Alpha Corporation Alpha Corporation

 CFO small source  Overall assessment:

 CFO never covers capex  Grave concerns
 Borrowed first, now selling lots of assets to finance the business  Drastic actions taken
 Have the lenders stopped lending?  Although CFO are up, capex are down
 Other problems  Other sources of cash flow are drying up
 Reduction in capex
 Now no dividends
 Capex < depreciation in 1991
 Working capital shrinking (source of cash)

FBE 529 – Scott Abrams – Spring 2019 FBE 529 – Scott Abrams – Spring 2019

Alpha Corporation Beta Corporation

 At its peak in the 1980s, Wang Laboratories had annual revenues of
 CFO > net income for all years except 1991
$3B; one of the leading companies of the ‘Massachusetts Miracle’
 Filed for Chapter 11 bankruptcy protection on August 18, 1992  A/R up sharply in 1991
 Dr. Wang, the company’s founder, had insisted that his son, Fred,  Change in revenue recognition?
succeed him; many felt that he was “unsuited”  Trying to look good for stock issue?
 Fred insisted on using debt instead of equity to fund the company’s  Working capital growing
growth
 After emerging from bankruptcy, the company eventually changed its
name to Wang Global.
 Wang Global was acquired by Getronics of The Netherlands in 1999,
becoming Getronics North America, then was sold to KPN in 2007
and CompuCom in 2008, after which it no longer existed as a distinct
brand or division.
FBE 529 – Scott Abrams – Spring 2019 FBE 529 – Scott Abrams – Spring 2019
 Proteon Corporation
Beta Corporation Beta Corporation
 Overall assessment:  Proteon, later known as OpenRoute, the first router company
 Appears to be growing rapidly merged with Netrix in 1999 to form Nx Networks.
 Profitable, with healthy CFO  In March of 2002, NSGDatacom, a private company, acquired
 Trends look positive the assets of Nx Networks.
 Net income increasing
 CFO up in 1990, down in 1991 due to taxes
 IPO; no dividends yet
 Cash from IPO provides cushion now
 Only concern is rapid increase in A/R

FBE 529 – Scott Abrams – Spring 2019 FBE 529 – Scott Abrams – Spring 2019

Gamma Corporation Gamma Corporation

 Net income declines to a loss in 1991  Overall assessment:
 CFO is healthy, but declining  Net income is ominous, but company is restructuring
 Capex cutbacks are a concern  CFO is still healthy, but declining
 Working capital growing to mixed  Not relying on outside financing ~ trying to tighten up internally
 Capex cutbacks are a concern

FBE 529 – Scott Abrams – Spring 2019 FBE 529 – Scott Abrams – Spring 2019
Gamma Corporation
 At its peak in the late 1980s, DEC had $14B in sales and
ranked among the most profitable companies in the US
 Digital’s fortunes declined after missing out on some critical
market shifts, particularly toward the PC
 The company was acquired by Compaq in June 1998 which
subsequently merged with Hewlett-Packard in May 2002

FBE 529 – Scott Abrams – Spring 2019