Section 1 ; Group 2FT 12113        Anuja DashFT 12102        Abhay BohraFT 12189        Pramod RavishankarFT 12127        ...
   Motorola and Nokia are both big players in the Cell Phone    manufacturing.   Motorola is the company that invented t...
Section 1 : Group 2   4/8/2012   3
Motorola       Total Long Term Debt      Total Equity     Research & DevelopmentDate                                      ...
   In Both Motorola and Nokia Capital Structure there is no    preferred stock. Motorola has less than 5 % debt in capita...
Liquidity measures                   Nokia                                   Motorola        Year            2007   2008  ...
   After doing the ratios above we can say that the CR of Motorola are greater than    the CR of Nokia for both years 200...
Section 1 : Group 2   4/8/2012   8
Asset utilization             Nokia Cor.                                 Motorola, IncYear                            2007...
Motorola inventory turnover ratio was less than Nokia in theyears 2007 and 2010 respectively. This means that Nokia hasbet...
Section 1 : Group 2   4/8/2012   11
Financial Leverage Ratios                       Nokia Corporation                          Motorola, Inc                  ...
0.8                     0.7                                     0.69                                        0.66       0.6...
Section 1 : Group 2   4/8/2012   14
Section 1 : Group 2   4/8/2012   15
Profitability Ratios                        Nokia                             Motorola                   Year   2007     2...
Nokia profit margin decreases significantly . Whereas for Motorola theprofit margin shows bad values and actually risky on...
In 2010 Motorola is the better companyin the creditors and investors point ofview because the higher the ROE thebetter it ...
   Strengths    ◦ Strong brand name    ◦ Customers trust Nokia    ◦ Global distribution network    ◦ Largest sales    ◦ S...
   Weaknesses    ◦ Some products are not user friendly    ◦ Few service centers in India thus affecting after sales      ...
   Threats    ◦ Emergence of other mobile companies like Sony Ericson,      Samsung, etc which give tough competition to ...
   Strengths    ◦ Good brand name in developed countries and getting itself      established in developing countries as w...
   Weaknesses    ◦   Non user friendly products    ◦   Less penetration    ◦   Some products were found faulty    ◦   Low...
   Opportunities    ◦ Widen its range and capture more market share and      increase sales    ◦ Improvise its products t...
Nokia                              MotorolaEarnings Before Interest &       Taxes:EBIT                      2950054000    ...
   Motorola has lost its market share while Nokia    gained market share .This phenomenon has    nothing to do with their...
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nokia vs motorola

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Nokia vs Motorola

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  • Z-SCORE ABOVE 3.0 –The company is considered 'Safe' based on the financial figures only.Z-SCORE BETWEEN 2.7 and 2.99 – 'On Alert'. This zone is an area where one should 'Exercise Caution'.Z-SCORE BETWEEN 1.8 and 2.7 – Good chances of the company going bankrupt within 2 years of operations from the date of financial figures given.Z-SCORE BELOW 1.80- Probability of Financial embarrassment is very high.
  • nokia vs motorola

    1. 1. Section 1 ; Group 2FT 12113 Anuja DashFT 12102 Abhay BohraFT 12189 Pramod RavishankarFT 12127 Harendra SinghFT 12168 Tushar AroraFT 12104 Abhilash Mohapatra Section 1 : Group 2 4/8/2012 1
    2. 2.  Motorola and Nokia are both big players in the Cell Phone manufacturing. Motorola is the company that invented the cell phone. Motorola DynaTAC 8000X was the first cellphone launched in 1983 where as Nokia 1011 was the first cellphone launched by Nokia in 1994.Still today Q1 2010 the share of Motorola by volume was 3% whereas Nokia share was 37.4%. Nokia has grown to become market leader whereas Motorola steadily lost ground. Our Objective is to find out what went wrong with Motorola and what went correct with Nokia. Nokia dominance is because of its management capital structure decisions or technology decisions or operations decisions. Section 1 : Group 2 4/8/2012 2
    3. 3. Section 1 : Group 2 4/8/2012 3
    4. 4. Motorola Total Long Term Debt Total Equity Research & DevelopmentDate Share price2010 5.25 94.75 1,479.00 63.492009 2.86 97.14 1,591.00 54.322008 3.39 96.61 2,358.00 31.01 Nokia Total Long Term Debt Total Equity Research & DevelopmentDate Stock Price2010 22.77 77.23 5,288.00 7.742009 25.30 74.70 5,345.00 8.922008 5.71 94.29 5,418.00 11.10 Section 1 : Group 2 4/8/2012 4
    5. 5.  In Both Motorola and Nokia Capital Structure there is no preferred stock. Motorola has less than 5 % debt in capital structure whereas Nokia uses more debt around 20% . Nokia has increased debt from 5 % to 22.77% of in capital structure. We did regression analysis with capital structure and share prices we could find that around 30% of sales is explained by capital structure. Also we did regression analysis on R& D spending and share prices. Around 95% of share prices are explained by R & D spending. Section 1 : Group 2 4/8/2012 5
    6. 6. Liquidity measures Nokia Motorola Year 2007 2008 2009 2010 2007 2008 2009 2010 Current ratio 1.54 1.2 1.18 1.22 1.78 1.63 1.6 1.58 Quick ratio 1.39 1.08 1.07 1.07 1.47 1.28 1.24 1.3 Cash ratio 0.62 0.33 0.3 0.29 0.69 0.66 0.63 0.64 NWC to total assets 0.27 0.1 0.13 0.11 0.28 0.24 0.23 0.22Interval measure days 323 270 274 280 315 310 305 302 Section 1 : Group 2 4/8/2012 6
    7. 7.  After doing the ratios above we can say that the CR of Motorola are greater than the CR of Nokia for both years 2007 and 2010 since the CL of Motorola is lower than the CL of Nokia. We can say the ability of Motorola to pay bills over short term without stress is better than Nokia in that. The Quick ratio of both companies Motorola is still greater than Nokia for both years 2007 and 2010 because the inventories of Nokia constitute a large part of their CA. Motorola is considered for sure better for creditors than Nokia because it seems that it can pay debt easily Section 1 : Group 2 4/8/2012 7
    8. 8. Section 1 : Group 2 4/8/2012 8
    9. 9. Asset utilization Nokia Cor. Motorola, IncYear 2007 2008 2009 2010 2007 2008 2009 2010Inventory turnover 11.52 13.04 13.4 13.24 6.72 5.6 5.6 5.6Day’s sales in inventory 31.684 27.99 27 26.32 54.3 65.22 65.22 65.22Receivable turnover 4.56 5.41 5.46 5.52 5.83 7.27 7.27 7.27Day’s sales in receivable 80.06 67.42 67.44 58.42 62.63 50.21 50.21 50.21NWC turnover 4.95 12.42 13.12 13.12 3.77 4.47 4.47 4.47Fixed asset turnover 26.7 24.46 24.24 23.96 14.77 12.35 12.35 12.35Total asset turnover 1.36 1.29 1.24 1.23 1.05 1.08 1.08 1.08 Section 1 : Group 2 4/8/2012 9
    10. 10. Motorola inventory turnover ratio was less than Nokia in theyears 2007 and 2010 respectively. This means that Nokia hasbetter sales than Motorola Section 1 : Group 2 4/8/2012 10
    11. 11. Section 1 : Group 2 4/8/2012 11
    12. 12. Financial Leverage Ratios Nokia Corporation Motorola, Inc Year 2007 2008 2009 2010 2007 2008 2009 2010Total Debt Ratio 0.54 0.598 0.56 0.602 0.56 0.66 0.67 0.69Debt Equity Ratio 1.17 1.397 1.43 1.39 1.25 1.93 1.97 2.01Equity Multiplier 2.17 2.397 2.42 2.44 2.25 2.93 2.9 2.97Long Term Debt Ratio 0.01 0.05 0.052 0.06 0.21 0.3 0.32 0.36Interest Earned Ratio 102.61 31.296 28.24 27.45 1.21 0.4 0.46 0.41Cash Coverage Ratio 120.61 38.78 36.258 34.96 3.69 2.25 2.4 3.16 Times interest earned ratio and cash coverage ratio measure a company’s ability to cover its interest obligation. For both year, Nokia’s ratios exceed Motorola’s ratios, this implies that Nokia covers its interest obligations better than Motorola. Section 1 : Group 2 4/8/2012 12
    13. 13. 0.8 0.7 0.69 0.66 0.67 0.6 0.598 0.602 0.56 0.56 0.54 0.5 Axis Title 0.4 Nokia Total Debt Ratio Motorola Total Debt Ratio 0.3 0.2 0.1 0 2007 2008 2009 2010 We notice that Motorola is more in debt than Nokia Section 1 : Group 2 4/8/2012 13
    14. 14. Section 1 : Group 2 4/8/2012 14
    15. 15. Section 1 : Group 2 4/8/2012 15
    16. 16. Profitability Ratios Nokia Motorola Year 2007 2008 2009 2010 2007 2008 2009 2010Profit margin 0.14 0.078 0.08 0.09 -0.0013 -0.141 -0.189 -0.212Return on assets 0.191 0.101 0.99 0.106 -0.0014 0.152 -0.002 -0.0026Retrun on equity 0.42 0.242 0.24 0.18 -0.0031 0.446 0.4 0.32 Section 1 : Group 2 4/8/2012 16
    17. 17. Nokia profit margin decreases significantly . Whereas for Motorola theprofit margin shows bad values and actually risky ones because in2010 the negativity in Motorola Profit margin increases! In other wordsfor every 1 $ in sales Motorola did it is not generating a profit. Section 1 : Group 2 4/8/2012 17
    18. 18. In 2010 Motorola is the better companyin the creditors and investors point ofview because the higher the ROE thebetter it is for them. Nokia and AppleROE decrease from 2007 to 2010. Section 1 : Group 2 4/8/2012 18
    19. 19.  Strengths ◦ Strong brand name ◦ Customers trust Nokia ◦ Global distribution network ◦ Largest sales ◦ Strong finances ◦ User friendly products ◦ Products have better sale value as compared to other brands ◦ Durable products ◦ Wide variety of products suiting every type of customer Section 1 : Group 2 4/8/2012 19
    20. 20.  Weaknesses ◦ Some products are not user friendly ◦ Few service centers in India thus affecting after sales service. ◦ Variety for the lower class people is to the minimum. Opportunities ◦ Good opportunity to increase sales and market share ◦ Can target new market and attract more customers in present market by introducing new varieties of products and a wide range of prices ◦ Strengthen its brand image further ◦ Can bring innovativeness to its products. Section 1 : Group 2 4/8/2012 20
    21. 21.  Threats ◦ Emergence of other mobile companies like Sony Ericson, Samsung, etc which give tough competition to Nokias mobile phones. ◦ Competitors could provide cheap products, more features and wide variety, latest style and more sales. ◦ Nokia shouldnt underestimate its competitors and strategically plan responses to its competitor’s advances and act accordingly. ◦ Rapid growth of WLL network is a threat because Nokia provides CDMA cell phones so its products can go toward the down fall with the rise of WLL network. Section 1 : Group 2 4/8/2012 21
    22. 22.  Strengths ◦ Good brand name in developed countries and getting itself established in developing countries as well. ◦ Leader of innovations ◦ Wide range of products ◦ Wide customer base and satisfied customers ◦ Affordable prices Section 1 : Group 2 4/8/2012 22
    23. 23.  Weaknesses ◦ Non user friendly products ◦ Less penetration ◦ Some products were found faulty ◦ Low employee training and less education of its employees ◦ Low brand awareness ◦ Declining sales Section 1 : Group 2 4/8/2012 23
    24. 24.  Opportunities ◦ Widen its range and capture more market share and increase sales ◦ Improvise its products to remove faultiness ◦ Design user friendly products to increase customer base ◦ Increase brand awareness through extensive marketing Threats ◦ Dominant competitors ◦ Competitors offer better products in some aspects and have better sales and satisfied customers. ◦ Consumer’s perception is not good about its products. Section 1 : Group 2 4/8/2012 24
    25. 25. Nokia MotorolaEarnings Before Interest & Taxes:EBIT 2950054000 80000000 Total Assets 52485209000 6204000000 Net Sales 56943158000 11460000000 Market value of equity 22260000000 7260000000 Total liability 31176295000 4472000000 Current assets 36416200000 3119000000 Current liability 33188446000 3846000000 Retained earnings 14086207000 0 Z-Score 2.15 2.72As per the Z Score, it is not high enough to predict success,nor is it low enough to predict bankruptcy. Section 1 : Group 2 4/8/2012 25
    26. 26.  Motorola has lost its market share while Nokia gained market share .This phenomenon has nothing to do with their capital structure but on their spending on R & D. Section 1 : Group 2 4/8/2012 26

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