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Management DecisionFinancial decision-making in a high-growth company: the case of Apple incorporatedJ. Nicolás Marín Ximénez, Luis J. Sanz,
Article information:To cite this document:J. Nicolás Marín Ximénez, Luis J. Sanz, (2014) "Financial decision-making in a high-growth company: thecase of Apple incorporated", Management Decision, Vol. 52 Issue: 9, pp.1591-1610, https://doi.org/10.1108/MD-10-2013-0557Permanent link to this document:https://doi.org/10.1108/MD-10-2013-0557
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Financial decision-making ina high-growth company: thecase of Apple incorporated
J. Nicol�as Marın Ximenez and Luis J. SanzINCAE Business School, Alajuela, Costa Rica
Abstract
Purpose – The purpose of this paper is to develop conceptual knowledge and skills in makingfinancial policy decisions in a rapidly growing and profitable enterprise.Design/methodology/approach – This teaching case was written by documenting and analyzingpublished information available to the public about Apple. It presents Apple’s situation at the endof April 2012. The company reported net profits of US$11.6 billion and income from sales of US$39.186billion both for the January-March 2012 quarter. Given this highly successful situation, studentsshould assume the role of the company’s chief financial officer, Peter Oppenheimer, and makerecommendations to the board of directors about what to do with what appears to be a huge cashsurplus that the company has accumulated through the years.Findings – Students/participants are usually surprised by the fact that accumulating excess cashcould become a problem for any company. Through several discussions of the case the authors havefound that answers to this central dilemma depend on students/participants’ experiences. Executiveeducation participants try to maintain the cash and find possible investments, while the lessexperienced (MBA students) worry about the negative effects of the excess liquidity on value creation.While the former group might be influenced by cash constraints situations frequent in Latin America,the latter group approaches the problem from a theoretical perspective.Research limitations/implications – Since the case was written using public data, therefore it doesnot take into account the actual opinions and actions of Apple’s management team except for thosereported by the press.Practical implications – The case points toward an overall discussion on conceptual topics such asdividend policies, share buybacks, and stock splits. It frames this discussion in terms of a financialstrategy matrix developed by Hawawini and Viallet. According to this matrix, the company is creatingvalue with excess liquidity, and this context helps practitioners to determine the optimal solution andprovides executives with a clear guideline. The management’s problem, in this case, is to find ways toinvest surplus liquidity productively, or failing that, to define the best way to return it to shareholders.Originality/value – This teaching case provides students and practitioners with a practicalapplication of the Hawawini and Viallet framework to the solution of the financial problem facedby successful companies like Apple. Moreover, it shares the teaching experiences of the authors inboth MBA and executive education programs.
Keywords Financial management, Case study, Apple, Financial analysis, Executive education,MBA programs
Paper type Case study
IntroductionAt the end of April 2012, Apple Incorporated, the manufacturer of the iPhone, iPad,and Mac, reported net profits of $11.6 billion[1] for the January-March 2012 quarter
The current issue and full text archive of this journal is available atwww.emeraldinsight.com/0025-1747.htm
Management DecisionVol. 52 No. 9, 2014
pp. 1591-1610r Emerald Group Publishing Limited
0025-1747DOI 10.1108/MD-10-2013-0557
The authors would like to thank the more than 100 MBA students and executive educationparticipants who through their contributions to class discussions have enriched our views on theissues and concepts presented in this teaching case. The authors also would like to express theappreciation to Mayid Sauma, Connie Jones, and Frank Azevedo for their editorial assistance.
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(second-quarter of the fiscal year), with sales income of $39.186 billion for the samequarter. These solid numbers were as favorable as the previous year’s, when thecompany had net profits of $6 billion on sales of $24.7 billion (see Tables I and II).
Apple had forecasted profits of $8.50 per share and sales income of $32.5 billionfor the quarter and had communicated that to Wall Street investors; but as wascustomary with Apple forecasts, they were low and quite conservative. The company’sreal results were $12.30 a share, a positive “surprise” that represented a 44.7 percentincrease in profits. In terms of products, the company sold 35.1 million units of itsinteractive telephone (an 88 percent increase), 11.8 million electronic tablets(151 percent increase), and four million computers (7 percent increase).
No one knew the causes of the drop in share price, but speculation, besides the factthat Steve Jobs was no longer around, centered on several reasons (see Table III):
(1) an end to the subsidies received from operators and contracts with AT&T andVerizon, subsidies that had encouraged iPhone sales;
(2) the sharp rebound in Apple stock over the last three months had representedconsiderable capital gains for investors; and
(3) the fact that Apple was not expected to launch any new products in the marketduring the next few months, except for updates to its Mac laptops.
Opening today $584.90Closing monday $583.98Maximum in 52 weeks $644.00Minimum in 52 weeks $310.50Market capitalization (billions $) $546.10Average volume in 10 days (millions) 28.6Shares in the market (millions) 935
Source: finance.yahoo.com
Table I.Apple Incorporated sharehistory (April 30, 2012)
Size Data per share Ratios
Marketcapitalization(billions $)
$546.10 Earning per share $ 41.02 Gross margin 0.4395
Value of thecompany (billions $)
$517.50 Income per share $ 151.29 Capital yield 0.471
Income from sales(billions $)
$142.40 Cash flow per share $ 43.68 Price/sales 3.8x
Net income(billions $)
$38.60 Dividends per share $ – Price/earnings 14,2x
No. of employees 60,400 Book value per share(MRQ)
$ 109.63 Price/book value(MRQ)
5,3x
Notes: MRQ, Most recent quarter. aAll data correspond to the last 12 months, unless otherwise noted;bcompany value¼market capitalizationþ debtþminority interestþ preferred stock�cash�cashequivalentsSource: finance.yahoo.com
Table II.Apple Incorporatedanalytical tools(April 2012)
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The company’s financial results for the quarter not only helped to stop the drop in itsprice per share over the previous two weeks on the NASDAQ, but also increased theshare price significantly (see Tables IV and V). In fact, the previous few days had notbeen easy for Apple. Before announcing the quarter’s positive results, the company hadbeen fighting to keep a $560 per share price, after having reached a peak of $644 onApril 10. With the good news, Apple’s share price had increased more than $50 in just aday (April 20, 2012) to reach $612. Over the next few days, the share price stabilizedbetween $600 and $610.
Despite growth in Apple’s market price, analysts continued to give the company thebenefit of the doubt. Most thought that the company’s value was increasing andmaintained a forecast of $700 per share over the next 12 months. However, a fewanalysts admitted that the company’s attractiveness in the short term was limited andwarned that its share price could decrease (see Figures 1 and 2 and Table VI).
Even though Apple had great potential and solid foundations for success, by June2012 it was clear that the company faced great long-term challenges in its strategy,specifically, the end of products designed by Steve Jobs; competition from telephonesoperating with Google’s Android system, which continued to gain market share; andthe possible rebound of Microsoft with its new Windows for mobile phones. In this
2011 2010 2009 2008 2007Sales Units Sales Units Sales Units Sales Units Sales Units
iPhone 47,057 72,293 25,179 39,989 13,033 20,731 1,844 11,627 123 1,389iPad 20,358 32,394 4,958 7,458 0 0 0 0 0 0Mac 21,783 16,735 17,479 13,662 13,859 10,396 14,276 9,715 10,314 7,051iPod 7,453 42,620 8,274 50,312 8,091 54,132 9,153 54,828 8,305 51,630iTunes 6,314 4,948 4,036 3,340 2,496Software 2,954 2,573 2,411 2,207 1,508Accessories 2,330 1,814 1,475 1,659 1,260Total sales 108,249 65,225 42,905 32,479 24,006
Source: SEC filings
Table III.Net sales by product
(dollars in millions andunits in thousands, period
ends September 30)
End of fiscal year: September 24 Q1 2012 Q2 2012
IncomeIncome from sales 46,333 39,186Operating expensesCost of income, total 25,630 20,622Total sales, general and administrative expenses 2,605 2,339Research and development 758 841Total operating expenses 28,993 23,802Operating profit 17,340 15,384Other, net 137 148Net profit before taxes 17,477 15,532Reserves for income taxes 4,413 3,910Net profit after taxes 13,064 11,622
Source: finance.yahoo.com
Table IV.Apple Incorporated
income statement(millions of US$)
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context it was really important to make sure that Apple’s financial policies, and itsfinancial strategy, could support the future decisions of the company.
Brief historyFounded in 1976 by Steve Jobs and Steve Wozniak, Apple is currently the world’slargest technology company in terms of market value, surpassing its rival, Microsoft,in 2010. In the last decade, the company has revolutionized the music industry with theiPod, the mobile phone industry with the iPhone, and the entertainment and mediaindustries with the iPad.
On October 5, 2011, the company announced the death of its star founder, SteveJobs, after his long fight with pancreatic cancer. Seldom has such a great company andindustry been so dominated by one person. Repeatedly, Jobs identified and bet on whatclients wanted, and was usually right. His death had a huge impact, both inside andoutside the company, and generated concern about Apple’s future. In August 2011,Apple named Timothy Cook as its CEO to succeed Steve Jobs.
Instead of setting a disruptive strategy, Cook took the role as the caretaker of Appleand what Jobs created. He said: “Apple is this unique company, unique culture thatyou can’t replicate. And I’m not going to witness or prevent the slow undoing ofit – because I believe in it so deeply. Steve drilled in all of us over many years that thecompany should revolve around great products and we should stay extremely focusedon a few things rather than so many that we did nothing well” (Ogg, 2012a).
End of fiscal year: September 24 Q1 2012 Q2 2012
AssetsCash and cash equivalents 10,310 10,121Short-term investments 19,846 18,417Cash and short-term investments 30,156 28,538Total accounts receivable, net 16,484 13,769Total inventory 1,236 1,102Taxes w/o deferred income 1,937 2,253Other current assets 6,895 7,303Total current assets 54,771 50,712Buildings 2,742 2,930Land and improvements 2,090 2,156Machinery and equipment 7,508 8,855Property, plants and equipment, net 7,816 8,847Intangibles, net 3,472 3,604Long-term financial investments 67,445 81,638Total assets 138,681 150,934LiabilitiesTotal current liabilities 34,607 32,036Total long-term debt 0 0Other long-term liabilities 14,020 16,400Total liabilities 48,627 48,436Shareholder equityCommon stock 13,961 14,850Retained earnings 75,709 87,124Other shareholder equity 384 524Total shareholder equity 90,054 102,498Total liabilities plus shareholder equity 138,681 150,934Total common stock in the market (millions) 932 935
Source: finance.yahoo.com
Table V.Apple IncorporatedSelected Accounts fromthe Balance Sheet(millions of US$)
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Quaterly Earnings
Real earnings per share
Q1 11 6.43
Q2 11
Q4 11
Q3 11
Q1 12
Q2 12 9.94
9.89Q3 12
6.40
7.79
7.05
13.87
9.00 10.00 11.00
6.00 8.00
RangeAnalysts’ estimates:
Estimated earnings next 2 quarters
12.00
Consensues
Figure 1.Apple Incorporatedanalysts’ estimates
500
400
300
200
100
2008 2009 2010 2011
Figure 2.Apple Incorporated share
price evolution (US$)
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Cook also said about iCloud: “is not just a product, it’s a strategy for the next decade”;the $1 billion data center in North Carolina was a proof of Apple’s interest in its longterm (Ogg, 2012b). In the first three months after its release, iCloud got more than 85million sign-ups. According to analysts, Apple would use iCloud to buildcloud apps that enhance existing services – such as iTunes – and to offer networkservices – such as storage, location and voice command and control – to the millions ofiPhone, iPad, and Mac owners.
Another of the medium-term bets of the company was growing in markets outsidethe USA, particularly in Asia Pacific region. While in first-quarter of 2010 the AsiaPacific region accounted for 11.6 percent of Apple’s revenue, in the second-quarter of2012 the Asia Pacific region accounted for 25.9 percent. In fact, Apple chief financialofficer (CFO) Peter Oppenheimer said Apple planned to open 40 new stores in fiscal2012, with three quarters of them outside the USA.
Although Apple was widely thought of as a major innovator in the tech industryand employed some of the best designers and engineers in the world, it used to acquirecompanies to gain access to the latest technologies to improve its products. Mostnotably, the operating systems iOS and OS X would not even exist without thepurchase of NeXT, the acquisition that also brought Steve Jobs back to Apple. With theacquisitions, Apple not only gained products and patents, but also an influx of amazingemployees.
For example, none of the outstanding iPad’s system on a chip (SoC) would have beenpossible if Apple did not make a handful of strategic acquisitions over the previousyears. However, Apple acquired PA Semi for $280 million in cash in 2008 (Brown et al.,2008) and Intrinsity for about $121 million in 2010 (Vance and Stone, 2010). With thispool of talent and patents, Apple continued to make a name for itself in the world ofSoC design.
In 2011, Apple acquired C3 Technologies, a 3D mapping company, for about $240million in order to compete with Google maps (Savitz, 2011), and Anobi, an Israelimaker of flash memory parts for about $390 million to secure supplies of a keycomponent for its top-selling devices (Solomon and Ferziger, 2012). The lasttransaction made by Apple had been the acquisition of Chomp for about $50 million inFebruary 2012 (Santoriano and MacMillan, 2012). Chomp was a provider of tools ofsearching applications that would be used to improve Apple’s app store. Table VIIpresents a list of Apple’s acquisitions.
Product and service lineApple, together with its subsidiaries, designed, produced, and sold personalcomputers, products for mobile communications, and portable, digital music devices.The company also sold a large variety of software packages, related services,networking solutions, and applications. Its product and service line included iPhone,iPad, Mac, iPod, Apple TV, iCloud, and a portfolio of consumer products and
Buy 26Overperform 20Hold 5Underperform 0Sell 1Consensus High yield
Source: finance.yahoo.com
Table VI.Apple Incorporatedanalysts’ ratings(April 27, 2012)
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Year Company BusinessValue
(millions USD) Derived products
1988 Network Innovations Software – –1988 Orion Network Systems Satellite communication
systems– –
1988 Styleware Computer software – AppleWorks GS1988 Nashoba Systems Computer software – FileMaker1997 NeXT Computer programming
services404 OS X, iOS
1997 Power Computing-Clone-Making
Clone computers 100 –
1999 Xemplar Education Software 5 –1999 Raycer Graphics Computer graphic chips 15 –2000 NetSelector Internet software – –2000 Astarte-DVD Authoring
SoftwareSoftware – DVD Studio Pro
2000 SoundJam MP[note 3] Software – iTunes2001 Bluefish Labs Productivity software – iWork2001 bluebuzz Internet service provider – –2001 Spruce Technologies Graphics software – DVD Studio Pro2001 PowerSchool Online info systems
services62 PowerSchool
2002 Nothing Real Special effects software 15 Shake2002 Zayante FireWire chips and
software13 FireWire
2002 Silicon Grail Corp-Chalice
Digital effects software – Final Cut Pro
2002 Prismo Graphics Special-effects softwarefor film
– LiveType (FinalCut Studio)
2002 Emagic Music productionsoftware
30 Logic Pro,GarageBand
2005 Schemasoft Software – iWork2005 FingerWorks Gesture recognition
company– iOS
2006 Silicon Color Software – Color (Final CutStudio)
2006 Proximity Software – Final Cut Server2008 P.A. Semi Semiconductors 278 Apple SoC2009 Placebase Maps – Maps2009 Lala.com Music streaming 17 iCloud, iTunes
Match2010 Quattro Wireless Mobile advertising 275 iAd2010 Intrinsity Semiconductors 121 Apple SoC2010 Siri Voice control software – Siri2010 Poly9 Web-based mapping – Maps2010 Polar Rose Face-recognition 29 iOS2010 IMSense High dynamic range
photography– iOS
2011 C3 Technologies 3D mapping 240 Maps2011 Anobit Flash memory 390 iPod, iPhone,
iPad2012 Chomp App search engine 50 App Store
Source: News reports from Bloomberg, Forbes, WSJ, and others
Table VII.Companies acquired
by Apple
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professional software applications. It also had a network of stores to sell itsproducts and services, such as the iTunes Store, App Store, iBookstore, andMac App Store.
In March 2012, Apple launched the iPad’s third generation, an improvement over theprevious one. Some of the most important improvements were its high-definitionscreen, faster wireless connections, and greater resolution and memory. Its base priceof $499 was the same price as the second generation iPad’s. Simultaneously, the priceof second-generation iPads dropped to $399. Recently, the company had alsointroduced a new version of Apple TV, priced at $99, for accessing online videos andhigh-definition streaming. Cook, commented, “In many ways the iPad is reinventingthe laptop, surpassing even the most optimistic projections.”
CompetitorsBecause of its wide variety of products, Apple had to face strong competitors in each ofthe industries in which it participated: Google in mobile operating systems andapplications, and Samsung Electronics in the smartphone and tablet segments.Additionally, Microsoft was carrying out strategic partnerships and acquisitions toenter in the mobile industry. Financial information of these companies is summarizedin Table VIII.
Samsung ElectronicsSamsung Electronics was one of the world’s largest semiconductor and electronicsmanufacturers. The South Korean company manufactured many kinds of consumerdevices and operated through four independent business divisions: digital media (DVDplayers, digital TVs, and cameras); mobile communications (wireless handsets,smartphones, and networking gear); semiconductor DRAMs, static RAMs, flashmemory, and display drivers and LCD panels. Over the long term, SamsungElectronics was looking to grow in key product areas including phones andtablets, promote future growth centered on software and service opportunities,and lay the foundation for future businesses, particularly in the health and medicalequipment markets.
Sales of the company’s mobile phone product line rose by 38.4 percent in 2011 over2010, while other divisions’ sales remained flat. Samsung’s strategy of supportingproducts with software and services had paid off in increased sales and market sharefor its smartphones and tablet PCs – both based on Google’s Android operating
Google Microsoft Samsung
Price per share US$ (April 30, 2011) 544.10 25.92 800.00Price per share US$ (April 30, 2012) 591.80 32.02 1,210.00Sales, millions of US$ (fiscal 2011) 37,905 69,943 143,069Earnings, millions of US$ (fiscal 2011) 9,737 23,150 11,908Book value, millions of US$ (end of fiscal 2011) 48,851 57,083 88,308Shares, basic (end of fiscal 2011) 321,527 8,479,853 154,195Basic earnings per share US$ 30.28 2.73 77.23Price/sales 5.0x 3.9x 1.3xPrice/earnings 19.5x 11.7x 15.7xPrice/book value 3.9x 4.8x 2.1x
Source: finance.yahoo.com and Samsung Electronics Annual Report (2011)
Table VIII.Apple’s competitorsfinancial summary
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system. By adding content and services to its smart mobile devices, SamsungElectronics was taking direct aim at Apple’s market dominance.
Looking to increase its share of the fast-growing mobile market, in 2011 SamsungElectronics bought Liquavista, a company that developed a new type of displaytechnology, and was looking to establish a joint venture with Fujitsu, NEC, andPanasonic to develop and market semiconductor products for mobile devices.Additionally, Samsung had formed alliances with other high-tech companies, such asIBM Microelectronics and Sony, to share chip-making and display technologies.
In a case with potentially wide-ranging implications, Samsung and Apple had acopyright battle for several patents, including the physical design of the iPhone. Twoseparate judicial proceedings were conducted in courts from both USA and SouthKorea. Despite the demand, Samsung continued to be a major supplier of componentsfor Apple products, including the iPhone.
GoogleGoogle offered targeted search results from billions of web pages, based on aproprietary algorithm. The firm generated revenue through selling relevantads targeted to search queries or web content. The Google Network was made up ofthird-party customers that use Google’s ad programs to deliver relevant ads to theirown sites. In order to face its international rivals head on, Google operated in morethan 50 countries and its interface was available in more than 100 languages.
Because the technology industry demanded constant innovation, Google constantlydeveloped or acquired new services and products in order to stay ahead of suchrivals as Yahoo! and Microsoft. Since its founding as a search engine, the companybranched out to provide web portal services such as web mail, blogging, photosharing, interactive maps, and web browsing.
Additionally to Google’s web portal services, Google’s Android operating systemwas the leading platform for mobile and tablet products, with a market share of53 percent beating Apple’s iOS (28 percent) and RIM (16 percent). Google also solddigital content such as apps, music, and movies through Google Play Store (formerlycalled Android Market). However, while Google reigned in terms of handset numbers,Apple held the crown in terms of application revenues, with 50 percent of the marketovercoming Android (39 percent) and RIM (9 percent).
Google had historically reported year-over-year revenue and net income growth,and fiscal 2011 was no different. For the year, the company’s revenues reached $37.9billion, and it earned a profit of $9.7 billion, compared with revenues of $29.3 billionand net income of $8.5 billion in fiscal 2010.
By the end of April 2011, Google was in serious negotiations to acquire thephone hardware maker Motorola for $12.5 billion. This offer was an indicator ofGoogle’s interest to shift its strategy beyond its core internet operations to increase itspenetration in the fast-growing mobile market.
MicrosoftMicrosoft was the world’s biggest software company, developing a variety of productsused by consumers and businesses. Its core products were the Windows operatingsystem and the Office business productivity application suite, both sold preinstalled inmost of personal computers. Other products included enterprise applications, serverand storage software, video game consoles, digital music players, and mobile phonesoftware. The company’s revenue increased 11.9 percent and its net income increased23.4 percent in fiscal 2011 compared with fiscal 2010.
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To make a greater impact in the mobile space, Microsoft agreed in 2011 to power thesmartphones of Nokia with Windows Mobile, following Nokia’s decision to abandonits Symbian platform. The partnership came on the heels of the appointment ofStephen Elop, the former head of Microsoft’s Office division, as Nokia’s first non-FinnCEO in late 2010. Nokia, a longtime global dominator of basic feature phones,struggled to maintain its grip on the market as consumers opted for smartphonesmade by its rivals. Prior to this partnership, Microsoft had made little headway intothe mobile industry.
Also in 2011 the company paid $8.5 billion in cash to acquire internet video callingsoftware maker Skype, giving it a leg up in the booming internet communicationsmarket, where it goes head to head with Google. In addition to using Skype’s voice andvideo technology to enhance products such as its videogame console, Microsoft waskeen to tap Skype’s user base, which totaled about 100 million active users a month.
Financial issuesIn recent years, Apple had experienced impressive growth in income from sales, netprofits, and profits per share, share price, and market capitalization (see Tables IX-XI).Apple’s balance sheet was quite solid, and the company did not have any financialdebt. Likewise, the company had high liquidity, with more than $100 billion in cashand liquid investments. In addition, during the last 12 months its margin of net profitover sales income was 27 percent, and its return on equity was 47.1 percent.Meanwhile, the company’s beta was only 1.05. Apple’s financial success had been due,in large part, to its founder’s genius and to its successful corporate strategy.
However, in mid-March 2012, several financial experts commented that Apple’sliquidity was not solid, but rather excessive. In addition, interest rates in the financialmarkets for quality investments were very low (the risk-free rate was only 1.87 percentand the market risk premium just 6.04 percent), which meant low returns on cashsurpluses. Analysts were concerned that this excess cash was not being used to buildnew factories, acquire related companies, or even to invest in developing great, newideas, concern that had to do with value creation, the main driver of the long-termshare price. Because of this situation, on March 15, 2012, a news program on CNBCconfirmed that Tim Cook admitted “the company’s board of directors was activelyinvolved in deciding what to do about the excess cash.” However, Cook mentioned
Period ending September 25, 2009 September 24, 2010 September 23, 2011
Total income 42,905 65,225 108,249Cost of income 25,683 39,541 64,431Gross profit 17,222 25,684 43,818Operating expensesResearch and development 1,333 1,782 2,429Sales, general, and administrative 4,149 5,517 7,599
Total operating expenses 5,482 7,299 10,028Operating profit 11,740 18,385 33,790Total other income/expenses, net 326 155 415Profit before taxes 12,066 18,540 34,205Income taxes 3,831 4,527 8,283Net profit 8,235 14,013 25,922
Source: finance.yahoo.com
Table IX.Apple IncorporatedAnnual Income Statement(millions of US$)
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that “priorities included making as many investments as possible in research anddevelopment.”
If the board of directors decided to disburse the excess cash back to shareholders, thetwo most common ways to do so was through either dividend payments or therepurchase of shares. In general, trends in dividend payments in capital marketshad varied considerably through the years. For example, in 1978 more than two-thirds ofthe companies registered on NYSE, AMEX, and NASDAQ paid dividends. But by 1999only 21 percent did. One change that helped explain this trend was that at the end of the1990s, companies went public sooner, still with greater opportunities for future growththat demanded profits’ reinvestment. Technology companies were considered the leadersof this trend. Of the 16 companies on the SOX index[2], only six paid dividends in 2002.Many preferred to return excess cash to shareholders through share buybacks, either fortax reasons or due to market expectations. Intel had done so since 1992, and Microsofthad begun doing so in March 2003 (Harvard Business School, 2003).
A few days later, Apple announced for the first time in its history that it woulddeclare and pay out cash dividends beginning June 30, 2012. The company said itwould pay a quarterly ordinary dividend of $2.65 per share, or $10.60 annually pershare. Considering that there were 935 million shares on the market, this pay out
Period ending September 25, 2009 September 24, 2010 September 23, 2011
AssetsCurrent assetsCash and cash equivalents 5,263 11,261 9,815Short-term investments 18,201 14,359 16,137Net accounts receivable 6,192 11,560 13,731Inventory 455 1,051 776Other current assets 1,444 3,447 4,529Total current assets 31,555 41,678 44,988Long-term financial investments 10,528 25,391 55,618Property, plant, and equipment 2,954 4,768 7,777Capital gains 206 741 896Intangible assets 247 342 3,536Other assets 2,011 2,263 3,556Deferred long-term asset charges 1,727 0 0Total assets 47,501 75,183 116,371LiabilitiesCurrent liabilitiesAccounts payable 9,453 17,738 23,879Other current liabilities 2,053 2,984 4,091Total current liabilities 11,506 20,722 27,970Long-term debt 0 0 0Other long-term liabilities 4,355 6,670 11,786Total liabilities 15,861 27,392 39,756Shareholder equityCommon stock 8,210 10,668 13,331Retained earnings 23,353 37,169 62,841Other shareholder equity 77 �46 443Total shareholder equity 31,640 47,791 76,615Net tangible assets 31,187 46,708 72,183
Source: finance.yahoo.com
Table X.Apple Incorporated
Annual Balance Sheet(millions of US$)
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represented a total of approximately $10 billion. Apple also announced a sharebuyback program of $10 billion for its next fiscal year.
Final reflectionsGiven these recent decisions, Apple’s CFO Peter Oppenheimer needed to recommendthe board of directors about a series of issues regarding the company’s future dividendpolicy, the shares buyback program, and the possibility of doing a stock split(see Apple’s executive directors list in Table XII). In order to do so, Oppenheimer neededto evaluate the company’s current liquidity and value creation situation, and decidewhether this situation should affect the company’s financial strategy or not. And in thiscontext he should justify if Apple should continue paying the same ordinary dividendsper share each year or increase them. In the latter case, he needed to propose what theannual increase would be. On the other hand, given the apparent excess cash,Oppenheimer needed to decide if paying a one-time extraordinary dividend of $25 pershare was a good idea, or if Apple should rather continue the $10 billion share buybackprogram for the next fiscal years. Finally, he was curious about the potential effect of astock split. Could it solve any of Apple’s financial problems? He would have to beprepared to justify his recommendations to the board (Tables I-XII; Figures 1 and 2)
Director Title
Arthur D. Levinson President of the Board since 2011Timothy D. Cook Chief Executive Officer (CEO) since 2011Peter Oppenheimer Chief Financial Officer (CFO)D. Bruce Sewell Senior Vice President since 2009Philip W. Schiller Senior Vice President since 1997
Source: finance.yahoo.com
Table XII.Apple IncorporatedExecutive Directors
Period ending September 25, 2009 September 24, 2010 September 23, 2011
Net Profit 8,235 14,013 25,922Operations, cash flow from or used inDepreciation 734 1,027 1,814Adjustments to net profits 1,750 2,319 4,036Changes in accounts receivable �353 �4,860 �1,791Changes in liabilities 452 8,302 8,664Changes in inventory 54 �596 275Changes in other operations �713 �1,610 �1,391Total cash flow from operations 10,159 18,595 37,529Investments, cash flow from or used inCapital expenses �1,144 �2,005 �4,260Long-term financial investments �16,046 �11,075 �32,464Other cash flow from investment �244 �774 �3,695Total cash flow from investments �17,434 �13,854 �40,419Financing, cash flow from or used inBuying and selling of shares 475 912 831Other cash flows from financing �82 �406 �520Total cash flows from financing 663 1,257 1,444Changes in cash and cash equivalents �6,612 5,998 �1,446
Source: finance.yahoo.com
Table XI.Apple IncorporatedAnnual Cash Flow(millions of US$)
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Notes
1. All currency figures are in US dollars.
2. A Philadelphia Stock Exchange capitalization-weighted index composed of companiesprimarily involved in the design, distribution, manufacture, and sale of semiconductors.
References
Brown, E., Corcoran, E. and Caulfield, B. (2008), “Apple buys chip designer”, Forbes, available at:www.forbes.com/2008/04/23/apple-buys-pasemi-tech-ebiz-cz_eb_0422apple.html (accessedDecember 2 2012).
Harvard Business School (2003), Dividend Policy at Linear Technology, Harvard Business SchoolPublishing, Boston, MA.
Ogg, E. (2012a), “Tim cook’s vision for Apple and its cash”, Businessweek, February 16, available at:www.businessweek.com/technology/tim-cooks-vision-for-apple-and-its-cash-02162012.html(accessed January 16, 2014).
Ogg, E. (2012b), “For Apple, iCloud is just the beginning”, GigaOM, January 27, available at:http://gigaom.com/2012/01/27/for-apple-icloud-is-just-the-beginning/ (accessed January 16,2014).
Santoriano, A. and MacMillan, D. (2012), “Apple buys chomp, a provider of tools for searchingapps”, Bloomberg, February 23, available at: www.bloomberg.com/news/2012-02-24/apple-buys-chomp-a-provider-of-tools-for-searching-apps-1-.html (accessed December 12, 2012).
Savitz, E. (2011), “Apple reportedly buys 3D mapping firm C3 technologies”, Forbes, October 31,available at: www.forbes.com/sites/ericsavitz/2011/10/31/apple-reportedly-buys-3d-mapping-firm-c3-technologies/ (accessed December 12, 2012).
Solomon, S. and Ferziger, J. (2012), “Apple Said to Acquire Israel’s Anobit Technologies for About$300 Million”, Bloomberg, January 11, available at: www.bloomberg.com/news/2012-01-11/apple-is-said-to-acquire-israeli-component-maker-anobit-for-390-million.html (accessedDecember 12, 2012).
Vance, A. and Stone, B. (2010), “Apple buys Intrinsity, a maker of fast chips”, The New YorkTimes, April 27, available at: www.nytimes.com/2010/04/28/technology/28apple.html?_r¼0(accessed December 12, 2012).
Appendix. Apple Incorporated (instructor’s guide)SynopsisThe case presents Apple Incorporated’s technological, commercial, and financial successes at theend of April 2012. The company reported net profits of US$11.6 billion (all currency amounts arein US dollars) for the January-March 2012 quarter, after also reporting income from sales of$39.186 billion for the same quarter. In recent years, Apple has experienced impressive growth inincome from sales, net profits, profits per share, share price, and market capitalization. The companyhad great liquidity, accumulating approximately $100 billion in cash and liquid investments.
The company’s efficiency (profit, margins, growth, etc.) was the best in the industry and in today’scorporate world. Given this highly successful situation, students should assume that the role of thecompany’s CFO, Peter Oppenheimer, would be to make recommendations to the board of directorsabout what decisions should be made to satisfy and maximize the objectives of the company’sshareholders, managers, businesses, and other stakeholders. In essence, the main issue is to decidehow to manage the company’s huge financial success.
Target audience
Students should have a solid theoretical background in basic finance and should be able tounderstand and discuss high-level financial policies and their relation to the board of directors.The case can be used at the end of a Finance II course, or even in short programs and seminars
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that require discussions on distributing dividends, share buybacks, stock splits, corporategovernance, etc.
To understand the nature of Apple’s financial problem and to analyze the company’s financialoptions, it is useful to assess its position in Hawawini and Viallet’s financial strategy matrix (seeFigure A1). If students have not been exposed to this tool, the instructor can assign the followingreading to complement the case:
. Hawawini, G., and Viallet, C., (2002). Chapter 14: managing for value creation. Finance for
Executives. 2nd ed., South-Western, Cincinnati, OH.
Teaching objectives
After discussing the case students are expected:
. to understand how Apple’s situation in terms of both value creation and liquity frame it’sdecisions about financial policies on distributing dividends in the future and reinvestingprofits; and
. to comprehend the benefits to Apple of reinvesting profits and maintaining high liquidityto finance both the company’s research and development initiatives and its possibleacquisitions of other companies.
Suggested study questions
The following questions can be assigned for students’ preparation before the session:
(1) What is the company’s current liquidity and value creation situation? Should thissituation affect the company’s financial strategy?
(2) Would you continue paying the same ordinary dividends per share each year or increasethem? What would the annual increase be?
(3) Would you declare and pay a one-time extraordinary dividend of $25 per share?
(4) Would you continue the $10 billion share buyback program for the next fiscal year?Would you offer it for one or two more years?
(5) Would you recommend a stock split? Of how much?
Case analysis
Students can begin analyzing the case by looking at Apple’s recent performance. Financialinformation is summarized on Table I-VI and Figures 1 and 2. Table I presents historicalinformation about the market price of Apple’s shares, Table II provides some market analyticaltools, and Figure 2 the price evolution. Together they show how Apple’s success had beenreflected in the huge appreciation of its share price, which had gone from $100 in 2007 to a highof $646 in mid-April 2012, allowing its market capitalization to surpass $546.1 billion. Table IIIand Figure 1 show the analysts’ view of the company. Figure 2 contains quarterly financialinformation for 2012 and Tables VI-VIII financial statements for years 2009 through 2011. Fromthis data students can build a financial profile like the following.
Financial profile
(1) Margins and Profits (2012)
. ROE: 47.1 percent
. Gross margin: 43.9 percent
. Net margin: 27.1 percent
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(2) Liquidity: more than $100 billion in cash and shares
(3) Solvency: no debt
Indicators per share
(1) Earnings per share: $41
(2) Cash flow per share: $43.7
(3) Dividends per share: 0
(4) Book value per share:$109.6
(5) Market price per share: $585 (April 30, 2012)
Ratios per share
(1) Price/earnings: 14.2x
(2) Price/book value: 5.3x
(3) Price/sales: 3.8x
Creation of Value
Use the excess cash to growmore rapidly.
Lower dividends.
Excess
Des
troy
ing
Cre
atin
g
Growth andliquidity
Deficit
Reduce growth of sales to aself-sustainable level.
Find new money.
-Organic growth -Issue equity.
-Eliminate products with low-profit margin and turnover.
-Increase dividends.-Shares buyback
-Mergers and acquisitions
Distribute excess cash.
Distribute part of the excesscash
and use the rest to improveproductivity.
-Improve assets turnover.-Increase operating margin.
Review capital structure.
If all else fails, sell thebusiness.
Restructure orliquidation
Source: Hawawini, G. and Viallet, C. (2002)
Figure A1.Apple Incorporated
financial strategy matrix
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After students have come up with some version of this profile, the instructor can segue into thenext phase of the discussion by asking students the following: Do you think Apple has a(financial) problem? While less experienced students will tend to state that it does not havea problem, more experienced students will clearly understand that Apple’s challenge is tomaintain this outstanding performance, a challenge not so easily met, considering marketexpectations (see Figure 1 of the case).
Students can then be asked to continue this discussion by placing Apple’s situation uponHawawini and Viallet’s financial strategy matrix. This matrix is based on two fundamentalmeasures: value creation and relative liquidity. If you begin with the second, you mightimmediately be inclined to conclude that Apple has excess liquidity because of its accumulatedresources in the form of cash and cash equivalents, as well as short- and long-term investments.However, it is important to analyze whether this situation will continue in the future.
To better understand Apple’s liquidity, two approaches can be taken. The first is to comparecash flow from operations with required investments. For this comparison, it is useful tohighlight Apple’s enormous capacity to generate cash from operations, a capacity due to its solidoperating margin, which ranged from 28.18 percent in 2010 to 31.21 percent in 2012, combinedwith a negative cash conversion cycle. The company had 9.7 days of inventory in 2010 and 4.4 in2011, almost following a just-in-time philosophy. The company reduced its days for accountsreceivable by 40 percent, from 65 days in 2010 to 46 in 2011. In terms of days for accountspayable, no data are available for purchases; however, if you assume that the costs for purchasesare the same as the costs of products and services sold, the company had approximately 163 daysof accounts payable in 2011, a level that results in a negative cash conversion cycle and thataffects positively the cash flow from operations.
Based on the Annual Cash Flow in Table VI, Apple’s operations have created $66.283 billion,accumulated over the last three years. Even though the company invested a total of $71.707billion during the same period and seemed to have a cash deficit, these data are misleading. Atotal of $59.585 billion corresponds to long-term financial investments, and only $12.122 billionare capital expenses. Since these investments do not represent the acquisition of other businessesand new development that would allow Apple to maintain its competitive situation, it is clearthat, in reality, Apple’s cash from operations exceeds its investment needs. Of course, it isalways worth thinking about investing more than the company does today, in order to createtomorrow’s businesses.
The second approach is based on the financial strategy matrix and compares the company’sself-sustainability with its real growth in sales. Self-sustainable growth is calculated bymultiplying ROE (calculated using the equity at the beginning of the year) by one minus thedividend payout ratio (the percentage of net profit that is paid out in dividends). Based on data inTable VI, Apple’s self-sustainable growth would have been 54 percent in 2011 and 44.6 percent in2010 (since the company did not pay dividends those years, the self-sustainable growth rate is thesame as the ROE calculation). If these numbers are compared to its real growth in sales, of 67 and52 percent, respectively, Apple seems to have a problem financing growth. However, thisproblem is due to the long-term financial investments. If the calculations are adjusted, Apple’sself-sustainable growth rate is greater than its growth in sales, meaning that Apple had excessliquidity both years.
Once it has been established that Apple had excess liquidity, the next step is to determinewhether Apple creates or destroys value. Students can compare the return on invested capitalwith the weighted average cost of capital (WACC). When the first is larger than the second, thecompany is creating value. Apple is a special case in not having financial debt. Hence, itsinvested capital is the same as its equity (although if long-term financial investments are notconsidered part of its operating assets, invested capital would be less than equity), and its WACCis the same as its equity cost.
To calculate the return on invested capital (ROIC), students must know the net operatingprofit after tax (NOPAT). Since Apple does not present other income or expenditure under itsoperating profit in its income statement, with the exception of taxes paid, students can assume
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that NOPAT is approximately equal to net profit. Using this assumption, ROIC was 36 percentfor 2011, 29 percent for 2010, and 26 percent for 2009 (calculated using equity at the end of theyear – if average equity levels for 2011 and 2010 are used, the rate rises, but there is not sufficientdata to calculate 2009).
To compare ROIC, students must know Apple’s estimated cost of capital. If data available onthe Damodaran page are used (http://pages.stern.nyu.edu/Badamodar/) to calculate the CAPMmodel, Apple’s cost of capital is 8.21 percent (without adjustments). For this calculation, we useda risk-free rate of 1.87 percent, a market risk premium of 6.04 percent, and a beta of 1.05 forassets. Based on these calculations, Apple creates value for its shareholders consistently, despitethe excess liquidity on its balance sheet.
Combining this result with the excess liquidity that was previously calculated, we canconclude that Apple is located in the upper-left quadrant of the financial strategy matrix,meaning that Apple’s challenge is to increase its growth rate even more, or to distribute itsexcess liquidity to shareholders (Harbert, 2003). The instructor may now focus the remainder ofthe session on the financial dilemmas presented at the end of the case.
Financial decisions
This part of the discussion could focus on asking students to pretend they are Apple’s CFO, PeterOppenheimer, and to come up with a series of financial recommendations that could be made tothe board of directors:
1. Do you agree with the quarterly dividend of $2.65 per share? Would you recommend thissame level of dividends for the next three years?
The company should not have any problems in maintaining this annual amount in dividendpayments as described in this case. In fact, given that empirical evidence suggests that themarket tends to punish companies that reduce dividend payments, the question becomeswhether Apple should maintain or increase the current payment (Bulan, 2010).
Given certain tax changes and other market trends that occurred since the beginning of thetwenty-first century, technology companies began reinvesting and not paying dividends to takeadvantage of opportunities for growth (Fama and French, 2001).
Another point of analysis is the impact that dividends have on the market as a sign of thecompany’s future (Miller and Rock, 1985). Would an increase in the dividends per share beinterpreted as a sign that the company has lost its innovative spirit with the death of Steve Jobsand that it wants to return excess cash more aggressively? On the contrary, will the marketperceive such dividend payments as a measure of confidence in Apple’s brilliant future?
2. Would you also recommend a one-time dividend of $25 per share at the end of this fiscalyear?
With 935 million shares in the market, an extraordinary dividend of $25 per share wouldrepresent approximately $23 billion. Clearly, Apple has enough liquidity to pay such a dividend,and if the company is not considering using these funds in the future, it should consider payingthe dividend. On the other hand, it is necessary to ensure that the market will interpret this actioncorrectly, as mentioned (DeAngelo, DeAngelo & Skinner, 1999).
3. What are the advantages and disadvantages of creating a share buyback program?A share buyback would increase the ROIC, value creation, and paradoxically,
self-sustainable growth even more (effects similar to what would be achieved through anextraordinary dividend). The logic of this last effect is that currently, Apple has these funds aspart of its investments, and shareholders expect a return equal or similar to the portion of theirequity that they invested in operating assets. Generating financial returns comparable to thosegenerated by Apple’s operations is never easy. In fact, maintaining these funds will eventuallyput pressure on the management to find new opportunities for investment, and this pressuremight even lead them to take unnecessary risks. Additionally, a share buyback increasesearnings per share, stock demand, and sends the message that the stock is undervalued.
4. Do you think it is appropriate for Apple to simultaneously adopt a share buyback programand distribute dividends?
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Depending on the company’s tax situation, different investors may have different preferencesconcerning distributing dividends and buying back shares. If this were a case about Apple’sinvestors, doing both things simultaneously could best satisfy most shareholders (Baker andWurgler, 2004).
5. What are the advantages and costs of a stock split?On April 30, 2012, Apple’s shares closed at $583.98. This share price is quite high, decreasing
demand and liquidity of the shares in the market. If Apple does a stock split, many newshareholders could enter the market with a smaller fraction of their portfolio investmentallocated to Apple. In addition, shareholders would have greater market liquidity, so they wouldlikely view the stock split favorably. However, it should be noted that this option does not resolveApple’s problem of excess liquidity, does not improve its potential for self-sustainable growth,and does not affect Apple’s value creation. What it could achieve is to make less difficult to reachanalysts’ price forecast due to the increased liquidity (some analysts have suggested a value of$700 per share, which they would revise down after the split.).
6. Would you recommend these actions to the board of directors? Justify your answer.Clearly, your answer will depend on your perspectives about three important variables:
. What is the primary criterion for decision making: meeting market expectations orreducing excess liquidity?
. Expectations: does Apple have enough opportunities for future growth to need all of thisliquidity?
. Succession: how important is it, in terms of market perspectives, to support the choice ofTim Cook as CEO?
In our experience teaching this case, answers to these questions depend on the students’experiences. The more experienced (Executive Education) try to maintain the liquidity and findpossible investments, while the less experienced (MBA) worry about the negative effects of theexcess liquidity on value creation and usually lean toward reducing the excess cash kept by thecompany.
Apple Incorporated (Case Study Teaching Experience)
Introduction
Interesting to note is that although the case has two authors, one has taught it mainly as part ofa finance course in the MBA program, while the other has used it, almost exclusively, in thearea of financial strategy in executive education programs with managers from differentfunctional areas.
Important to highlight is that the analysis in the instructor’s guide follows a more linearapproach, adapted for MBA students. In the following two sections, we discuss in detailour experiences teaching the case.
Teaching in the MBA finance course
MBA students bring a broader knowledge of finance to the study of this case than do participantsin executive education programs; therefore, an overall discussion is possible on conceptual topicspresented in the case. For example, academic discussions on dividend policies, share buybacks,stock splits, etc., can be analyzed using fundamental theories.
The discussion of the Apple case at the end of the Finance II course means that students havebasic knowledge about the main financial concepts. A typical discussion focusses on four mainissues:
1. Evaluating the company’s financial performance. After completing the correspondingfinancial analyses, students can conclude that the company has excess cash on its balance sheetand in cash flow. Their greatest dilemma (as is Peter Offenheimer’s, Apple’s CFO) is what to do tocreate value, if value creation is possible, through financial decisions related to the excess cash.
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2. Determining the company’s present and future cash needs and concluding that: first, Applehas a relatively low need to make investments in fixed assets and working capital since it is not acapital-intensive company; rather, it is a “brain-intensive” one; second, they are not consideringacquisitions that require large amounts of cash; third, likewise, Apple’s investments in R&D donot require significant cash resources.
3. Deciding whether to create a dividend policy that they think can create financial value. Thepolicy includes the following elements:
(a) A quarterly cash dividend of US$2.65 (all currencies are in US dollars) per share, or $10.60per share annually, which represents a total of $10 billion annually vs annual net profits ofapproximately $40 billion. These dividends represent a relatively low paid-out ratio (25 percent),typical of companies or industries with high growth rates. Likewise, and considering otherdetermining factors, a plausible conclusion is that regular dividends would require incrementaladjustments at different times based on circumstances (future profit, future cash flows, andfuture cash flow needs).
(b) Deciding not to declare an extraordinary cash dividend of $25 per share.(c) Instead of an extraordinary dividend, recommending a share buyback program of $10
billion, and evaluating it one year later to determine if it merits a second phase at the same rate.4. Discussion of a stock split centers on the advantages of doing a 5 � 1 split and in
determining what that will achieve, concluding that: first, it does not resolve Apple’s liquidityproblem; second, in the strictest sense, it does not create financial value; third, however, it doeshave some advantages that are hard to quantify, for example, creating greater relative demandfor Apple’s shares, sending a message to the market that Apple’s shares are attractively priced.All these factors should slightly increase the shares’ market price.
Teaching in executive education programs
In executive education programs, participants typically have less financial experience than doMBAs (except in specialized programs, which is not the situation here) and, therefore, the planfor the session must be different. In this situation, the focus is on trying to establish why excessliquidity can be a problem and then exploring options to solve it.
As mentioned, all types of functional managers and general managers discussed this case in aone-day program on financial strategy. This program’s main goal is to give participants anunderstanding of the logic behind financial strategy. As such, the program begins with a discussionof three cases, illustrating three of the four quadrants of the financial strategy matrix (all except thelower-right quadrant). In this program, solutions tend to be ad hoc, so fewer general guidelines exist.
In particular, the Apple case allows understanding the logic behind the upper-left quadrant,in which the company is creating value with excess liquidity. The management’s problem, in thiscase, is to find ways to invest surplus liquidity productively, or failing that, to define the best wayto return it to shareholders.
With this problem in mind, the discussion typically progresses in three phases:
(1) Apple’s recent financial performance. Participants can easily review the numberspresented in the case analyses and can easily conclude that Apple does not have anyproblems, mostly because Latin American practitioners rarely perceive excess liquidityto be negative. The only objections to such a perception come from participantsconcerned about Apple’s future after the death of Steve Jobs.
(2) Financial plans for 2012. Even if participants in the previous discussion could question thedifficulty of maintaining this exceptional performance, in practice, few raise this point.Therefore, discussing financial plans for 2012 is an ideal way for participants, upon reflectionof motivations to pay dividends, to question expectations about future performance.
(3) The starting point. Based on this discussion, it is possible to characterize Apple’ssituation from the perspective of relative liquidity and value creation, linking thediscussion of the three options presented in the case to the situation generally.
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The program’s last session presents the financial strategy matrix as well as the lessons learnedfor each of the three cases. While this approach could work with MBA students, it would requireat least four sessions.
References
Baker, M. and Wurgler, J., (2004), A Catering Theory of Dividends, The Journal of Finance, Vol. 59No. 3, pp. 1125-1165.
Bulan, L., (2010), To Cut or Not to Cut a Dividend, available at: http://people.brandeis.edu/Blbulan/divcuts.pdf (accessed December 2, 2012).
DeAngelo, H., DeAngelo, L. and Skinner, D., (1999), Special dividends and the evolutionof dividend signaling, available at: http://ssrn.com/abstract¼198448; http://dx.doi.org/10.2139/ssrn.198448 (accessed March 15, 2012)
Fama, E. and French, K. (2001), Dissapearing dividends: changing firm characteristicsor reluctance to pay, Journal of Financial Economics, Vol. 60 No. 1, pp. 3-43.
Harbert, T. (2003). Dividend dilemma, Electronic business, available at: www.reed-electronics.com(accessed December 4, 2012)
Hawawini, G. and Viallet, C. (2002), Chapter 14: managing for value creation, Finance forExecutives, 2nd ed., South-Western, Cincinnati, OH, pp. 487-525.
Higgins, R. (2009), Chapter 4: managing growth, Analysis for Financial Management, 9th ed.,Mc Graw Hill/Irwin, New York, NY, pp. 123-150.
Miller, M. and Rock, K. (1985), Dividend policy under asymetric information, The Journal ofFinance, Vol. 40 No. 4, pp. 1031-1051.
About the authors
Professor J. Nicol�as Marın Ximenez is an Author of over 50 papers, case studies and technicalnotes. He has taught at the INCAE Business School for more than three decades and has anacademic track record that includes courses in finance, banking and strategy, as well asmanagement theory. His latest books, Investments: Strategic Investment Analysis, and Mergers and
Acquisition in Practice have been published by recognized publishers like Norma and CengageLearning. Nicol�as has been either a consultant or a board member for an impressive number ofleading companies in Latin America, names like Grupo Numar (CR), Grupo de Sola (SAL), GrupoDelta (NIC), TOYOTA (PAN), Cervecerıa Nacional (PAN) are just a few examples. Professor Marınholds a DBA from the Harvard University as well as an MBA from the Tulane University.
Dr Luis J. Sanz, with more than 70 teaching cases written or supervised about companies withoperations in Latin America, Luis is an expert in financial problems of Latin Americancompanies, and has received international awards for his research. Venezuelan, and married to aCosta Rican, Professor Sanz has lived in five countries and has taught in Latin America, USA,and Spain. Full Professor of the INCAE Business School in Finance, Luis combines his skills onresearch and teaching to inspire practitioners to create value, while its multiple trips and interestin contemporary literature allow him to do so with awareness of its cultural context. He holds aPhD in Economics from the University of Pennsylvania, and has served at the INCAE BusinessSchool as an Associate Dean of Master Programs and the Director of the EntrepreneurshipCenter. He is also the Strachan Professor on Philanthropy and Social Investment, President ofBusiness Association of Latin American Studies, and a fellow STARS, CALI (Central AmericanLeadership Initiative) and AGLN (Aspen Global Leadership Initiative). Dr Luis J. Sanz is thecorresponding author and can be contacted at: [email protected]
To purchase reprints of this article please e-mail: [email protected] visit our web site for further details: www.emeraldinsight.com/reprints
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This article has been cited by:
1. 2015. How to not spend $100bn. Strategic Direction 31:2, 13-15. [Abstract] [Full Text] [PDF]
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