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Raytheon vs Nortel
Title: Raytheon vs Nortel
Category: Law & Government / Government & Politics
Details: Words: 1712 | Pages: 7.3 (approximately 235 words/page)
Raytheon vs Nortel
Nortel vs. Raytheon
Two companies taking similar actions that are obtaining very different results
What is happening to the debt position?
Nortel Networks engaged in several acquisitions in 1998. The effect on their income statement was staggering. Despite .575 billion in revenues (a 3 million increase from 1997), Nortel’s net income before taxes was negative 7 million. ROE was negative 4.64% compared to the industry average of 13.8%.
Acquisitions, mergers, and partnerships have become a major strategy of many companies in …showed first 75 words of 1712 total…
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…showed last 75 words of 1712 total…much more important then current profitability. Hence, book value and market cap value can easily be two different numbers that are not even in the same ballpark.
2. Wall Street and investors do not like bad surprises.
3. Mergers and acquisitions aren’t always a good thing. Especially when the acquiring company increases their debt in the transaction.
4. It’s imperative for a company to maintain and/or increase revenues to cover debt assumed in an acquisition.
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