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Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
Capital Management & Impacts to Financial Analysis - Technology Media
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Capital Management & Impacts to Financial Analysis - Technology Media

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  • 1. Technology & Media Companies Wednesday, February 08, 2012 Richard Chan*EDUCATIONAL USE ONLY!
  • 2. Capital Management Overview Finance Strategically Establish Communicate determine right Corporate Planning Plan Formally mix Targets Business Ensure Assets Plan Technical Think Financial Idea Generation are Tactically Units Requirements Value Deployed Finance Support Review Ensure Accurate Provide Strong Business Financial Financial Capital Oversight Partners Impacts Reporting Staged Review Sponsorship Ensure Strategic Fit of from Begin to Substantial Gatekeepers Projects End Value is Created
  • 3. Gatekeepers/Level of Effort Network Legal IT Project Leader (Prod Mgr) Finance Device Marketing
  • 4. Effective Capital Processes Plan High Set CommunicateFinance Level Yearly to BusinessPlanning Capital Targets Units 2 Sponsor/Budget Determine BusinessBusiness Units Idea Y Proceed with Feasibility OK? Unit Generation plan requests & Scope Review N Recycle Idea Finance Consolidate FY 1Finance Review CapitalCapital Prelim. List requirementsStagedGatekeepers
  • 5. Effective Capital Processes (Continued)FinancePlanningBusiness Units 2 Push to Recycle / Business Unit Kill N Prepare Review Y Consolidate/ 3Finance 1 Initial Financial Complete? CoordinateCapital List document Presentation NStaged Review YGatekeepers Capital Approve? requirements
  • 6. Effective Capital Processes (Continued)FinancePlanning Denied/ Hold 4Business Units N Y Requisitioner Workflows Y PO creates PO Approval Approved? Generated Modification? against Authority via Sourcing budgets N Provide Monthly Establish Implement SupportFinance 3 Review Reporting, Project Sound Future Plan/Capital Data Analysis, Forecast Funds/PS Policies Target SettingStagedGatekeepers
  • 7. Effective Capital Processes (Continued)FinancePlanningBusiness Units Receive 3-Way 4 Post to Paid, ‘Credit Goods/ Match Cash’ out the door Services ProcessFinanceCapitalStagedGatekeepers
  • 8. Why does it matter? Capital Management is a function that provides continuous transparency in product development Higher Value Projects and capital deployment to optimize resource Transparency allocation through clear prioritization Some Key Objectives: Risk Based Decisions  Transparency to the Whole  Holistic, risk-managed investment decisions  Optimization for improved ROI  Higher value product and capital implemented  Objective and timely Approve/Recycle/Kill Decisions Improved ROI Ultimately you want to ensure value is added to a business!
  • 9. MODEL
  • 10. SWOT Summary - Google Strengths include:  Economies of scale, brand name, innovation, business structure, strong management, innovative, unique product, advanced technology, loyalty, adwords, adsense, and navigation. Weakness include:  Poor corporate investments, search engine reliant, data center costs, weak social media, YouTube profitability, and not quick to market. Opportunities:  Acquisitions for growth, regulation in China/Emerging markets, new products, global internet, wireless technology, and web media. Threats:  Search engine substitutes, anti-trust laws, online security, technology margins, Microsoft, and browser standard changes.
  • 11. Model Summary - Google Assumes Risk Free Rate of 2.00% via Treasury 10-yr bonds Assumes weighted cost of debt borrowings at 7.1% Assumes Equity Risk premium of 7.5% Model only as fluid as timing on daily share price Overall ROIC is roughly 21.7% and 19.3% in 2010/2011 vs. industry WACC of 9.3% $911.56 per share based on DCF estimates
  • 12. Financial Ratios - Google 2007-12 2008-12 2009-12 2010-12 2011-12 Current Ratio 8.49 8.77 10.62 4.16 5.92 Acid Test/Quick Ratio 8.05 8.03 10.07 3.92 5.62 Liquidity Receiveables Turnover 7.67 9.07 8.13 7.89 7.83 Average Collection Period 47.6 40.2 44.9 46.2 46.6 Inventory Turnover - - - - - Days in Inventory - - - - - Profit Margin 25.3% 19.4% 27.6% 29.0% 25.7% Asset Turnover 65.5% 76.3% 65.5% 59.6% 58.1% Profitability Return on Assets 16.6% 14.8% 18.0% 17.3% 14.9% Return on Equity 18.5% 16.6% 20.3% 20.7% 18.7% Earnings per share ($) $ 13.53 $ 13.46 $ 20.62 $ 26.69 $ 30.17 Price Earnings Ratio 44.85 45.08 29.43 22.73 20.11 Payout Ratio - - - - - Debt to Assets 10.4% 11.1% 11.1% 20.1% 19.9% Solvency Interest Coverage Ratio - - - - - Free Cash Flow ($MM) $ 3,372 $ 5,495 $ 8,506 $ 7,063 $ 11,127*SEC 10K filings / Annual Reports
  • 13. Google - Share Price675625575525475 GOOG425375325275 1/2/2009 4/2/2009 7/2/2009 10/2/2009 1/2/2010 4/2/2010 7/2/2010 10/2/2010 1/2/2011 4/2/2011 7/2/2011 10/2/2011 1/2/2012 Working with Intel/Sony on TV YouTube defeats Viacom Larry Page becomes CEO Stops censoring web searches (China) ITA Software Acquisition Acquisition of beatthatquote Nintendo/Google to jointly develop web-game Yahoo Japan switches search Working on Mobile payments Acquisition of Slide Verifone/Sprint partners mobile pay Acquisition of Jambool Google labs winds down DTV and Google Ad sale partnership Acquisition of Zagat Acquisition of Like.com Visa/Google partnership Acquisition of Angstro Acquires Motorola Mobility
  • 14. 09-10’ Google EPS Walk $14.02 ($3.89) $0.86 $0.10 $26.69 $0.32 $20.62 ($5.33) $6.5B $8.5B 2009 2010 Revenue Depreciation COGS SG&A Corp/Tax/BTL Interest Net*SEC 10K filings / Annual Reports
  • 15. Google - Discounted Cash Flow AnalysisMillions USD Actuals Best View Estimates 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump.Total Revenue $ 10,605 $ 16,594 $ 21,796 $ 23,651 $ 29,321 $ 37,905 $ 45,486 $ 52,309 $ 57,540 $ 60,417 $ 63,438 $ 66,610 $ 69,940 $ 73,437 $ 77,109% growth rate n/a 56.5% 31.3% 8.5% 24.0% 29.3% 20.0% 15.0% 10.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%- COGS $ 4,225 $ 6,649 $ 8,622 $ 8,844 $ 10,417 $ 13,188 $ 15,826 $ 18,199 $ 20,019 $ 21,020 $ 22,071 $ 23,175 $ 24,334 $ 25,550 $ 26,828% of revenue 39.8% 40.1% 39.6% 37.4% 35.5% 34.8% 34.8% 34.8% 34.8% 34.8% 34.8% 34.8% 34.8% 34.8% 34.8%Gross Profit $ 6,380 $ 9,945 $ 13,174 $ 14,806 $ 18,904 $ 24,717 $ 29,660 $ 34,109 $ 37,520 $ 39,396 $ 41,366 $ 43,435 $ 45,606 $ 47,887 $ 50,281% of revenue 60.2% 59.9% 60.4% 62.6% 64.5% 65.2% 65.2% 65.2% 65.2% 65.2% 65.2% 65.2% 65.2% 65.2% 65.2%- Operating Exp $ 3,104 $ 5,134 $ 6,816 $ 6,768 $ 8,523 $ 12,475 $ 13,803 $ 15,873 $ 17,461 $ 18,334 $ 19,250 $ 20,213 $ 21,224 $ 22,285 $ 23,399% of revenue 29.3% 30.9% 31.3% 28.6% 29.1% 32.9% 30.3% 30.3% 30.3% 30.3% 30.3% 30.3% 30.3% 30.3% 30.3%- SG&A (Op Ex) $ 2,532 $ 4,167 $ 5,316 $ 5,244 $ 7,127 $ 10,624 $ 11,364 $ 12,818 $ 13,824 $ 14,226 $ 14,634 $ 15,047 $ 15,464 $ 15,886 $ 16,405% of revenue 23.9% 25.1% 24.4% 22.2% 24.3% 28.0% 25.0% 24.5% 24.0% 23.5% 23.1% 22.6% 22.1% 21.6% 21.3%EBITDA $ 3,848 $ 5,778 $ 7,858 $ 9,563 $ 11,777 $ 14,093 $ 18,296 $ 21,291 $ 23,696 $ 25,170 $ 26,732 $ 28,388 $ 30,142 $ 32,001 $ 33,876% of revenue 36.3% 34.8% 36.1% 40.4% 40.2% 37.2% 40.2% 40.7% 41.2% 41.7% 42.1% 42.6% 43.1% 43.6% 43.9%- D & A (Op Ex) $ 572 $ 968 $ 1,500 $ 1,524 $ 1,396 $ 1,851 $ 2,439 $ 3,055 $ 3,636 $ 4,107 $ 4,616 $ 5,166 $ 5,759 $ 6,399 $ 6,994% of revenue 5.4% 5.8% 6.9% 6.4% 4.8% 4.9% 5.4% 5.8% 6.3% 6.8% 7.3% 7.8% 8.2% 8.7% 9.1%EBIT (oper profits) $ 3,276 $ 4,811 $ 6,358 $ 8,038 $ 10,381 $ 12,242 $ 15,857 $ 18,236 $ 20,060 $ 21,063 $ 22,116 $ 23,222 $ 24,383 $ 25,602 $ 26,882% of revenue 30.9% 29.0% 29.2% 34.0% 35.4% 32.3% 34.9% 34.9% 34.9% 34.9% 34.9% 34.9% 34.9% 34.9% 34.9%- Taxes $ 934 $ 1,470 $ 1,627 $ 1,861 $ 2,291 $ 2,589 $ 3,991 $ 4,590 $ 5,049 $ 5,301 $ 5,566 $ 5,844 $ 6,137 $ 6,443 $ 6,766% of EBIT 28.5% 30.6% 25.6% 23.1% 22.1% 21.1% 25.2% 25.2% 25.2% 25.2% 25.2% 25.2% 25.2% 25.2% 25.2%NOPAT $ 2,343 $ 3,340 $ 4,732 $ 6,178 $ 8,090 $ 9,653 $ 11,866 $ 13,646 $ 15,011 $ 15,762 $ 16,550 $ 17,377 $ 18,246 $ 19,158 $ 20,116% of revenue 22.1% 20.1% 21.7% 26.1% 27.6% 25.5% 26.1% 26.1% 26.1% 26.1% 26.1% 26.1% 26.1% 26.1% 26.1%*SEC 10K filings / Annual Reports/Estimates
  • 16. Google - Free Cash Flow to the Firm 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump.+D&A $ 572 $ 968 $ 1,500 $ 1,524 $ 1,396 $ 1,851 $ 2,439 $ 3,055 $ 3,636 $ 4,107 $ 4,616 $ 5,166 $ 5,759 $ 6,399 $ 6,994% of revenue 5.4% 5.8% 6.9% 6.4% 4.8% 4.9% 5.4% 5.8% 6.3% 6.8% 7.3% 7.8% 8.2% 8.7% 9.1%- CapEx $ 1,903 $ 2,403 $ 2,358 $ 810 $ 4,018 $ 3,438 $ 4,126 $ 4,744 $ 5,219 $ 5,480 $ 5,754 $ 6,042 $ 6,344 $ 6,661 $ 6,994% of revenue 17.9% 14.5% 10.8% 3.4% 13.7% 9.1% 9.1% 9.1% 9.1% 9.1% 9.1% 9.1% 9.1% 9.1% 9.1%Working Capital $ 491 $ 1,035 $ 2,030 $ 1,935 $ 56 $ 72 $ 87 $ 100 $ 110 $ 115 $ 121 $ 127 $ 134 $ 140% of revenue 4.6% 6.2% 9.3% 8.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%- WC Investment n/a $ 544 $ 995 $ (96) $ (1,879) $ 16 $ 14 $ 13 $ 10 $ 5 $ 6 $ 6 $ 6 $ 7 $ 7% of revenue n/a 3.3% 4.6% -0.4% -6.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%FCF n/a $ 1,362 $ 2,878 $ 6,988 $ 7,347 $ 8,050 $ 10,165 $ 11,944 $ 13,418 $ 14,384 $ 15,407 $ 16,496 $ 17,655 $ 18,890 $ 20,109% of revenue n/a 8.2% 13.2% 29.5% 25.1% 21.2% 22.3% 22.8% 23.3% 23.8% 24.3% 24.8% 25.2% 25.7% 26.1%Present Value factor Industry WACC 9.3% 91.5% 83.7% 76.6% 70.0% 64.1% 58.6% 53.6% 49.0% 44.9% 44.9%Present Value of FCF LTG (est) 5.0% $ 7,364 $ 8,507 $ 9,144 $ 9,397 $ 9,215 $ 9,029 $ 8,844 $ 8,659 $ 8,475 $ 209,137 Per Share Value Working Capital 2006 2007 2008 2009 2010 Est. Price Invested Capital (Equity and Debt) Value $ 287,771 Current Assets $ 13,040 $ 17,289 $ 20,178 $ 29,167 $ 41,562 + Excess Cash $ 34,975 - Excess Cash $ 11,244 $ 14,219 $ 15,846 $ 24,485 $ 34,975 - Interest Bearing Debt, Preferred and Minority Interest $ 3,465 - Current Liabilities $ 1,305 $ 2,036 $ 2,302 $ 2,747 $ 9,996 $ 991.56 + Short Term Debt $ - $ - $ - $ - $ 3,465 Equity Value (Net Present Value) $ 319,281 Working Capital $ 491 $ 1,035 $ 2,030 $ 1,935 $ 56 Last Stock Price % of revenue 4.6% 6.2% 9.3% 8.2% 0.2% Divide: Shares Outstanding 322 Interest Exp (net) $ 412 $ 560 $ 390 $ 230 $ (579) $ 606.77 Fair Value/Share $ 991.56 Total Debt $ - $ - $ - $ 1,392 $ 3,465*SEC 10K filings / Annual Reports/Estimates
  • 17. WACC Google Discount Rate Industry Average Estimates for the WACC Calculation (Millions USD) WACC 9.3% Beta Debt Debt BetaWACC Assumptions Company Price levered Debt Shares Equity Capital Equity Capital Tax % unleverRisk Free Rate (10yr) 2.00%Cost of Debt (est.) 7.10% Google $ 606.77 0.970 $ 3,465 322 $ 195,380 $ 198,845 1.77% 1.74% 21.15% 0.957Equity Risk Prem* 7.5% Yahoo! $ 15.83 0.650 $ 181 1,283 $ 20,310 $ 20,491 0.89% 0.88% 21.71% 0.645Alpha 0.0% Microsoft $ 30.35 0.970 $ 5,939 8,593 $ 260,798 $ 266,737 2.28% 2.23% 7.08% 0.950Country Risk Premium 0.0% Time Warner $ 38.10 1.240 $ 16,554 1,145 $ 43,636 $ 60,190 37.94% 27.50% 24.68% 0.964 Baidu.com $ 129.49 1.520 $ 13 349 $ 45,192 $ 45,205 0.03% 0.03% 12.13% 1.520Industry WACC Oracle $ 28.95 1.210 $ 15,056 5,128 $ 148,456 $ 163,512 10.14% 9.21% 22.72% 1.122Beta (unlevered) 0.96 IBM $ 192.60 0.520 $ 28,750 1,214 $ 233,778 $ 262,528 12.30% 10.95% 26.07% 0.477Industry D/E 6.1% Apple $ 468.83 0.920 $ - 937 $ 439,125 $ 439,125 0.00% 0.00% 24.51% 0.920Tax Rate (5 yrs) 22.2% News Corp $ 19.50 1.450 $ 13,748 2,633 $ 51,344 $ 65,092 26.78% 21.12% 22.68% 1.201Beta (relevered) 1.01 Nokia $ 5.13 1.840 $ 10,160 3,710 $ 19,032 $ 29,192 53.38% 34.80% 16.11% 1.271Cost of Debt (after-tax) 5.52% Median 1.090 $ 8,049 1,248 $ 99,900 $ 114,302 6.21% 5.72% 22.20% 0.961Debt / Capital 5.72%WAC (debt) 0.32%Cost of Equity (capm) 9.54%Equity / Capital 94.28%WAC (equity) 9.00%Industry Level WACC 9.3%
  • 18. Google Comparative Enterprise Value Ent Value Revenue Growth EBITDA Margin EBIT Margin Cash Flow Margin Current -1yr -5yr +5yr -1yr -5yr +5yr -1yr -5yr +5yr -1yr -5yr +5yrGoogle $ 163,870 24.0% 30.1% 15.9% 37.2% 37.6% 40.2% 32.3% 31.7% 34.3% 21.2% 31.7% 22.7%Yahoo! $ 17,607 -2.1% -0.1% -7.7% 33.1% 20.6% 25.3% 22.3% 10.4% 14.7% 15.4% 5.7% 8.5%Microsoft $ 229,949 6.9% 9.3% 5.1% 42.7% 40.6% 41.2% 38.5% 37.3% 37.3% 33.2% 24.8% 29.9%Time Warner $ 56,527 4.3% -8.8% 2.0% 46.9% 37.2% 46.1% 19.1% 12.8% 19.1% 39.9% 26.9% 38.4%Baidu.com $ 43,961 84.4% 85.5% 56.1% 56.3% 41.8% 57.8% 50.0% 33.8% 50.0% 49.4% 33.8% 48.1%Oracle $ 145,043 15.3% 17.2% 13.6% 43.0% 38.2% 41.4% 35.4% 35.5% 35.4% 36.5% 28.8% 32.9%IBM $ 250,877 4.3% 2.4% 6.2% 23.2% 20.8% 21.5% 18.5% 15.6% 17.0% 14.4% 12.1% 13.1%Apple $ 413,505 78.5% 37.6% 25.6% 33.4% 21.9% 31.3% 31.2% 20.4% 28.0% 26.3% 16.7% 19.2%News Corp $ 56,383 7.7% 7.1% 3.2% 17.4% 17.4% 18.4% 13.6% 14.0% 14.7% 13.9% 8.4% 10.6%Nokia $ 12,217 -3.2% 3.1% 1.6% 4.8% 10.6% 5.2% 4.6% 9.1% 4.6% 2.5% 7.5% 2.8%Low Value $ 12,217 -3.2% -8.8% -7.7% 4.8% 10.6% 5.2% 4.6% 9.1% 4.6% 2.5% 5.7% 2.8%High Value $ 413,505 84.4% 85.5% 56.1% 56.3% 41.8% 57.8% 50.0% 37.3% 50.0% 49.4% 33.8% 48.1%Average Value $ 136,230 21.8% 17.0% 11.7% 33.4% 27.7% 32.0% 25.9% 21.0% 24.5% 25.7% 18.3% 22.6%Median Value $ 56,527 6.9% 7.1% 5.1% 33.4% 21.9% 31.3% 22.3% 15.6% 19.1% 26.3% 16.7% 19.2% Google vs. Competitors Ent Value Revenue Growth EBITDA Margin EBIT Margin Cash Flow MarginLow Value + + + + + + + + + + + + +High ValueAverage Value + + + + + + + + + + + +Median Value + + + + + + + + + + + +Advantages v. Competitors 75% 75% = Average 75% = Average 75% = Average 63% = Average
  • 19. BACKUP(News Corp.)
  • 20. Model Summary – News Corp Parent Assumes Risk Free Rate of 2.00% via Treasury 10-yr bonds Assumes weighted cost of debt borrowings at 7.1% Assumes Equity Risk premium of 7.5% Model only as fluid as timing on daily share price 2009 restructuring costs normalized for DCF analysis 2010 used as a base year to compare similar industries Overall ROIC is roughly 8.9% and 9.4% in 2010/2011 vs. industry WACC of 9.7% $17.79 per share based on DCF estimates
  • 21. Financial Ratios – News Corp 2007-12 2008-12 2009-12 2010-12 2011-12 Current Ratio 2.12 1.56 1.49 2.03 2.28 Acid Test/Quick Ratio 1.80 1.27 1.21 1.71 1.99 Liquidity Receiveables Turnover 4.90 5.14 4.58 5.15 5.24 Average Collection Period 74.4 70.9 79.6 70.8 69.7 Inventory Turnover 9.14 9.56 8.27 8.63 8.92 Days in Inventory 39.9 38.2 44.1 42.3 40.9 Profit Margin 12.0% 16.3% -11.1% 7.7% 8.2% Asset Turnover 46.0% 52.9% 52.7% 61.0% 57.4% Profitability Return on Assets 5.5% 8.6% -5.9% 4.7% 4.7% Return on Equity 10.4% 17.5% -13.0% 10.5% 10.0% Earnings per share ($) $ 1.14 $ 1.82 $ (1.29) $ 0.97 $ 1.04 Price Earnings Ratio 17.11 10.71 -15.12 20.10 18.75 Payout Ratio 10.8% 6.9% 10.8% 16.5% 18.3% Debt to Assets 47.2% 54.1% 56.3% 53.8% 52.4% Solvency Interest Coverage Ratio 13.7% 11.2% -20.1% 23.0% 18.8% Free Cash Flow ($MM) $ 2,802 $ 2,482 $ 1,147 $ 2,940 $ 3,300*SEC 10K filings / Annual Reports
  • 22. News Corp - Share Price $20.00 $18.00 $16.00 $14.00 NWSA $12.00 $10.00 $8.00 $6.00 $4.00 1/2/2009 4/2/2009 7/2/2009 10/2/2009 1/2/2010 4/2/2010 7/2/2010 10/2/2010 1/2/2011 4/2/2011 7/2/2011 10/2/2011 1/2/2012 News Corp Sells BTV and Indexes Acquires SmartMoney Reaffirms FY2011 EBIT 2Q tops estimates Acquires Stake in Rotana Group DJ Investment Banker Sale of Myspace Raises EBIT Guidance Withdraws offer on BskyB Launch of FX Dollar Index Announces $5B buyback Acquires Skiff eReading Hulu drawing bids Yahoo buyout talks
  • 23. 09-10’ News Corp EPS Walk $0.23 $2.71 ($0.02) ($0.36) $0.97 ($0.43) $2.5B $0.71 2009 2010 Revenue Depreciation COGS SG&A Restructuring Corp/Tax/BTL Other Net Affliate Equity Interest Net -$3.5B ($0.44) ($0.14) ($0.01) ($1.29)*SEC 10K filings / Annual Reports
  • 24. 10-11’ News Corp EPS Walk $0.09 $0.02 $0.18 ($0.02) ($0.01) ($0.01) $1.04 $0.97 ($0.17) $2.5B $2.7B -$3.5B 2010 2011 Revenue COGS Restructuring SG&A Corp/Tax/BTL Other Net Interest Net*SEC 10K filings / Annual Reports
  • 25. 09-10’ News Corp Segment Level Operating Income Mix $615M $29M ($163M) $64M $71M $501M ($504M) ($212M) $3.6B $4.0B 2009 2010 Other Television Broadcast Satellite Integrated Marketing News & Information Book Publishing Cable Network Filmed Entertainment -$3.5B*SEC 10K filings / Annual Reports
  • 26. 10-11’ News Corp Segment Level Operating Income Mix $397M $492M $2M ($39M) $461M ($422M) $4.9B $4.0B 2010 2011 Publishing Other Television Broadcast Satellite Cable Network Filmed Entertainment -$3.5B*SEC 10K filings / Annual Reports
  • 27. News Corp - Discounted Cash Flow AnalysisMillions USD Actuals Actuals Best View Estimates 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Assump.Total Revenue $ 25,327 $ 28,665 $ 32,996 $ 30,423 $ 32,778 $ 33,405 $ 34,574 $ 35,784 $ 37,037 $ 38,333 $ 39,675 $ 41,063 $ 42,500 $ 43,988 $ 45,528% growth rate n/a 13.2% 15.1% -7.8% 7.7% 1.9% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%- COGS $ 16,593 $ 18,645 $ 20,531 $ 19,563 $ 21,015 $ 21,058 $ 21,795 $ 22,558 $ 23,347 $ 24,165 $ 25,010 $ 25,886 $ 26,792 $ 27,729 $ 28,700% of revenue 65.5% 65.0% 62.2% 64.3% 64.1% 63.0% 63.0% 63.0% 63.0% 63.0% 63.0% 63.0% 63.0% 63.0% 63.0%Gross Profit $ 8,734 $ 10,020 $ 12,465 $ 10,860 $ 11,763 $ 12,347 $ 12,779 $ 13,226 $ 13,689 $ 14,168 $ 14,664 $ 15,178 $ 15,709 $ 16,259 $ 16,828% of revenue 34.5% 35.0% 37.8% 35.7% 35.9% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0%- Operating Exp $ 4,866 $ 5,568 $ 7,084 $ 7,302 $ 8,057 $ 7,810 $ 7,610 $ 7,877 $ 8,152 $ 8,438 $ 8,733 $ 9,039 $ 9,355 $ 9,682 $ 10,021% of revenue 19.2% 19.4% 21.5% 24.0% 24.6% 23.4% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0%- SG&A (Op Ex) $ 4,190 $ 4,689 $ 6,075 $ 6,076 $ 6,788 $ 6,527 $ 6,300 $ 6,538 $ 6,785 $ 7,042 $ 7,308 $ 7,584 $ 7,871 $ 8,168 $ 8,463% of revenue 16.5% 16.4% 18.4% 20.0% 20.7% 19.5% 18.2% 18.3% 18.3% 18.4% 18.4% 18.5% 18.5% 18.6% 18.6%EBITDA $ 4,544 $ 5,331 $ 6,390 $ 4,784 $ 4,975 $ 5,820 $ 6,480 $ 6,688 $ 6,904 $ 7,127 $ 7,356 $ 7,593 $ 7,838 $ 8,090 $ 8,365% of revenue 17.9% 18.6% 19.4% 15.7% 15.2% 17.4% 18.7% 18.7% 18.6% 18.6% 18.5% 18.5% 18.4% 18.4% 18.4%- D & A (Op Ex) $ 676 $ 879 $ 1,009 $ 1,226 $ 1,269 $ 1,283 $ 1,311 $ 1,339 $ 1,367 $ 1,396 $ 1,425 $ 1,454 $ 1,484 $ 1,514 $ 1,558% of revenue 2.7% 3.1% 3.1% 4.0% 3.9% 3.8% 3.8% 3.7% 3.7% 3.6% 3.6% 3.5% 3.5% 3.4% 3.4%EBIT (oper profits) $ 3,868 $ 4,452 $ 5,381 $ 3,558 $ 3,706 $ 4,537 $ 5,169 $ 5,350 $ 5,537 $ 5,731 $ 5,931 $ 6,139 $ 6,354 $ 6,576 $ 6,806% of revenue 15.3% 15.5% 16.3% 11.7% 11.3% 13.6% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%- Taxes $ 1,526 $ 1,814 $ 1,803 $ 2,229 $ 679 $ 1,029 $ 1,872 $ 1,938 $ 2,006 $ 2,076 $ 2,149 $ 2,224 $ 2,302 $ 2,382 $ 2,466% of EBIT 39.5% 40.7% 33.5% 62.6% 18.3% 22.7% 36.2% 36.2% 36.2% 36.2% 36.2% 36.2% 36.2% 36.2% 36.2%NOPAT $ 2,342 $ 2,638 $ 3,578 $ 1,329 $ 3,027 $ 3,508 $ 3,296 $ 3,412 $ 3,531 $ 3,655 $ 3,783 $ 3,915 $ 4,052 $ 4,194 $ 4,341% of revenue 9.2% 9.2% 10.8% 4.4% 9.2% 10.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5%*SEC 10K filings / Annual Reports/Estimates
  • 28. News Corp - Free Cash Flow to the Firm 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump. +D&A $ 676 $ 879 $ 1,009 $ 1,226 $ 1,269 $ 1,283 $ 1,311 $ 1,339 $ 1,367 $ 1,396 $ 1,425 $ 1,454 $ 1,484 $ 1,514 $ 1,558 % of revenue 2.7% 3.1% 3.1% 4.0% 3.9% 3.8% 3.8% 3.7% 3.7% 3.6% 3.6% 3.5% 3.5% 3.4% 3.4% - CapEx $ 976 $ 1,308 $ 1,443 $ 1,101 $ 914 $ 1,171 $ 1,212 $ 1,254 $ 1,298 $ 1,344 $ 1,391 $ 1,439 $ 1,490 $ 1,542 $ 1,723 % of revenue 3.9% 4.6% 4.4% 3.6% 2.8% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.8% Working Capital $ 1,009 $ 1,113 $ 799 $ 742 $ 582 $ (438) $ (453) $ (469) $ (486) $ (503) $ (520) $ (538) $ (557) $ (577) % of revenue 4.0% 3.9% 2.4% 2.4% 1.8% -1.3% -1.3% -1.3% -1.3% -1.3% -1.3% -1.3% -1.3% -1.3% - WC Investment n/a $ 104 $ (314) $ (57) $ (160) $ (1,020) $ (15) $ (16) $ (16) $ (17) $ (18) $ (18) $ (19) $ (20) $ (20) % of revenue n/a 0.4% -1.0% -0.2% -0.5% -3.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FCF n/a $ 2,105 $ 3,458 $ 1,511 $ 3,542 $ 4,640 $ 3,410 $ 3,512 $ 3,616 $ 3,724 $ 3,834 $ 3,948 $ 4,065 $ 4,185 $ 4,197 % of revenue n/a 7.3% 10.5% 5.0% 10.8% 13.9% 9.9% 9.8% 9.8% 9.7% 9.7% 9.6% 9.6% 9.5% 9.2% Present Value factor Industry WACC 9.7% 91.1% 83.0% 75.7% 68.9% 62.8% 57.2% 52.2% 47.5% 43.3% 43.3% Present Value of FCF LTG (est) 3.5% $ 4,228 $ 2,832 $ 2,657 $ 2,493 $ 2,339 $ 2,195 $ 2,059 $ 1,932 $ 1,813 $ 29,111 Per Share Value Working Capital 2007 2008 2009 2010 2011 Est. Price Invested Capital (Equity and Debt) Value $ 51,660 Current Assets $ 13,123 $ 15,906 $ 14,362 $ 15,836 $ 18,024 + Excess Cash $ 8,709 - Excess Cash $ 5,783 $ 7,654 $ 4,662 $ 6,540 $ 8,709 - Interest Bearing Debt, Preferred and Minority Interest $ 13,748 - Current Liabilities $ 6,373 $ 7,494 $ 9,182 $ 10,639 $ 8,862 $ 17.76 + Short Term Debt $ 42 $ 355 $ 281 $ 2,085 $ 129 Equity Value (Net Present Value) $ 46,621 Working Capital $ 1,009 $ 1,113 $ 799 $ 742 $ 582 Last Stock Price % of revenue 4.0% 3.9% 2.4% 2.4% 1.8% Divide: Shares Outstanding 2,625 Interest Exp (net) $ 1,037 $ 1,162 $ 1,172 $ 1,018 $ 900 $ 19.50 Fair Value/Share $ 17.76 Total Debt $ 11,708 $ 13,064 $ 14,505 $ 15,040 $ 13,748*SEC 10K filings / Annual Reports/Estimates
  • 29. WACC News Corp Discount Rate Industry Average Estimates for the WACC Calculation (Millions USD) WACC 9.7% Beta Debt Debt BetaWACC Assumptions Company Price levered Debt Shares Equity Capital Equity Capital Tax % unleverRisk Free Rate (10yr) 2.00%Cost of Debt 7.10% News Corp $ 19.50 1.470 $ 13,748 2,625 $ 51,187 $ 64,935 26.86% 21.17% 22.68% 1.217Equity Risk Prem* 7.5% Time Warner $ 38.10 1.120 $ 16,554 1,082 $ 41,229 $ 57,783 40.15% 28.65% 24.68% 0.860Alpha 0.0% CBS $ 29.90 2.210 $ 6,001 675 $ 20,174 $ 26,175 29.74% 22.93% 21.50% 1.792Country Risk Premium 0.0% Walt Disney $ 40.98 1.120 $ 14,527 1,899 $ 77,824 $ 92,351 18.67% 15.73% 35.53% 1.000 General Electric $ 19.18 1.630 $ 5,262 10,619 $ 203,679 $ 208,941 2.58% 2.52% 15.00% 1.595Industry WACC New York Times $ 7.49 1.450 $ 1,001 146 $ 1,096 $ 2,097 91.28% 47.72% 25.00% 0.861Beta (unlevered) 1.00 Washington Post $ 383.30 0.940 $ 400 8 $ 3,112 $ 3,512 12.84% 11.38% 36.12% 0.869Industry D/E 20.4% Yahoo! $ 15.83 0.880 $ 181 1,309 $ 20,728 $ 20,909 0.87% 0.87% 38.82% 0.875Tax Rate (5 yrs) 25.0% Viacom $ 54.28 1.150 $ 6,728 608 $ 33,002 $ 39,730 20.39% 16.93% 26.76% 1.001Beta (relevered) 1.15Cost of Debt (after-tax) 5.33% Median 1.150 $ 6,001 1,082 $ 33,002 $ 39,730 20.39% 16.93% 25.00% 1.000Debt / Capital 16.93%WAC (debt) 0.90%Cost of Equity (capm) 10.64%Equity / Capital 83.07%WAC (equity) 8.84%Industry Level WACC 9.7%
  • 30. News Corp Comparative Enterprise Value Ent Value Revenue Growth EBITDA Margin EBIT Margin Cash Flow Margin Current -1yr -5yr +5yr -1yr -5yr +5yr -1yr -5yr +5yr -1yr -5yr +5yrNews Corp $ 56,226 7.7% 7.1% 3.2% 17.4% 17.4% 18.4% 13.6% 14.0% 14.7% 13.9% 14.0% 10.6%Time Warner $ 54,120 4.3% -8.8% 2.0% 46.9% 37.2% 46.1% 19.1% 12.8% 19.1% 39.9% 26.9% 38.4%CBS $ 25,695 8.0% -0.3% 3.0% 18.7% 18.4% 18.7% 14.7% 14.7% 14.7% 13.4% 13.7% 13.2%Walt Disney $ 89,629 5.3% 2.7% 2.7% 22.7% 22.5% 22.6% 18.2% 18.2% 18.2% 11.0% 10.9% 11.1%General Electric $ 208,941 -4.1% 0.3% 0.3% 18.2% 17.2% 17.9% 11.6% 11.6% 11.6% 10.4% 7.7% 9.8%New York Times $ 1,697 -1.9% -7.4% 0.8% 14.7% 5.8% 14.8% 9.6% 0.5% 9.6% 10.6% 3.3% 10.3%Washington Post $ 2,669 3.4% 4.9% 2.9% 17.0% 15.1% 17.1% 11.1% 8.9% 11.1% 7.9% 6.9% 7.8%Yahoo! $ 18,025 -2.1% -0.1% -0.1% 21.2% 20.6% 21.0% 10.4% 10.4% 10.4% 7.7% 5.7% 7.9%Viacom $ 38,893 -31.4% -3.1% 2.0% 53.5% 30.9% 47.8% 21.6% 21.6% 21.6% 46.6% 22.4% 40.8%Low Value $ 1,697 -31.4% -8.8% -0.1% 14.7% 5.8% 14.8% 9.6% 0.5% 9.6% 7.7% 3.3% 7.8%High Value $ 208,941 8.0% 4.9% 3.0% 53.5% 37.2% 47.8% 21.6% 21.6% 21.6% 46.6% 26.9% 40.8%Average Value $ 54,959 -2.3% -1.5% 1.7% 26.6% 21.0% 25.8% 14.5% 12.3% 14.5% 18.4% 12.2% 17.4%Median Value $ 32,294 0.7% -0.2% 2.0% 19.9% 19.5% 19.8% 13.1% 12.2% 13.1% 10.8% 9.3% 10.7% News Corp vs. Competitors Ent Value Revenue Growth EBITDA Margin EBIT Margin Cash Flow MarginLow Value + + + + + + + + + + + + +High Value + +Average Value + + + + + + +Median Value + + + + + + + + +Advantages v. Competitors 75% 88% = High 38% = Average 69% = Average 56% = Average
  • 31. BACKUP(additional competitors)
  • 32. Time Warner - NOPATMillions USD Actuals Best View Estimates 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump.Total Revenue $ 43,690 $ 46,482 $ 26,516 $ 25,785 $ 26,888 $ 27,426 $ 27,974 $ 28,534 $ 29,104 $ 29,687 $ 30,280 $ 30,886 $ 31,504 $ 32,134 $ 32,134% growth rate n/a 6.4% -43.0% -2.8% 4.3% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 0.0%- COGS $ 24,876 $ 27,426 $ 14,911 $ 14,235 $ 15,023 $ 15,358 $ 15,666 $ 15,979 $ 16,298 $ 16,624 $ 16,957 $ 17,296 $ 17,642 $ 17,995 $ 17,995% of revenue 56.9% 59.0% 56.2% 55.2% 55.9% 56.0% 56.0% 56.0% 56.0% 56.0% 56.0% 56.0% 56.0% 56.0% 56.0%Gross Profit $ 18,814 $ 19,056 $ 11,605 $ 11,550 $ 11,865 $ 12,067 $ 12,309 $ 12,555 $ 12,806 $ 13,062 $ 13,323 $ 13,590 $ 13,862 $ 14,139 $ 14,139% of revenue 43.1% 41.0% 43.8% 44.8% 44.1% 44.0% 44.0% 44.0% 44.0% 44.0% 44.0% 44.0% 44.0% 44.0% 44.0%- Operating Exp $ 11,511 $ 10,107 $ 14,567 $ 6,683 $ 6,437 $ 6,837 $ 6,974 $ 7,113 $ 7,255 $ 7,401 $ 7,549 $ 7,700 $ 7,854 $ 8,011 $ 8,011% of revenue 26.3% 21.7% 54.9% 25.9% 23.9% 24.9% 24.9% 24.9% 24.9% 24.9% 24.9% 24.9% 24.9% 24.9% 24.9%- SG&A (Op Ex) $ 4,558 $ (381) $ 7,650 $ (938) $ (1,164) $ (800) $ (699) $ (592) $ (482) $ (366) $ (246) $ (121) $ 9 $ 145 $ 145% of revenue 10.4% -0.8% 28.9% -3.6% -4.3% -2.9% -2.5% -2.1% -1.7% -1.2% -0.8% -0.4% 0.0% 0.5% 0.5%EBITDA $ 14,256 $ 19,437 $ 3,955 $ 12,488 $ 13,029 $ 12,868 $ 13,007 $ 13,147 $ 13,288 $ 13,428 $ 13,569 $ 13,711 $ 13,852 $ 13,994 $ 13,994% of revenue 32.6% 41.8% 14.9% 48.4% 48.5% 46.9% 46.5% 46.1% 45.7% 45.2% 44.8% 44.4% 44.0% 43.5% 43.5%- D & A (Op Ex) $ 6,953 $ 10,488 $ 6,917 $ 7,621 $ 7,601 $ 7,637 $ 7,672 $ 7,706 $ 7,737 $ 7,767 $ 7,795 $ 7,820 $ 7,844 $ 7,866 $ 7,866% of revenue 15.9% 22.6% 26.1% 29.6% 28.3% 27.8% 27.4% 27.0% 26.6% 26.2% 25.7% 25.3% 24.9% 24.5% 24.5%EBIT (oper profits) $ 7,303 $ 8,949 $ (2,962) $ 4,867 $ 5,428 $ 5,230 $ 5,335 $ 5,442 $ 5,550 $ 5,661 $ 5,775 $ 5,890 $ 6,008 $ 6,128 $ 6,128% of revenue 16.7% 19.3% -11.2% 18.9% 20.2% 19.1% 19.1% 19.1% 19.1% 19.1% 19.1% 19.1% 19.1% 19.1% 19.1%- Taxes $ 1,308 $ 2,336 $ 692 $ 1,194 $ 1,348 $ 1,291 $ 1,317 $ 1,343 $ 1,370 $ 1,397 $ 1,425 $ 1,454 $ 1,483 $ 1,513 $ 1,513% of EBIT 17.9% 26.1% -23.4% 24.5% 24.8% 24.7% 24.7% 24.7% 24.7% 24.7% 24.7% 24.7% 24.7% 24.7% 24.7%NOPAT $ 5,995 $ 6,613 $ (3,654) $ 3,673 $ 4,080 $ 3,939 $ 4,018 $ 4,098 $ 4,180 $ 4,264 $ 4,349 $ 4,436 $ 4,525 $ 4,616 $ 4,616% of revenue 13.7% 14.2% -13.8% 14.2% 15.2% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4%*SEC 10K filings / Annual Reports/Estimates
  • 33. Time Warner – FCF 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump. +D&A $ 6,953 $ 10,488 $ 6,917 $ 7,621 $ 7,601 $ 7,637 $ 7,672 $ 7,706 $ 7,737 $ 7,767 $ 7,795 $ 7,820 $ 7,844 $ 7,866 $ 7,866 % of revenue 15.9% 22.6% 26.1% 29.6% 28.3% 27.8% 27.4% 27.0% 26.6% 26.2% 25.7% 25.3% 24.9% 24.5% 24.5% - CapEx $ 4,141 $ 4,430 $ 684 $ 561 $ 631 $ 620 $ 722 $ 828 $ 937 $ 1,051 $ 1,168 $ 1,290 $ 1,417 $ 1,548 $ 1,678 % of revenue 9.5% 9.5% 2.6% 2.2% 2.3% 2.3% 2.6% 2.9% 3.2% 3.5% 3.9% 4.2% 4.5% 4.8% 5.2% Working Capital $ (3,443) $ (1,132) $ 3,425 $ (499) $ 858 $ 875 $ 893 $ 911 $ 929 $ 947 $ 966 $ 986 $ 1,005 $ 1,025 % of revenue -7.9% -2.4% 12.9% -1.9% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% - WC Investment n/a $ 2,311 $ 4,557 $ (3,924) $ 1,357 $ 17 $ 18 $ 18 $ 18 $ 19 $ 19 $ 19 $ 20 $ 20 $ 20 % of revenue n/a 5.0% 17.2% -15.2% 5.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% FCF n/a $ 10,360 $ (1,978) $ 14,657 $ 9,693 $ 10,939 $ 10,951 $ 10,959 $ 10,962 $ 10,962 $ 10,957 $ 10,947 $ 10,933 $ 10,913 $ 10,783 % of revenue n/a 22.3% -7.5% 56.8% 36.0% 39.9% 39.1% 38.4% 37.7% 36.9% 36.2% 35.4% 34.7% 34.0% 33.6% Present Value factor Industry WACC 9.3% 91.5% 83.7% 76.6% 70.0% 64.1% 58.6% 53.6% 49.0% 44.9% 44.9% Present Value of FCF LTG (est) 0.0% $ 10,007 $ 9,164 $ 8,389 $ 7,677 $ 7,023 $ 6,421 $ 5,869 $ 5,362 $ 4,896 $ 51,942*SEC 10K filings / Annual Reports/Estimates
  • 34. Yahoo! - NOPATMillions USD Actuals Best View Estimates 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump.Total Revenue $ 6,426 $ 6,969 $ 7,209 $ 6,460 $ 6,325 $ 4,984 $ 4,767 $ 4,559 $ 4,360 $ 4,170 $ 3,989 $ 3,815 $ 3,649 $ 3,490 $ 3,338% growth rate n/a 8.5% 3.4% -10.4% -2.1% -21.2% -4.4% -4.4% -4.4% -4.4% -4.4% -4.4% -4.4% -4.4% -4.4%- COGS $ 2,676 $ 2,839 $ 3,023 $ 2,872 $ 2,628 $ 1,503 $ 1,896 $ 1,813 $ 1,734 $ 1,658 $ 1,586 $ 1,517 $ 1,451 $ 1,388 $ 1,327% of revenue 41.6% 40.7% 41.9% 44.5% 41.5% 30.2% 39.8% 39.8% 39.8% 39.8% 39.8% 39.8% 39.8% 39.8% 39.8%Gross Profit $ 3,750 $ 4,131 $ 4,185 $ 3,589 $ 3,697 $ 3,481 $ 2,871 $ 2,746 $ 2,627 $ 2,512 $ 2,403 $ 2,298 $ 2,198 $ 2,102 $ 2,010% of revenue 58.4% 59.3% 58.1% 55.5% 58.5% 69.8% 60.2% 60.2% 60.2% 60.2% 60.2% 60.2% 60.2% 60.2% 60.2%- Operating Exp $ 2,807 $ 3,450 $ 3,613 $ 3,158 $ 2,867 $ 2,367 $ 2,264 $ 2,166 $ 2,071 $ 1,981 $ 1,895 $ 1,812 $ 1,733 $ 1,658 $ 1,586% of revenue 43.7% 49.5% 50.1% 48.9% 45.3% 47.5% 47.5% 47.5% 47.5% 47.5% 47.5% 47.5% 47.5% 47.5% 47.5%- SG&A (Op Ex) $ 2,267 $ 2,791 $ 2,823 $ 2,419 $ 2,184 $ 1,833 $ 1,756 $ 1,683 $ 1,612 $ 1,544 $ 1,480 $ 1,418 $ 1,358 $ 1,301 $ 1,245% of revenue 35.3% 40.0% 39.2% 37.4% 34.5% 36.8% 36.8% 36.9% 37.0% 37.0% 37.1% 37.2% 37.2% 37.3% 37.3%EBITDA $ 1,483 $ 1,339 $ 1,363 $ 1,169 $ 1,513 $ 1,648 $ 1,115 $ 1,064 $ 1,014 $ 968 $ 923 $ 880 $ 839 $ 801 $ 766% of revenue 23.1% 19.2% 18.9% 18.1% 23.9% 33.1% 23.4% 23.3% 23.3% 23.2% 23.1% 23.1% 23.0% 22.9% 22.9%- D & A (Op Ex) $ 540 $ 659 $ 790 $ 739 $ 683 $ 535 $ 508 $ 483 $ 459 $ 437 $ 415 $ 394 $ 375 $ 356 $ 341% of revenue 8.4% 9.5% 11.0% 11.4% 10.8% 10.7% 10.7% 10.6% 10.5% 10.5% 10.4% 10.3% 10.3% 10.2% 10.2%EBIT (oper profits) $ 943 $ 680 $ 573 $ 430 $ 830 $ 1,113 $ 607 $ 580 $ 555 $ 531 $ 508 $ 486 $ 465 $ 444 $ 425% of revenue 14.7% 9.8% 7.9% 6.7% 13.1% 22.3% 12.7% 12.7% 12.7% 12.7% 12.7% 12.7% 12.7% 12.7% 12.7%- Taxes $ 458 $ 337 $ 259 $ 219 $ 222 $ 242 $ 219 $ 210 $ 201 $ 192 $ 184 $ 176 $ 168 $ 161 $ 154% of EBIT 48.5% 49.6% 45.2% 51.0% 26.7% 21.7% 36.1% 36.1% 36.1% 36.1% 36.1% 36.1% 36.1% 36.1% 36.1%NOPAT $ 485 $ 343 $ 314 $ 211 $ 609 $ 872 $ 388 $ 371 $ 355 $ 339 $ 324 $ 310 $ 297 $ 284 $ 271% of revenue 7.6% 4.9% 4.4% 3.3% 9.6% 17.5% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1%*SEC 10K filings / Annual Reports/Estimates
  • 35. Yahoo! - FCF 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump. +D&A $ 540 $ 659 $ 790 $ 739 $ 683 $ 535 $ 508 $ 483 $ 459 $ 437 $ 415 $ 394 $ 375 $ 356 $ 341 % of revenue 8.4% 9.5% 11.0% 11.4% 10.8% 10.7% 10.7% 10.6% 10.5% 10.5% 10.4% 10.3% 10.3% 10.2% 10.2% - CapEx $ 689 $ 713 $ 746 $ 466 $ 736 $ 605 $ 572 $ 541 $ 511 $ 483 $ 457 $ 431 $ 408 $ 385 $ 346 % of revenue 10.7% 10.2% 10.4% 7.2% 11.6% 12.1% 12.0% 11.9% 11.7% 11.6% 11.4% 11.3% 11.2% 11.0% 10.4% Working Capital $ (325) $ (315) $ (412) $ (414) $ (164) $ (130) $ (124) $ (119) $ (113) $ (108) $ (104) $ (99) $ (95) $ (91) % of revenue -5.1% -4.5% -5.7% -6.4% -2.6% -2.6% -2.6% -2.6% -2.6% -2.6% -2.6% -2.6% -2.6% -2.6% - WC Investment n/a $ 11 $ (97) $ (3) $ 250 $ 35 $ 6 $ 5 $ 5 $ 5 $ 5 $ 5 $ 4 $ 4 $ 4 % of revenue n/a 0.2% -1.3% 0.0% 3.9% 0.7% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% FCF n/a $ 279 $ 454 $ 486 $ 306 $ 766 $ 318 $ 308 $ 297 $ 288 $ 278 $ 269 $ 260 $ 251 $ 262 % of revenue n/a 4.0% 6.3% 7.5% 4.8% 15.4% 6.7% 6.7% 6.8% 6.9% 7.0% 7.0% 7.1% 7.2% 7.8% Present Value factor Industry WACC 9.3% 91.5% 83.7% 76.6% 70.0% 64.1% 58.6% 53.6% 49.0% 44.9% 44.9% Present Value of FCF LTG (est) -4.4% $ 701 $ 266 $ 235 $ 208 $ 184 $ 163 $ 144 $ 127 $ 113 $ 859*SEC 10K filings / Annual Reports/Estimates
  • 36. Microsoft - NOPATMillions USD Actuals Best View Estimates 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump.Total Revenue $ 44,282 $ 51,122 $ 60,420 $ 58,437 $ 62,484 $ 69,538 $ 73,015 $ 75,205 $ 77,461 $ 79,785 $ 82,179 $ 84,644 $ 87,183 $ 89,799 $ 92,493% growth rate n/a 15.4% 18.2% -3.3% 6.9% 11.3% 5.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%- COGS $ 7,650 $ 10,693 $ 11,598 $ 12,155 $ 12,395 $ 15,577 $ 15,063 $ 15,515 $ 15,980 $ 16,460 $ 16,954 $ 17,462 $ 17,986 $ 18,526 $ 19,081% of revenue 17.3% 20.9% 19.2% 20.8% 19.8% 22.4% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6%Gross Profit $ 36,632 $ 40,429 $ 48,822 $ 46,282 $ 50,089 $ 53,961 $ 57,952 $ 59,690 $ 61,481 $ 63,326 $ 65,225 $ 67,182 $ 69,197 $ 71,273 $ 73,412% of revenue 82.7% 79.1% 80.8% 79.2% 80.2% 77.6% 79.4% 79.4% 79.4% 79.4% 79.4% 79.4% 79.4% 79.4% 79.4%- Operating Exp $ 18,840 $ 21,905 $ 26,642 $ 25,919 $ 25,991 $ 27,205 $ 30,961 $ 31,889 $ 32,846 $ 33,831 $ 34,846 $ 35,892 $ 36,969 $ 38,078 $ 39,220% of revenue 42.5% 42.8% 44.1% 44.4% 41.6% 39.1% 42.4% 42.4% 42.4% 42.4% 42.4% 42.4% 42.4% 42.4% 42.4%- SG&A (Op Ex) $ 17,977 $ 20,735 $ 24,586 $ 23,357 $ 23,318 $ 24,299 $ 27,982 $ 28,896 $ 29,839 $ 30,813 $ 31,819 $ 32,858 $ 33,930 $ 35,036 $ 36,088% of revenue 40.6% 40.6% 40.7% 40.0% 37.3% 34.9% 38.3% 38.4% 38.5% 38.6% 38.7% 38.8% 38.9% 39.0% 39.0%EBITDA $ 18,655 $ 19,694 $ 24,236 $ 22,925 $ 26,771 $ 29,662 $ 29,970 $ 30,795 $ 31,642 $ 32,512 $ 33,406 $ 34,324 $ 35,268 $ 36,237 $ 37,324% of revenue 42.1% 38.5% 40.1% 39.2% 42.8% 42.7% 41.0% 40.9% 40.8% 40.7% 40.7% 40.6% 40.5% 40.4% 40.4%- D & A (Op Ex) $ 863 $ 1,170 $ 2,056 $ 2,562 $ 2,673 $ 2,906 $ 2,979 $ 2,994 $ 3,007 $ 3,018 $ 3,027 $ 3,034 $ 3,039 $ 3,041 $ 3,132% of revenue 1.9% 2.3% 3.4% 4.4% 4.3% 4.2% 4.1% 4.0% 3.9% 3.8% 3.7% 3.6% 3.5% 3.4% 3.4%EBIT (oper profits) $ 17,792 $ 18,524 $ 22,180 $ 20,363 $ 24,098 $ 26,756 $ 26,991 $ 27,801 $ 28,635 $ 29,494 $ 30,379 $ 31,290 $ 32,229 $ 33,196 $ 34,192% of revenue 40.2% 36.2% 36.7% 34.8% 38.6% 38.5% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0% 37.0%- Taxes $ 5,663 $ 6,036 $ 6,133 $ 5,252 $ 6,253 $ 4,921 $ 6,427 $ 6,620 $ 6,818 $ 7,023 $ 7,233 $ 7,450 $ 7,674 $ 7,904 $ 8,141% of EBIT 31.8% 32.6% 27.7% 25.8% 25.9% 7.1% 23.8% 23.8% 23.8% 23.8% 23.8% 23.8% 23.8% 23.8% 23.8%NOPAT $ 12,129 $ 12,488 $ 16,047 $ 15,111 $ 17,845 $ 21,835 $ 20,564 $ 21,181 $ 21,817 $ 22,471 $ 23,146 $ 23,840 $ 24,555 $ 25,292 $ 26,050% of revenue 27.4% 24.4% 26.6% 25.9% 28.6% 31.4% 28.2% 28.2% 28.2% 28.2% 28.2% 28.2% 28.2% 28.2% 28.2%*SEC 10K filings / Annual Reports/Estimates
  • 37. Microsoft - FCF 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump. +D&A $ 863 $ 1,170 $ 2,056 $ 2,562 $ 2,673 $ 2,906 $ 2,979 $ 2,994 $ 3,007 $ 3,018 $ 3,027 $ 3,034 $ 3,039 $ 3,041 $ 3,132 % of revenue 1.9% 2.3% 3.4% 4.4% 4.3% 4.2% 4.1% 4.0% 3.9% 3.8% 3.7% 3.6% 3.5% 3.4% 3.4% - CapEx $ 1,578 $ 2,264 $ 3,182 $ 3,119 $ 1,977 $ 2,355 $ 2,473 $ 2,547 $ 2,623 $ 2,702 $ 2,783 $ 2,867 $ 2,953 $ 3,041 $ 3,132 % of revenue 3.6% 4.4% 5.3% 5.3% 3.2% 3.4% 3.4% 3.4% 3.4% 3.4% 3.4% 3.4% 3.4% 3.4% 3.4% Working Capital $ (7,593) $ (6,997) $ (10,306) $ (7,201) $ (6,259) $ (6,966) $ (7,314) $ (7,533) $ (7,759) $ (7,992) $ (8,232) $ (8,479) $ (8,733) $ (8,995) % of revenue -17.1% -13.7% -17.1% -12.3% -10.0% -10.0% -10.0% -10.0% -10.0% -10.0% -10.0% -10.0% -10.0% -10.0% - WC Investment n/a $ 596 $ (3,309) $ 3,105 $ 942 $ (707) $ (348) $ (219) $ (226) $ (233) $ (240) $ (247) $ (254) $ (262) $ (270) % of revenue n/a 1.2% -5.5% 5.3% 1.5% -1.0% -0.5% -0.3% -0.3% -0.3% -0.3% -0.3% -0.3% -0.3% -0.3% FCF n/a $ 10,798 $ 18,230 $ 11,449 $ 17,599 $ 23,092 $ 21,419 $ 21,848 $ 22,426 $ 23,020 $ 23,629 $ 24,254 $ 24,896 $ 25,554 $ 26,320 % of revenue n/a 21.1% 30.2% 19.6% 28.2% 33.2% 29.3% 29.1% 29.0% 28.9% 28.8% 28.7% 28.6% 28.5% 28.5% Present Value factor Industry WACC 9.3% 91.5% 83.7% 76.6% 70.0% 64.1% 58.6% 53.6% 49.0% 44.9% 44.9% Present Value of FCF LTG (est) 3.0% $ 21,125 $ 17,924 $ 16,725 $ 15,706 $ 14,748 $ 13,848 $ 13,004 $ 12,210 $ 11,465 $ 187,026*SEC 10K filings / Annual Reports/Estimates
  • 38. Nokia (pre-spin) - NOPATMillions USD Actuals Best View Estimates 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump.Total Revenue $ 54,271 $ 74,560 $ 70,761 $ 58,801 $ 56,943 $ 58,684 $ 59,858 $ 60,456 $ 61,061 $ 61,671 $ 62,288 $ 62,911 $ 63,540 $ 64,175 $ 64,817% growth rate n/a 37.4% -5.1% -16.9% -3.2% 3.1% 2.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%- COGS $ 36,614 $ 49,330 $ 46,518 $ 39,771 $ 39,749 $ 40,964 $ 41,783 $ 42,201 $ 42,623 $ 43,049 $ 43,480 $ 43,914 $ 44,353 $ 44,797 $ 45,245% of revenue 67.5% 66.2% 65.7% 67.6% 69.8% 69.8% 69.8% 69.8% 69.8% 69.8% 69.8% 69.8% 69.8% 69.8% 69.8%Gross Profit $ 17,657 $ 25,230 $ 24,243 $ 19,030 $ 17,195 $ 17,720 $ 18,075 $ 18,255 $ 18,438 $ 18,622 $ 18,809 $ 18,997 $ 19,187 $ 19,378 $ 19,572% of revenue 32.5% 33.8% 34.3% 32.4% 30.2% 30.2% 30.2% 30.2% 30.2% 30.2% 30.2% 30.2% 30.2% 30.2% 30.2%- Operating Exp $ 10,600 $ 16,530 $ 16,436 $ 15,968 $ 14,562 $ 15,008 $ 15,308 $ 15,461 $ 15,615 $ 15,772 $ 15,929 $ 16,089 $ 16,250 $ 16,412 $ 16,576% of revenue 19.5% 22.2% 23.2% 27.2% 25.6% 25.6% 25.6% 25.6% 25.6% 25.6% 25.6% 25.6% 25.6% 25.6% 25.6%- SG&A (Op Ex) $ 9,660 $ 14,769 $ 14,180 $ 15,968 $ 14,562 $ 14,896 $ 15,080 $ 15,116 $ 15,150 $ 15,184 $ 15,218 $ 15,250 $ 15,282 $ 15,312 $ 15,465% of revenue 17.8% 19.8% 20.0% 27.2% 25.6% 25.4% 25.2% 25.0% 24.8% 24.6% 24.4% 24.2% 24.1% 23.9% 23.9%EBITDA $ 7,997 $ 10,461 $ 10,063 $ 3,062 $ 2,632 $ 2,824 $ 2,995 $ 3,140 $ 3,287 $ 3,438 $ 3,591 $ 3,746 $ 3,905 $ 4,066 $ 4,107% of revenue 14.7% 14.0% 14.2% 5.2% 4.6% 4.8% 5.0% 5.2% 5.4% 5.6% 5.8% 6.0% 6.1% 6.3% 6.3%- D & A (Op Ex) $ 940 $ 1,761 $ 2,256 $ - $ - $ 112 $ 228 $ 345 $ 465 $ 587 $ 712 $ 838 $ 968 $ 1,100 $ 1,111% of revenue 1.7% 2.4% 3.2% 0.0% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.1% 1.3% 1.5% 1.7% 1.7%EBIT (oper profits) $ 7,057 $ 8,700 $ 7,807 $ 3,062 $ 2,632 $ 2,713 $ 2,767 $ 2,794 $ 2,822 $ 2,851 $ 2,879 $ 2,908 $ 2,937 $ 2,966 $ 2,996% of revenue 13.0% 11.7% 11.0% 5.2% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6%- Taxes $ 1,791 $ 2,223 $ 1,508 $ 1,007 $ (594) $ 437 $ 446 $ 450 $ 455 $ 459 $ 464 $ 469 $ 473 $ 478 $ 483% of EBIT 25.4% 25.6% 19.3% 32.9% -22.6% 16.1% 16.1% 16.1% 16.1% 16.1% 16.1% 16.1% 16.1% 16.1% 16.1%NOPAT $ 5,266 $ 6,477 $ 6,299 $ 2,055 $ 3,226 $ 2,276 $ 2,321 $ 2,344 $ 2,368 $ 2,391 $ 2,415 $ 2,439 $ 2,464 $ 2,488 $ 2,513% of revenue 9.7% 8.7% 8.9% 3.5% 5.7% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9%*SEC 10K filings / Annual Reports/Estimates
  • 39. Nokia - FCF 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump. +D&A $ 940 $ 1,761 $ 2,256 $ - $ - $ 112 $ 228 $ 345 $ 465 $ 587 $ 712 $ 838 $ 968 $ 1,100 $ 1,111 % of revenue 1.7% 2.4% 3.2% 0.0% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.1% 1.3% 1.5% 1.7% 1.7% - CapEx $ 1,025 $ 1,273 $ 1,423 $ 801 $ 911 $ 1,006 $ 1,026 $ 1,036 $ 1,046 $ 1,057 $ 1,067 $ 1,078 $ 1,089 $ 1,100 $ 1,111 % of revenue 1.9% 1.7% 2.0% 1.4% 1.6% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% Working Capital $ 179 $ (801) $ 1,236 $ 343 $ (2,098) $ (2,162) $ (2,206) $ (2,228) $ (2,250) $ (2,272) $ (2,295) $ (2,318) $ (2,341) $ (2,365) % of revenue 0.3% -1.1% 1.7% 0.6% -3.7% -3.7% -3.7% -3.7% -3.7% -3.7% -3.7% -3.7% -3.7% -3.7% - WC Investment n/a $ (980) $ 2,037 $ (893) $ (2,441) $ (64) $ (43) $ (22) $ (22) $ (22) $ (23) $ (23) $ (23) $ (23) $ (24) % of revenue n/a -1.3% 2.9% -1.5% -4.3% -0.1% -0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FCF n/a $ 7,945 $ 5,095 $ 2,148 $ 4,757 $ 1,446 $ 1,566 $ 1,676 $ 1,809 $ 1,944 $ 2,082 $ 2,223 $ 2,366 $ 2,512 $ 2,537 % of revenue n/a 10.7% 7.2% 3.7% 8.4% 2.5% 2.6% 2.8% 3.0% 3.2% 3.3% 3.5% 3.7% 3.9% 3.9% Present Value factor Industry WACC 9.3% 91.5% 83.7% 76.6% 70.0% 64.1% 58.6% 53.6% 49.0% 44.9% 44.9% Present Value of FCF LTG (est) 1.0% $ 1,323 $ 1,311 $ 1,283 $ 1,267 $ 1,246 $ 1,220 $ 1,192 $ 1,160 $ 1,127 $ 13,691*SEC 10K filings / Annual Reports/Estimates
  • 40. Baidu – NOPATMillions USD Actuals Best View Estimates 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump.Total Revenue $ 107 $ 239 $ 469 $ 652 $ 1,201 $ 2,228 $ 3,788 $ 6,061 $ 8,486 $ 10,607 $ 11,138 $ 11,695 $ 12,279 $ 12,893 $ 13,538% growth rate n/a 122.7% 96.0% 39.0% 84.4% 85.5% 70.0% 60.0% 40.0% 25.0% 5.0% 5.0% 5.0% 5.0% 5.0%- COGS $ 36 $ 94 $ 169 $ 237 $ 326 $ 605 $ 1,029 $ 1,646 $ 2,304 $ 2,880 $ 3,024 $ 3,176 $ 3,334 $ 3,501 $ 3,676% of revenue 33.5% 39.5% 36.1% 36.3% 27.2% 27.2% 27.2% 27.2% 27.2% 27.2% 27.2% 27.2% 27.2% 27.2% 27.2%Gross Profit $ 71 $ 145 $ 300 $ 415 $ 875 $ 1,623 $ 2,760 $ 4,415 $ 6,182 $ 7,727 $ 8,113 $ 8,519 $ 8,945 $ 9,392 $ 9,862% of revenue 66.5% 60.5% 63.9% 63.7% 72.8% 72.8% 72.8% 72.8% 72.8% 72.8% 72.8% 72.8% 72.8% 72.8% 72.8%- Operating Exp $ 48 $ 81 $ 138 $ 180 $ 274 $ 509 $ 865 $ 1,384 $ 1,937 $ 2,422 $ 2,543 $ 2,670 $ 2,803 $ 2,943 $ 3,091% of revenue 44.8% 33.8% 29.5% 27.6% 22.8% 22.8% 22.8% 22.8% 22.8% 22.8% 22.8% 22.8% 22.8% 22.8% 22.8%- SG&A (Op Ex) $ 39 $ 56 $ 100 $ 133 $ 207 $ 368 $ 597 $ 909 $ 1,209 $ 1,432 $ 1,420 $ 1,403 $ 1,381 $ 1,353 $ 1,421% of revenue 36.0% 23.4% 21.4% 20.5% 17.3% 16.5% 15.8% 15.0% 14.3% 13.5% 12.7% 12.0% 11.2% 10.5% 10.5%EBITDA $ 33 $ 89 $ 199 $ 282 $ 668 $ 1,256 $ 2,163 $ 3,506 $ 4,972 $ 6,295 $ 6,693 $ 7,116 $ 7,564 $ 8,039 $ 8,441% of revenue 30.4% 37.1% 42.5% 43.2% 55.6% 56.3% 57.1% 57.8% 58.6% 59.3% 60.1% 60.8% 61.6% 62.3% 62.3%- D & A (Op Ex) $ 9 $ 25 $ 38 $ 46 $ 67 $ 141 $ 268 $ 475 $ 728 $ 990 $ 1,123 $ 1,267 $ 1,422 $ 1,590 $ 1,670% of revenue 8.8% 10.4% 8.1% 7.1% 5.6% 6.3% 7.1% 7.8% 8.6% 9.3% 10.1% 10.8% 11.6% 12.3% 12.3%EBIT (oper profits) $ 23 $ 64 $ 161 $ 235 $ 601 $ 1,115 $ 1,895 $ 3,032 $ 4,244 $ 5,305 $ 5,571 $ 5,849 $ 6,142 $ 6,449 $ 6,771% of revenue 21.7% 26.7% 34.4% 36.1% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0%- Taxes $ 2 $ (2) $ 17 $ 29 $ 81 $ 135 $ 230 $ 368 $ 515 $ 644 $ 676 $ 710 $ 745 $ 782 $ 822% of EBIT 7.7% -2.9% 10.5% 12.3% 13.5% 12.1% 12.1% 12.1% 12.1% 12.1% 12.1% 12.1% 12.1% 12.1% 12.1%NOPAT $ 21 $ 66 $ 144 $ 206 $ 519 $ 979 $ 1,665 $ 2,664 $ 3,729 $ 4,662 $ 4,895 $ 5,140 $ 5,396 $ 5,666 $ 5,950% of revenue 20.0% 27.5% 30.8% 31.6% 43.2% 43.9% 43.9% 43.9% 43.9% 43.9% 43.9% 43.9% 43.9% 43.9% 43.9%*SEC 10K filings / Annual Reports/Estimates
  • 41. Baidu - FCF 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump. +D&A $ 9 $ 25 $ 38 $ 46 $ 67 $ 141 $ 268 $ 475 $ 728 $ 990 $ 1,123 $ 1,267 $ 1,422 $ 1,590 $ 1,670 % of revenue 8.8% 10.4% 8.1% 7.1% 5.6% 6.3% 7.1% 7.8% 8.6% 9.3% 10.1% 10.8% 11.6% 12.3% 12.3% - CapEx $ 22 $ 84 $ 67 $ 66 $ 148 $ 275 $ 467 $ 748 $ 1,047 $ 1,308 $ 1,374 $ 1,442 $ 1,514 $ 1,590 $ 1,670 % of revenue 20.3% 35.0% 14.3% 10.1% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% Working Capital $ (36) $ (74) $ (98) $ (167) $ (298) $ (554) $ (941) $ (1,506) $ (2,108) $ (2,635) $ (2,767) $ (2,905) $ (3,050) $ (3,203) % of revenue -33.8% -31.0% -20.9% -25.6% -24.8% -24.8% -24.8% -24.8% -24.8% -24.8% -24.8% -24.8% -24.8% -24.8% - WC Investment n/a $ (38) $ (24) $ (69) $ (132) $ (255) $ (387) $ (565) $ (602) $ (527) $ (132) $ (138) $ (145) $ (153) $ (160) % of revenue n/a -15.9% -5.1% -10.5% -11.0% -11.5% -10.2% -9.3% -7.1% -5.0% -1.2% -1.2% -1.2% -1.2% -1.2% FCF n/a $ 45 $ 139 $ 255 $ 570 $ 1,101 $ 1,853 $ 2,955 $ 4,013 $ 4,870 $ 4,776 $ 5,102 $ 5,450 $ 5,819 $ 6,110 % of revenue n/a 18.8% 29.6% 39.2% 47.5% 49.4% 48.9% 48.8% 47.3% 45.9% 42.9% 43.6% 44.4% 45.1% 45.1% Present Value factor Industry WACC 9.3% 91.5% 83.7% 76.6% 70.0% 64.1% 58.6% 53.6% 49.0% 44.9% 44.9% Present Value of FCF LTG (est) 5.0% $ 1,007 $ 1,551 $ 2,263 $ 2,810 $ 3,120 $ 2,799 $ 2,735 $ 2,673 $ 2,611 $ 63,542*SEC 10K filings / Annual Reports/Estimates
  • 42. Oracle – NOPATMillions USD Actuals Best View Estimates 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump.Total Revenue $ 14,380 $ 17,996 $ 22,430 $ 23,252 $ 26,820 $ 35,622 $ 40,965 $ 45,062 $ 47,315 $ 49,681 $ 52,165 $ 54,773 $ 57,512 $ 60,387 $ 63,407% growth rate n/a 25.1% 24.6% 3.7% 15.3% 32.8% 15.0% 10.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%- COGS $ 3,225 $ 4,165 $ 4,191 $ 4,794 $ 5,764 $ 8,398 $ 8,872 $ 9,759 $ 10,247 $ 10,759 $ 11,297 $ 11,862 $ 12,455 $ 13,078 $ 13,732% of revenue 22.4% 23.1% 18.7% 20.6% 21.5% 23.6% 21.7% 21.7% 21.7% 21.7% 21.7% 21.7% 21.7% 21.7% 21.7%Gross Profit $ 11,155 $ 13,831 $ 18,239 $ 18,458 $ 21,056 $ 27,224 $ 32,094 $ 35,303 $ 37,068 $ 38,921 $ 40,868 $ 42,911 $ 45,056 $ 47,309 $ 49,675% of revenue 77.6% 76.9% 81.3% 79.4% 78.5% 76.4% 78.3% 78.3% 78.3% 78.3% 78.3% 78.3% 78.3% 78.3% 78.3%- Operating Exp $ 6,409 $ 7,831 $ 9,605 $ 10,137 $ 11,218 $ 14,616 $ 17,571 $ 19,329 $ 20,295 $ 21,310 $ 22,375 $ 23,494 $ 24,669 $ 25,902 $ 27,197% of revenue 44.6% 43.5% 42.8% 43.6% 41.8% 41.0% 42.9% 42.9% 42.9% 42.9% 42.9% 42.9% 42.9% 42.9% 42.9%- SG&A (Op Ex) $ 6,186 $ 7,582 $ 9,337 $ 9,874 $ 8,947 $ 11,901 $ 14,795 $ 16,656 $ 17,889 $ 19,203 $ 20,605 $ 22,098 $ 23,689 $ 25,384 $ 26,653% of revenue 43.0% 42.1% 41.6% 42.5% 33.4% 33.4% 36.1% 37.0% 37.8% 38.7% 39.5% 40.3% 41.2% 42.0% 42.0%EBITDA $ 4,969 $ 6,249 $ 8,902 $ 8,584 $ 12,109 $ 15,323 $ 17,298 $ 18,647 $ 19,179 $ 19,718 $ 20,263 $ 20,813 $ 21,367 $ 21,925 $ 23,021% of revenue 34.6% 34.7% 39.7% 36.9% 45.1% 43.0% 42.2% 41.4% 40.5% 39.7% 38.8% 38.0% 37.2% 36.3% 36.3%- D & A (Op Ex) $ 223 $ 249 $ 268 $ 263 $ 2,271 $ 2,715 $ 2,776 $ 2,673 $ 2,406 $ 2,106 $ 1,771 $ 1,396 $ 979 $ 518 $ 544% of revenue 1.6% 1.4% 1.2% 1.1% 8.5% 7.6% 6.8% 5.9% 5.1% 4.2% 3.4% 2.5% 1.7% 0.9% 0.9%EBIT (oper profits) $ 4,746 $ 6,000 $ 8,634 $ 8,321 $ 9,838 $ 12,608 $ 14,522 $ 15,974 $ 16,773 $ 17,612 $ 18,492 $ 19,417 $ 20,388 $ 21,407 $ 22,478% of revenue 33.0% 33.3% 38.5% 35.8% 36.7% 35.4% 35.4% 35.4% 35.4% 35.4% 35.4% 35.4% 35.4% 35.4% 35.4%- Taxes $ 1,429 $ 1,712 $ 2,313 $ 2,241 $ 2,108 $ 2,864 $ 3,671 $ 4,038 $ 4,240 $ 4,452 $ 4,675 $ 4,909 $ 5,154 $ 5,412 $ 5,682% of EBIT 30.1% 28.5% 26.8% 26.9% 21.4% 22.7% 25.3% 25.3% 25.3% 25.3% 25.3% 25.3% 25.3% 25.3% 25.3%NOPAT $ 3,317 $ 4,288 $ 6,321 $ 6,080 $ 7,730 $ 9,744 $ 10,851 $ 11,936 $ 12,533 $ 13,160 $ 13,818 $ 14,508 $ 15,234 $ 15,996 $ 16,795% of revenue 23.1% 23.8% 28.2% 26.1% 28.8% 27.4% 26.5% 26.5% 26.5% 26.5% 26.5% 26.5% 26.5% 26.5% 26.5% *SEC 10K filings / Annual Reports/Estimates
  • 43. Oracle - FCF 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump. +D&A $ 223 $ 249 $ 268 $ 263 $ 2,271 $ 2,715 $ 2,776 $ 2,673 $ 2,406 $ 2,106 $ 1,771 $ 1,396 $ 979 $ 518 $ 544 % of revenue 1.6% 1.4% 1.2% 1.1% 8.5% 7.6% 6.8% 5.9% 5.1% 4.2% 3.4% 2.5% 1.7% 0.9% 0.9% - CapEx $ 236 $ 319 $ 243 $ 529 $ 230 $ 450 $ 351 $ 386 $ 406 $ 426 $ 447 $ 470 $ 493 $ 518 $ 544 % of revenue 1.6% 1.8% 1.1% 2.3% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% Working Capital $ (2,402) $ (2,166) $ (2,166) $ (2,191) $ (3,011) $ (3,999) $ (4,599) $ (5,059) $ (5,312) $ (5,577) $ (5,856) $ (6,149) $ (6,457) $ (6,779) % of revenue -16.7% -12.0% -9.7% -9.4% -11.2% -11.2% -11.2% -11.2% -11.2% -11.2% -11.2% -11.2% -11.2% -11.2% - WC Investment n/a $ 236 $ - $ (25) $ (820) $ (988) $ (600) $ (460) $ (253) $ (266) $ (279) $ (293) $ (307) $ (323) $ (339) % of revenue n/a 1.3% 0.0% -0.1% -3.1% -2.8% -1.5% -1.0% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% FCF n/a $ 3,982 $ 6,346 $ 5,839 $ 10,591 $ 12,997 $ 13,876 $ 14,682 $ 14,786 $ 15,106 $ 15,420 $ 15,728 $ 16,028 $ 16,318 $ 17,134 % of revenue n/a 22.1% 28.3% 25.1% 39.5% 36.5% 33.9% 32.6% 31.3% 30.4% 29.6% 28.7% 27.9% 27.0% 27.0% Present Value factor Industry WACC 9.3% 91.5% 83.7% 76.6% 70.0% 64.1% 58.6% 53.6% 49.0% 44.9% 44.9% Present Value of FCF LTG (est) 5.0% $ 11,890 $ 11,612 $ 11,240 $ 10,355 $ 9,677 $ 9,037 $ 8,432 $ 7,861 $ 7,321 $ 178,197*SEC 10K filings / Annual Reports/Estimates
  • 44. IBM - NOPATMillions USD Actuals Best View Estimates 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump.Total Revenue $ 91,424 $ 98,786 $ 103,630 $ 95,758 $ 99,871 $ 106,916 $ 114,458 $ 122,532 $ 128,659 $ 135,091 $ 141,846 $ 148,938 $ 156,385 $ 164,205 $ 172,415% growth rate n/a 8.1% 4.9% -7.6% 4.3% 7.1% 7.1% 7.1% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%- COGS $ 53,129 $ 57,057 $ 57,969 $ 51,973 $ 53,857 $ 56,778 $ 62,953 $ 67,393 $ 70,763 $ 74,301 $ 78,016 $ 81,917 $ 86,013 $ 90,314 $ 94,829% of revenue 58.1% 57.8% 55.9% 54.3% 53.9% 53.1% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0%Gross Profit $ 38,295 $ 41,729 $ 45,661 $ 43,785 $ 46,014 $ 50,138 $ 51,505 $ 55,138 $ 57,895 $ 60,790 $ 63,830 $ 67,021 $ 70,372 $ 73,891 $ 77,585% of revenue 41.9% 42.2% 44.1% 45.7% 46.1% 46.9% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0%- Operating Exp $ 26,366 $ 28,213 $ 29,723 $ 26,772 $ 27,863 $ 30,351 $ 32,492 $ 34,784 $ 36,523 $ 38,349 $ 40,267 $ 42,280 $ 44,394 $ 46,614 $ 48,944% of revenue 28.8% 28.6% 28.7% 28.0% 27.9% 28.4% 28.4% 28.4% 28.4% 28.4% 28.4% 28.4% 28.4% 28.4% 28.4%- SG&A (Op Ex) $ 21,383 $ 23,012 $ 24,273 $ 21,778 $ 23,032 $ 25,298 $ 27,210 $ 29,266 $ 30,873 $ 32,567 $ 34,353 $ 36,237 $ 38,223 $ 40,317 $ 42,333% of revenue 23.4% 23.3% 23.4% 22.7% 23.1% 23.7% 23.8% 23.9% 24.0% 24.1% 24.2% 24.3% 24.4% 24.6% 24.6%EBITDA $ 16,912 $ 18,717 $ 21,388 $ 22,007 $ 22,982 $ 24,840 $ 24,295 $ 25,872 $ 27,023 $ 28,223 $ 29,476 $ 30,784 $ 32,149 $ 33,574 $ 35,253% of revenue 18.5% 18.9% 20.6% 23.0% 23.0% 23.2% 21.2% 21.1% 21.0% 20.9% 20.8% 20.7% 20.6% 20.4% 20.4%- D & A (Op Ex) $ 4,983 $ 5,201 $ 5,450 $ 4,994 $ 4,831 $ 5,053 $ 5,282 $ 5,518 $ 5,650 $ 5,782 $ 5,913 $ 6,043 $ 6,171 $ 6,297 $ 6,612% of revenue 5.5% 5.3% 5.3% 5.2% 4.8% 4.7% 4.6% 4.5% 4.4% 4.3% 4.2% 4.1% 3.9% 3.8% 3.8%EBIT (oper profits) $ 11,929 $ 13,516 $ 15,938 $ 17,013 $ 18,151 $ 19,787 $ 19,013 $ 20,355 $ 21,372 $ 22,441 $ 23,563 $ 24,741 $ 25,978 $ 27,277 $ 28,641% of revenue 13.0% 13.7% 15.4% 17.8% 18.2% 18.5% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6%- Taxes $ 3,901 $ 4,071 $ 4,381 $ 4,713 $ 4,890 $ 5,159 $ 4,957 $ 5,307 $ 5,572 $ 5,851 $ 6,143 $ 6,451 $ 6,773 $ 7,112 $ 7,467% of EBIT 32.7% 30.1% 27.5% 27.7% 26.9% 26.1% 26.1% 26.1% 26.1% 26.1% 26.1% 26.1% 26.1% 26.1% 26.1%NOPAT $ 8,028 $ 9,445 $ 11,557 $ 12,300 $ 13,261 $ 14,628 $ 14,056 $ 15,048 $ 15,800 $ 16,590 $ 17,420 $ 18,291 $ 19,205 $ 20,165 $ 21,174% of revenue 8.8% 9.6% 11.2% 12.8% 13.3% 13.7% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3%*SEC 10K filings / Annual Reports/Estimates
  • 45. IBM - FCF 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump. +D&A $ 4,983 $ 5,201 $ 5,450 $ 4,994 $ 4,831 $ 5,053 $ 5,282 $ 5,518 $ 5,650 $ 5,782 $ 5,913 $ 6,043 $ 6,171 $ 6,297 $ 6,612 % of revenue 5.5% 5.3% 5.3% 5.2% 4.8% 4.7% 4.6% 4.5% 4.4% 4.3% 4.2% 4.1% 3.9% 3.8% 3.8% - CapEx $ 5,166 $ 5,505 $ 4,887 $ 4,077 $ 4,754 $ 4,100 $ 4,389 $ 4,699 $ 4,934 $ 5,180 $ 5,439 $ 5,711 $ 5,997 $ 6,297 $ 6,612 % of revenue 5.7% 5.6% 4.7% 4.3% 4.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% Working Capital $ 2,815 $ 4,956 $ 4,898 $ 3,127 $ 2,681 $ 2,870 $ 3,073 $ 3,289 $ 3,454 $ 3,626 $ 3,808 $ 3,998 $ 4,198 $ 4,408 % of revenue 3.1% 5.0% 4.7% 3.3% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% - WC Investment n/a $ 2,141 $ (58) $ (1,771) $ (446) $ 189 $ 202 $ 217 $ 164 $ 173 $ 181 $ 190 $ 200 $ 210 $ 220 % of revenue n/a 2.2% -0.1% -1.8% -0.4% 0.2% 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% FCF n/a $ 7,000 $ 12,178 $ 14,988 $ 13,784 $ 15,392 $ 14,746 $ 15,650 $ 16,352 $ 17,019 $ 17,712 $ 18,432 $ 19,179 $ 19,955 $ 20,953 % of revenue n/a 7.1% 11.8% 15.7% 13.8% 14.4% 12.9% 12.8% 12.7% 12.6% 12.5% 12.4% 12.3% 12.2% 12.2% Present Value factor Industry WACC 9.3% 91.5% 83.7% 76.6% 70.0% 64.1% 58.6% 53.6% 49.0% 44.9% 44.9% Present Value of FCF LTG (est) 5.0% $ 14,080 $ 12,340 $ 11,981 $ 11,452 $ 10,903 $ 10,380 $ 9,882 $ 9,406 $ 8,953 $ 217,914*SEC 10K filings / Annual Reports/Estimates
  • 46. Apple - NOPATMillions USD Actuals Best View Estimates 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump.Total Revenue $ 19,315 $ 24,006 $ 32,479 $ 36,537 $ 65,225 $ 108,249 $ 146,136 $ 168,057 $ 181,501 $ 188,761 $ 196,312 $ 204,164 $ 212,331 $ 220,824 $ 229,657% growth rate n/a 24.3% 35.3% 12.5% 78.5% 66.0% 35.0% 15.0% 8.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%- COGS $ 13,696 $ 15,852 $ 21,334 $ 23,397 $ 39,541 $ 64,431 $ 86,982 $ 100,029 $ 108,031 $ 112,353 $ 116,847 $ 121,521 $ 126,382 $ 131,437 $ 136,694% of revenue 70.9% 66.0% 65.7% 64.0% 60.6% 59.5% 59.5% 59.5% 59.5% 59.5% 59.5% 59.5% 59.5% 59.5% 59.5%Gross Profit $ 5,619 $ 8,154 $ 11,145 $ 13,140 $ 25,684 $ 43,818 $ 59,154 $ 68,027 $ 73,470 $ 76,408 $ 79,465 $ 82,643 $ 85,949 $ 89,387 $ 92,963% of revenue 29.1% 34.0% 34.3% 36.0% 39.4% 40.5% 40.5% 40.5% 40.5% 40.5% 40.5% 40.5% 40.5% 40.5% 40.5%- Operating Exp $ 3,166 $ 3,166 $ 4,870 $ 5,482 $ 7,299 $ 10,028 $ 19,493 $ 22,417 $ 24,210 $ 25,178 $ 26,185 $ 27,233 $ 28,322 $ 29,455 $ 30,633% of revenue 16.4% 13.2% 15.0% 15.0% 11.2% 9.3% 13.3% 13.3% 13.3% 13.3% 13.3% 13.3% 13.3% 13.3% 13.3%- SG&A (Op Ex) $ 2,941 $ 2,849 $ 4,397 $ 4,779 $ 6,272 $ 7,685 $ 15,467 $ 16,796 $ 17,069 $ 16,638 $ 16,146 $ 15,587 $ 14,958 $ 14,253 $ 14,823% of revenue 15.2% 11.9% 13.5% 13.1% 9.6% 7.1% 10.6% 10.0% 9.4% 8.8% 8.2% 7.6% 7.0% 6.5% 6.5%EBITDA $ 2,678 $ 5,305 $ 6,748 $ 8,361 $ 19,412 $ 36,133 $ 43,687 $ 51,231 $ 56,401 $ 59,770 $ 63,319 $ 67,056 $ 70,991 $ 75,134 $ 78,139% of revenue 13.9% 22.1% 20.8% 22.9% 29.8% 33.4% 29.9% 30.5% 31.1% 31.7% 32.3% 32.8% 33.4% 34.0% 34.0%- D & A (Op Ex) $ 225 $ 317 $ 473 $ 703 $ 1,027 $ 2,343 $ 4,025 $ 5,620 $ 7,141 $ 8,540 $ 10,040 $ 11,646 $ 13,364 $ 15,202 $ 15,810% of revenue 1.2% 1.3% 1.5% 1.9% 1.6% 2.2% 2.8% 3.3% 3.9% 4.5% 5.1% 5.7% 6.3% 6.9% 6.9%EBIT (oper profits) $ 2,453 $ 4,988 $ 6,275 $ 7,658 $ 18,385 $ 33,790 $ 39,662 $ 45,611 $ 49,260 $ 51,230 $ 53,279 $ 55,410 $ 57,627 $ 59,932 $ 62,329% of revenue 12.7% 20.8% 19.3% 21.0% 28.2% 31.2% 27.1% 27.1% 27.1% 27.1% 27.1% 27.1% 27.1% 27.1% 27.1%- Taxes $ 829 $ 1,512 $ 2,061 $ 2,280 $ 4,527 $ 8,283 $ 11,625 $ 13,369 $ 14,438 $ 15,016 $ 15,616 $ 16,241 $ 16,891 $ 17,566 $ 18,269% of EBIT 33.8% 30.3% 32.8% 29.8% 24.6% 24.5% 29.3% 29.3% 29.3% 29.3% 29.3% 29.3% 29.3% 29.3% 29.3%NOPAT $ 1,624 $ 3,476 $ 4,214 $ 5,378 $ 13,858 $ 25,507 $ 28,037 $ 32,242 $ 34,822 $ 36,214 $ 37,663 $ 39,169 $ 40,736 $ 42,366 $ 44,060% of revenue 8.4% 14.5% 13.0% 14.7% 21.2% 23.6% 19.2% 19.2% 19.2% 19.2% 19.2% 19.2% 19.2% 19.2% 19.2%*SEC 10K filings / Annual Reports/Estimates
  • 47. Apple - FCF 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assump. +D&A $ 225 $ 317 $ 473 $ 703 $ 1,027 $ 2,343 $ 4,025 $ 5,620 $ 7,141 $ 8,540 $ 10,040 $ 11,646 $ 13,364 $ 15,202 $ 15,810 % of revenue 1.2% 1.3% 1.5% 1.9% 1.6% 2.2% 2.8% 3.3% 3.9% 4.5% 5.1% 5.7% 6.3% 6.9% 6.9% - CapEx $ 657 $ 735 $ 1,199 $ 1,213 $ 2,121 $ 7,452 $ 10,060 $ 11,569 $ 12,495 $ 12,995 $ 13,514 $ 14,055 $ 14,617 $ 15,202 $ 15,810 % of revenue 3.4% 3.1% 3.7% 3.3% 3.3% 6.9% 6.9% 6.9% 6.9% 6.9% 6.9% 6.9% 6.9% 6.9% 6.9% Working Capital $ (2,072) $ (2,729) $ (3,892) $ (6,481) $ (4,664) $ (12,766) $ (17,235) $ (19,820) $ (21,405) $ (22,261) $ (23,152) $ (24,078) $ (25,041) $ (26,043) % of revenue -10.7% -11.4% -12.0% -17.7% -7.2% -11.8% -11.8% -11.8% -11.8% -11.8% -11.8% -11.8% -11.8% -11.8% - WC Investment n/a $ (657) $ (1,163) $ (2,589) $ 1,817 $ (8,102) $ (4,468) $ (2,585) $ (1,586) $ (856) $ (890) $ (926) $ (963) $ (1,002) $ (1,042) % of revenue n/a -2.7% -3.6% -7.1% 2.8% -7.5% -3.1% -1.5% -0.9% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% FCF n/a $ 3,715 $ 4,651 $ 7,457 $ 10,947 $ 28,500 $ 26,470 $ 28,879 $ 31,053 $ 32,616 $ 35,079 $ 37,687 $ 40,447 $ 43,367 $ 45,102 % of revenue n/a 15.5% 14.3% 20.4% 16.8% 26.3% 18.1% 17.2% 17.1% 17.3% 17.9% 18.5% 19.0% 19.6% 19.6% Present Value factor Industry WACC 9.3% 91.5% 83.7% 76.6% 70.0% 64.1% 58.6% 53.6% 49.0% 44.9% 44.9% Present Value of FCF LTG (est) 4.0% $ 26,072 $ 22,151 $ 22,108 $ 21,747 $ 20,896 $ 20,559 $ 20,205 $ 19,837 $ 19,457 $ 380,794*SEC 10K filings / Annual Reports/Estimates

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