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Mod XIII. Luke Friedman. Industry Definition. Comprised of companies that sell products through “non-store” channels, including catalogs, online sales, television, and radio Products and services are delivered through the mail

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Mod xiii
Mod XIII

Luke Friedman


Industry definition
Industry Definition

  • Comprised of companies that sell products through “non-store” channels, including catalogs, online sales, television, and radio

  • Products and services are delivered through the mail

  • Companies in this industry typically have low amounts of inventory and commonly act as the “middle-man” in sales transactions


Final valuation
Final Valuation

11:46PM

4/22/2014


Confession
Confession

  • Not even close to linking the 3

  • Only worked first time after manipulation

  • Tried line items as % of Sales—didn’t work

  • Tried as % of Sales (simple valuation)—didn’t work


Interesting assumption s
Interesting Assumption(s)

  • Large cash balance Q3paid down debt

  • Caused change in

  • Tried to compound bad outlook in early years then minimal growth in following years

  • Terminal value used 3% because do not expect Barnes & Noble to close





Interpretation issues
Interpretation&ISSUES

  • FCF

    • Potentially higher EPAT if sold Nook segment

    • NEA increasing too quickly

  • REI

    • Far too many assets/not efficient enough

    • Incorrectly forecasted NEA

  • AGR

    • Earnings taken in advance by liquidation of Nooks

  • WACC adjustment

  • Underlying “smoothness issue”

  • Spreadsheet error(s)


Final valuation1
Final Valuation

9:04AM

4/23/2014





Conclusion and q a
Conclusion and Q&A

  • Results

    • FCF—45%

    • REI—128%

    • AGR—108%

  • Why Adjusted Assumptions

    • Sole Survivorwill not perpetually liquidate

    • Demand for hard-cover books

    • Analyst at a hold—high target at $32

  • ???


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