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Please solve part a,b,c according to the given template in the second picture Internet IPO ever, raising $1.67 billion and leaving the firm with 271,219,643
Please solve part a,b,c according to the given template in the second picture
Internet IPO ever, raising $1.67 billion and leaving the firm with 271,219,643 shares of common stock. While Google commands a wide lead over its competitors in the search engine market, it is witnessing increased pressure from well-funded rival entities. Yahoo! Inc., with a market cap of approximately $38.43 billion, is generally regarded as following a business model very similar to Google's. a. Use the data found in Exhibit P8-12.1 for the following companies as comparables in your analysis: Earthlink, Yahoo!, eBay, and Microsoft. Compute the IPO value of Google: shares using each of the comparable firms separately, and then use an average "multiple" of the comparable firms. Use the year-end 2003 balance sheets and income statements of the comparable firms to do the analysis. Assume that Google's forecasted values at the time of the IPO are as follows: Net income is $400 million, EBITDA is approximately $800 million, cash and equivalents are $430 million, and interest-bearing debt (total short-term and long-term) equals only $10 million. 17 b. Which of the four comparable firms do you think is the best comparison firm for Google? Why? c. How has the stock performed after the IPO? Do you believe that Google is currently correctly valued in the stock market? Explain yourStep by Step Solution
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