Here are some accounting numbers and market values (in millions) for Hewlett-Packard and Lenovo Group for 2008. These two computer manufacturers are considered to be comparables for Dell, Inc.

Calculate price-to-sales, price-earnings (P/E), and price-to-book (P/B) ratios for Hewlett-Packard and Lenovo.
Dell reported the following numbers for fiscal year 2008:

Sales .............................$61, 133 million
Earnings .........................$ 2,947 million
Book value ....................$ 3, 735 million

Apply multiples for Hewlett-Packard and Lenovo to price Dell's 2,060 million outstanding shares. What difficulties did you encounter?

Transcribed Image Text:

Book Value Market Value Sales Earnings $84,229 14,590 $38,526 1,134 Hewlett-Packard Co. Lenovo Group Ltd. $115,700 6,381 $7,264 161