1. CASH FLOW Google, eBay Marko Novak MA1N0223

2. Google In less than 9 years from its founding, Google has in 2006 operating cash flow $3.58 billion on revenues of $10.6 billion. With more than $11 billion in cash and short- term marketable securities What should the company’s management do with this $11 billion? – New acquisitions, pay dividends, buy back stock, reduce debt

3. Google Google has no long-term debt and has no history of paying dividends. Therefore the company is not likely to buy back its stock Since its incorporation, Google has pursued a gowth policy fueled by its acquisitions of high- tech companies It currently has 87 subsidiaries, including YouTube which it bought for $1.65 billion

4. Google If the company continues to amass additional cash, some shareholders may demand that the company issue dividends. Like Google, companies must make strategic plans and implement those plans.

5. Free Cash Flow at eBay Free cash flow is the lifeblood of any company and is the only true way to measure how much cash a company is generating. Free cash flow is, broadly, operating cash flow minus investments in net fixed assets and net current assets.

6. Free Cash Flow at eBay It represents the net amount of cash available to creditors and owners. Free cash flow is an ideal way to measure a company’s health and cash generating growth.

7. Free Cash Flow at eBay eBay has in 2006 free cash flow of $1.73 billion Net cash provided by operating activities was $2.24 billion, and the company invested $0.51 billion in property, equipment, and net current assets

8. Free Cash Flow at eBay But the company is spending more and more, mostly paying Google to draw traffic to the site. Expenses start to increase more than free cash flow, it suggests that a company’s competitive edge is under attack

9. Free Cash Flow at eBay According to www.fool.com as an investor you are much better served by companies that use free cash flow to buy back their stock or use it toward a regular cash dividend.www.fool.com Company chose in 2006 to buy back stock for $1.7 billion

10. Free Cash Flow at eBay The company’s intentions are clearly not to begin paying dividends for the foreseeable future.

11. Thank you for your attention! Q & A