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Value Migration Examples

Ford and GM are investing in electric vehicles, with Ford putting $135 million into two Michigan plants and GM investing $449 million. Overall electric vehicle sales are expected to grow substantially in coming years, reaching 3.8 million annually by 2020, driven by increased popularity and availability of models from Tesla, Nissan, Chevy and Toyota. However, increased adoption of electric vehicles also depends on further development of charging infrastructure. BlackBerry failed to anticipate the rise of the consumer smartphone market and the app economy, and was slow to adopt touchscreen interfaces, leading to its decline overtaken by Apple and Android devices.

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Sneha Rath
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203 views

Value Migration Examples

Ford and GM are investing in electric vehicles, with Ford putting $135 million into two Michigan plants and GM investing $449 million. Overall electric vehicle sales are expected to grow substantially in coming years, reaching 3.8 million annually by 2020, driven by increased popularity and availability of models from Tesla, Nissan, Chevy and Toyota. However, increased adoption of electric vehicles also depends on further development of charging infrastructure. BlackBerry failed to anticipate the rise of the consumer smartphone market and the app economy, and was slow to adopt touchscreen interfaces, leading to its decline overtaken by Apple and Android devices.

Uploaded by

Sneha Rath
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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IMPLICATION OF VALUE

MIGRATION IN INVESTING IN
EQUITIES
GROUP 11
SAPM-Y


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VALUE MIGRATION
AUTOMOBILE INDUSTRY
FORD HAD INVESTED $135 MILLION INTO TWO OF ITS DETROIT-AREA PLANTS, FOR ELECTRIC VEHICLES (EVS).
THE INVESTMENT WILL BE DIVIDED BETWEEN THE COMPANY'S TRANSAXLE PLANT IN STERLING HEIGHTS, MI AND
ITS YPSILANTI BATTERY PLANT. COMBINED, FORD SAYS, 220 NEW JOBS WILL BE CREATED INCLUDING 130 AT THE
TRANSAXLE PLANT, 40 AT THE BATTERY FACILITY AND 50 ENGINEERS TO BE SPLIT BETWEEN THE TWO SITES.

GM INVESTED $449 MILLION FOR ELECTRIC VEHICLES.
THE INVESTMENT CONSISTS OF A $384 MILLION UPGRADE PROGRAM AT THE DETROIT-HAMTRAMCK FACILITY WHERE THE
CHEVROLET VOLT EXTENDED RANGE ELECTRIC CAR IS MADE ALONG WITH ITS RELATIONS THE VAUXHALL/OPEL AMPERA
AND CADILLAC ELR. IT ALSO INCLUDES A $65 MILLION INVESTMENT PROGRAM AT GMS BROWNSTONE BATTERY
ASSEMBLY FACILITY, WHERE ALL OF GMS LITHIUM-ION BATTERY PACKS ARE CURRENTLY MADE.

Company Enterprise
value
Credit
Rating
(S&P)
ROE (TTM),
June 30,
2014
Debt/
Equity
Price/
Earnings
GM 69.45B BB 9.32 .9543 30.4
Ford 127.83B BBB- 27.64 4.43 10.7
Toyota 309.90B AA- 13.30 1.120 10.3
Source: http://ycharts.com/companies/F/return_on_equity
ACCORDING TO CLEANTECH THINK-TANK PIKE RESEARCH, HYBRID ELECTRIC VEHICLES (HEVS), PLUG-IN
HYBRID ELECTRIC VEHICLES (PHEVS) AND BATTERY ELECTRIC VEHICLES (BEVS) WILL ALL CONTINUE TO
CAPTURE A LARGER PORTION OF THE TOTAL VEHICLE MARKET. PIKES LATEST BIT OF RESEARCH SHOWS
THAT ANNUAL WORLDWIDE SALES OF ELECTRIC VEHICLES (EVS) WILL REACH 3.8 MILLION BY 2020.

DRIVEN BY THE POPULARITY OF MODELS SUCH AS TESLAS MODEL S AND NISSANS LEAF, CLEANTECH
THINK-TANK PIKE RESEARCH ESTIMATES THAT SALES OF PLUG-IN EVS WILL GROW AT A COMPOUND
ANNUAL GROWTH RATE OF NEARLY 40% FOR THE REST OF THE DECADE. THAT COMPARES TO JUST A
CAGR OF 2% FOR THE OVERALL AUTOMOBILE MARKET.

WITH CHARGING ISSUES AND RANGE-ANXIETY BEGINNING TO DWINDLE, NOW COULD BE PHEV'S(PLUG-
IN HYBRID ELECTRIC VEHICLES) TIME TO SHINE. PERHAPS MORE IMPORTANTLY, ASIDE FROM TESLA- AND
ITS 400% YEARLY GAIN- MOST OF THE SECTOR IS CURRENTLY TRADING FOR PEANUTS VERSUS THEIR
POTENTIAL. THAT GIVES INVESTORS PLENTY OF BARGAINS TO CHOOSE FROM.

WITH TESLA, NISSAN, CHEVY, AND TOYOTA PUSHING OUT ECONOMY TO DOWN-RIGHT
LUXURY ELECTRIC CARS, MORE PEOPLE ARE SHUNNING GASOLINE IN FAVOR OF ELECTRIC MODELS. FOR
EVS TO BE PRACTICAL AND MORE WIDELY ADOPTED THERE NEEDS TO BE A STRONG INFRASTRUCTURE OF
CHARGING STATIONS FOR PEOPLE TO FILL UP THEIR ELECTRIC TANKS. COULOMB TECHNOLOGIES MADE
ITS WAY IN THE GREEN TECH MARKET BY PROVIDING OUTDOOR CHARGING STATIONS FOR EV OWNERS
ON THE GO.

VALUE MIGRATION
BLACKBERRY
BlackBerrys failure to keep up with Apple and Google was
a consequence of errors in its strategy and vision. First, after
growing to dominate the corporate market, BlackBerry
failed to anticipate that consumers not business
customers would drive the smartphone revolution.
Second, BlackBerry was blindsided by the emergence of
the app economy, which drove massive adoption of
iPhone and Android-based devices. Third, BlackBerry failed
to realize that smartphones would evolve beyond
mere communication devices to become full-fledged
mobile entertainment hubs.
BlackBerry insisted on
producing phones with
full keyboards, even
after it became clear
that many users
preferred
touchscreens, which
allowed for better
video viewing and
touchscreen
navigation. When
BlackBerry finally did
launch a touchscreen
device, it was seen as
a poor imitation of the
iPhone. BlackBerry saw
its devices as fancy, e-
mail-enabled mobile
phones.
Indicators for
Valuation
Apple BlackBerry
Enterprise Value 393.94B 5.59B
P/E 10.0 N/A
PEG Ratio 0.55 N/A
Price/Sales 2.63 0.62
Price/Book 3.41 0.82
Enterprise
Value/Revenue
2.39 0.44
Enterprise
Value/EBITDA
6.65 3.60
Dividend
Yield (%)
2.34 N/A
Beta 1.04 1.64
1 Month Stock
Returns (%)
2.46 13.13
Year to Date
Stock Returns
(%)
-12.70 25.61
1 Year Stock
Returns (%)
-21.36 9.15
3 Year Stock
Returns (%)
105.3 -80.23
52-Week Change
(%)
-22.50 6.20
S&P500 52-Week
Change (%)
11.44 11.44
52-Week High 705.07 18.32
52-Week Low 419.00 6.22
50-Day Moving
Average
448.67 14.46
200-Day Moving
Average
546.88 11.36
ROE (%) 38.41 -8.67
ROA (%) 24.94 -6.35
.

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