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Vs. 1 Which Stock to Decide on? - Samarth Patwardhan - Sachin Mylavarapu A Financial Analysis
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2 Agenda Company Overview Products and Services Recent Developments Financial Analysis Future Plans Conclusion
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3 Company Overview Intel Corporation Incorporated as NM Electronics on July18 th 1968 Introduced first ever Microprocessor in 1971 Went public on October 13 th 1971 Sector – Technology, Industry – Semiconductor broad line(b = 2.1) Today – World leader in the manufacturing of microprocessors
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4 Company Overview Hitachi Corporation 1910 – Started as an Electrical Workshop IPO – 1949 – Tokyo Stock Exchange, April’1982 – New York Stock Exchange Sector – Consumer Goods, Industry – Electronic Equipment (b = 1.04) Today, Hitachi has a broad range of products to offer in the market
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5 Products and Services Intel Corporation Classified in four main categories Wide range of products From wireless networking solutions to programmable hardware Focus – Freedom of computing and reduction of infrastructure costs
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6 Products and Services Hitachi Corporation Much more diversified spectrum Power and Industrial Systems, logistics services Information and telecommunication systems, electronic devices Media products, financial services Focus - Creating e-business infrastructures that are tailored to specific individual needs
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7 Recent Developments Intel corporation In the last 2 years, seven acquisitions to broaden its product portfolio Target the network and Communications markets Shifted more than half of their R&D expenditure to server-related chipsets, microprocessors and platforms
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8 Recent Developments Hitachi Corporation First half of Fiscal’ 01 – 2% drop in Sales Hit by a 90% price collapse for DRAM chips October’01 – decision to spin off two if its groups Recent reform measures include alliances, JV’s, acquisitions etc.
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9 Financial Analysis Growth Liquidity Gain Market Value Risk Factors Future Stock Performance The 7 – Point Criteria
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10Overview Excess Inventory More Accounts receivable
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11 Overview Mode of Financing
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12 Growth
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13 Growth
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14 Liquidity
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15 Asset Utilization Gain
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16 Hitachi – Uses Debt Intel – Less use of Debt Use of leverage Gain
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17 Profit MarginGain Cost of sales. Money tied up in A/R and inventory
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18 ROEHITINDINTCIND 1-Year 3.6%-7.45%3.6%-3.56% 3-Year-2.9%3.5%18.1%14.3% 5-Year-1%4.2%23.3%17.3% The Bottom LineGain
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19 ROAHITINDINTCIND 1-Year0.9%-6.49%2.9%2.77% 3-Year-0.8%1.5%13.9%9.6% 5-Year-0.3%1.6%17%11.4%Gain
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20 Price/Earnings Market Value HITIND INTC IND P/E36.489.87165.5147.26
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21 Risk Factors Risk related to economic environment Risk related to industrial sectors and business lines Risks related to Management
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22 Future Plans Intel corporation Market share for processors – increase from 20% to 69% by ‘03 Fiber optics industry Hyper-Threading technology CEO – “In the future, all computers will communicate and all communication devices will compute.”
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23 Future Plans Hitachi Corporation April’2001 - The Corporate Innovation Innovative (CII) Reduce material purchasing costs by 20% Inventory and A/R by 25% Aim at doubling the sales from Fiscal 2000 to Fiscal 2002
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24 3 – Month Performance Stock Performance
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25 Semester Start – 4 th May, 1600 hrs Stock Performance
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26 1 – Year Performance Stock Performance
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27 5 – Year Performance Stock Performance
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28 Summary Parameters HIT INTC Growth3 3 Liquidity2 3 Gain3 4 Market Value2 4 Risk Factors3 3 Future4 4 Stock Performance 3 3 Average2.853.42
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29 What to Do? Look beyond numbers See as an opportunity to buy low If you already have it, hold it Good for long term investment
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30 Risk is the Name of the Game! Are You Willing to Take it?
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