenue
n/a $
n/a
(3) $
0.0%
250 $
3.9%
354 $
7.1%
(11)
-0.2%
$
9 $
0.2%
9 $
0.2%
10 $
0.2%
10 $
0.2%
11 $
0.2%
11 $
0.2%
12 $
0.2%
13 $
0.2%
13 $
0.2%
14
0.2%
FCF
% of revenue
n/a $
n/a
486 $
7.5%
306 $
4.8%
247 $
4.9%
(1,217)
-24.4%
$
655 $
12.5%
581 $
10.6%
591 $
10.2%
601 $
9.9%
610 $
9.6%
619 $
9.3%
628 $
8.9%
635 $
8.6%
642 $
8.3%
673
8.3%
91.2%
83.2%
75.9%
Present Value factor
Industry WACC
9.6%
Present Value of FCF
LTG (est)
5.0%
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
Assump.
671 $
687 $
703 $
719 $
735 $
751 $
766 $
782 $
796 $
836
12.8%
12.5%
12.2%
11.9%
11.6%
11.2%
10.9%
10.6%
10.3%
10.3%
+D&A
% of revenue
$
597 $
Conclusion: Per Share Value
Potential Price
Invested Capital (Equity and Debt) Value
+ Excess Cash
- Interest Bearing Debt, Preferred and Minority Interest
$
$
$
9,988
4,184
170
$
14,002
Last Stock Price
Divide: Shares Outstanding
$ 33.81
Fair Value/Share
449 $
416 $
63.2%
57.6%
386 $
Working Capital
Equity Value (Net Present Value)
$ 11.64
483 $
69.3%
52.6%
357 $
2008
Current Assets
- Excess Cash
- Current Liabilities
+ Short Term Debt
Working Capital
% of revenue
$
$
$
$
$
Interest Exp (net)
Total Debt
$
$
48.0%
330 $
2009
4,746
3,452
1,705
(412)
-5.7%
$
$
$
$
$
4,595
3,291
1,718
(414)
-6.4%
43.8%
305 $
2010
$
$
$
$
$
4,346
2,884
1,626
(164)
-2.6%
796 $
10.3%
43.8%
281 $
2011
$
$
$
$
$
3,453
2,056
1,207
190
3.8%
836
10.3%
6,384
2012
$
$
$
$
$
5,653
4,184
1,290
179
3.6%
(19) $
175 $
170
1,203
$
11.64
95 $
95 $
22 $
108 $
(23) $
181 $

42. Time Warner
Millions USD
2008
2009
Actuals
2010
2011
2012
2013
2014
2015
2016
Best View Estimates
2017
2018
2019
2020
2021
Assump.
Total Revenue
% growth rate
$
26,516 $
-43.0%
25,785 $
-2.8%
26,888 $
4.3%
28,974 $
7.8%
28,729
-0.8%
$
28,729 $
0.0%
28,729 $
0.0%
28,729 $
0.0%
28,729 $
0.0%
28,729 $
0.0%
28,729 $
0.0%
28,729 $
0.0%
28,729 $
0.0%
28,729 $
0.0%
29,016
1.0%
- COGS
% of revenue
$
14,911 $
56.2%
14,235 $
55.2%
15,023 $
55.9%
16,311 $
56.3%
15,934
55.5%
$
16,053 $
55.9%
16,053 $
55.9%
16,053 $
55.9%
16,053 $
55.9%
16,053 $
55.9%
16,053 $
55.9%
16,053 $
55.9%
16,053 $
55.9%
16,053 $
55.9%
16,213
55.9%
Gross Profit
% of revenue
$
11,605 $
43.8%
11,550 $
44.8%
11,865 $
44.1%
12,663 $
43.7%
12,795
44.5%
$
12,676 $
44.1%
12,676 $
44.1%
12,676 $
44.1%
12,676 $
44.1%
12,676 $
44.1%
12,676 $
44.1%
12,676 $
44.1%
12,676 $
44.1%
12,676 $
44.1%
12,803
44.1%
- Operating Exp
% of revenue
$
14,567 $
54.9%
6,683 $
25.9%
6,437 $
23.9%
6,865 $
23.7%
6,886
24.0%
$
7,004 $
24.4%
7,004 $
24.4%
7,004 $
24.4%
7,004 $
24.4%
7,004 $
24.4%
7,004 $
24.4%
7,004 $
24.4%
7,004 $
24.4%
7,004 $
24.4%
7,074
24.4%
- SG&A (Op Ex)
% of revenue
$
7,650 $
28.9%
(938) $
-3.6%
(1,164) $
-4.3%
(1,725) $
-6.0%
(1,216)
-4.2%
$
(1,103) $
-3.8%
(1,107) $
-3.9%
(1,112) $
-3.9%
(1,117) $
-3.9%
(1,122) $
-3.9%
(1,127) $
-3.9%
(1,131) $
-3.9%
(1,136) $
-4.0%
(1,141) $
-4.0%
(1,152)
-4.0%
EBITDA
% of revenue
$
3,955 $
14.9%
12,488 $
48.4%
13,029 $
48.5%
14,388 $
49.7%
14,011
48.8%
$
13,779 $
48.0%
13,784 $
48.0%
13,788 $
48.0%
13,793 $
48.0%
13,798 $
48.0%
13,803 $
48.0%
13,808 $
48.1%
13,812 $
48.1%
13,817 $
48.1%
13,955
48.1%
- D & A (Op Ex)
% of revenue
$
6,917 $
26.1%
7,621 $
29.6%
7,601 $
28.3%
8,590 $
29.6%
8,102
28.2%
$
8,107 $
28.2%
8,112 $
28.2%
8,116 $
28.3%
8,121 $
28.3%
8,126 $
28.3%
8,131 $
28.3%
8,136 $
28.3%
8,140 $
28.3%
8,145 $
28.4%
8,227
28.4%
EBIT (oper profits)
% of revenue
$
(2,962) $
-11.2%
4,867 $
18.9%
5,428 $
20.2%
5,798 $
20.0%
5,909
20.6%
$
5,672 $
19.7%
5,672 $
19.7%
5,672 $
19.7%
5,672 $
19.7%
5,672 $
19.7%
5,672 $
19.7%
5,672 $
19.7%
5,672 $
19.7%
5,672 $
19.7%
5,729
19.7%
- Taxes
% of EBIT
$
692 $
-23.4%
1,194 $
24.5%
1,348 $
24.8%
1,484 $
25.6%
1,526
25.8%
$
1,429 $
25.2%
1,429 $
25.2%
1,429 $
25.2%
1,429 $
25.2%
1,429 $
25.2%
1,429 $
25.2%
1,429 $
25.2%
1,429 $
25.2%
1,429 $
25.2%
1,443
25.2%
NOPAT
% of revenue
$
(3,654) $
-13.8%
3,673 $
14.2%
4,080 $
15.2%
4,314 $
14.9%
4,383
15.3%
$
4,243 $
14.8%
4,243 $
14.8%
4,243 $
14.8%
4,243 $
14.8%
4,243 $
14.8%
4,243 $
14.8%
4,243 $
14.8%
4,243 $
14.8%
4,243 $
14.8%
4,285
14.8%

43. Time Warner
Free Cash Flow to the Firm Analysis
2008
2009
2010
2011
2012
6,917 $
7,621 $
7,601 $
8,590 $
8,102
26.1%
29.6%
28.3%
29.6%
28.2%
$
- CapEx
% of revenue
$
684 $
2.6%
561 $
2.2%
631 $
2.3%
772 $
2.7%
643
2.2%
$
677 $
2.4%
682 $
2.4%
687 $
2.4%
693 $
2.4%
698 $
2.4%
703 $
2.4%
708 $
2.5%
713 $
2.5%
Working Capital
% of revenue
$
3,425 $
12.9%
(499) $
-1.9%
858 $
3.2%
1,057 $
3.6%
1,367
4.8%
$
1,367 $
4.8%
1,367 $
4.8%
1,367 $
4.8%
1,367 $
4.8%
1,367 $
4.8%
1,367 $
4.8%
1,367 $
4.8%
1,367 $
4.8%
- WC Investment
% of revenue
n/a $
n/a
(3,924) $
-15.2%
1,357 $
5.0%
199 $
0.7%
310
1.1%
$
$
0.0%
$
0.0%
$
0.0%
$
0.0%
$
0.0%
$
0.0%
$
0.0%
$
0.0%
$
0.0%
0.0%
FCF
% of revenue
n/a $
n/a
14,657 $
56.8%
9,693 $
36.0%
11,933 $
41.2%
11,532
40.1%
$
11,673 $
40.6%
11,672 $
40.6%
11,672 $
40.6%
11,671 $
40.6%
11,671 $
40.6%
11,671 $
40.6%
11,670 $
40.6%
11,670 $
40.6%
11,670 $
40.6%
11,815
40.7%
Present Value factor
Industry WACC
9.6%
Present Value of FCF
LTG (est)
1.0%
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
Assump.
8,107 $ 8,112 $ 8,116 $ 8,121 $ 8,126 $ 8,131 $ 8,136 $ 8,140 $ 8,145 $ 8,227
28.2%
28.2%
28.3%
28.3%
28.3%
28.3%
28.3%
28.3%
28.4%
28.4%
+D&A
% of revenue
91.2%
$
10,649 $
Conclusion: Per Share Value
Potential Price
$ 128,279
$ 2,841
$ 19,872
Equity Value (Net Present Value)
$ 113.95
$ 111,248
Last Stock Price
Divide: Shares Outstanding
$ 67.50
Fair Value/Share
75.9%
69.3%
63.2%
57.6%
52.6%
48.0%
43.8%
9,714 $
8,862 $
8,084 $
7,375 $
6,728 $
6,137 $
5,599 $
5,108 $
2008
2009
Current Assets
- Excess Cash
- Current Liabilities
+ Short Term Debt
Working Capital
% of revenue
$
$
$
$
$
16,622
1,099
14,139
2,041
3,425
12.9%
$
$
$
$
$
Interest Exp (net)
Total Debt
$
$
1,325 $
25,278 $
13,007
4,800
8,765
59
(499)
-1.9%
2010
$
$
$
$
$
13,138
3,663
8,643
26
858
3.2%
43.8%
2011
$
$
$
$
$
697
2.4%
1,367
4.8%
83.2%
Working Capital
Invested Capital (Equity and Debt) Value
+ Excess Cash
- Interest Bearing Debt, Preferred and Minority Interest
718 $
2.5%
13,432
3,476
8,922
23
1,057
3.6%
60,024
2012
$
$
$
$
$
13,288
2,841
9,829
749
1,367
4.8%
1,210 $
19,521 $
568
19,872
976
$
113.95
1,155 $
15,759 $
1,178 $
16,554 $