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Information Technology Company Presentation

Information Technology Company Presentation. Finance 724/824 SIM Class Autumn 2009. Scott McGrath John Morgan Denise Morrison. By:. Agenda. Recommendation Recap Sector Presentation Company Analysis MSFT IBM Oracle NCR Summary. Recommendation. Sell all MSFT -461 bps

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Information Technology Company Presentation

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  1. Information Technology Company Presentation Finance 724/824SIM Class Autumn 2009 Scott McGrath John Morgan Denise Morrison By:

  2. Agenda • Recommendation • Recap Sector Presentation • Company Analysis • MSFT • IBM • Oracle • NCR • Summary

  3. Recommendation • Sell all MSFT -461 bps • Buy IBM +252 bps (bring to 450) • Buy ORCL +91 bps (bring to 450) • Buy NCR +118 • Keep IT Sector in line with S&P @ 19%

  4. Recap Recommendation • Long Term: • Info Tech will be sector leader amongst S&P • Short Term: • Have enjoyed strong outperformance • Rebound in economy/spending may take time

  5. Recap Recommendation  Bring our Sector weight in line with S&P500 • Why? • Info Tech sector is up 42% YTD compared to 14% for the S&P 500 • GDP Growth forecasted 2% – 2.5% for years to come puts some pressure on IT growth • Majority of growth s/t likely to come from smaller companies (we don’t own) • Being in-line with S&P 500 index still has Info Tech at a 19% allocation

  6. SIM Information Technology Target Price Overview* *Prices as of 11/29/09

  7. MSFT vs. S&P 500

  8. MSFT Financial Analysis

  9. MSFT Recap • Target Price of $31.88 (9.1% upside)

  10. IBM: Company Overview • Industry leader in providing business and information technology services • A diversified company having a major impact in most IT industries: • IT infrastructure and business process services • Consulting and systems integration • Computing and storage solutions

  11. IBM: Company Overview • Information management, integration, intelligence, and security • Business financing • World wide brand recognition • Known for Eco Efficient solutions • Focuses on business solutions

  12. IBM Pros and Cons Pros: Cons: S&P’s largest pension plan– liabilities? Needs business spending to rebound • Huge company, diversified in many IT industries • Mgmt focus on high margin businesses (services, software) • Brand Equity • Cash = $9.5B

  13. IBM Drivers: Capital Spending

  14. Graph of Stock Performance Div Yield: 1.7%

  15. IBM Financial Analysis

  16. IBM Valuation

  17. Sensitivity Analysis Discount Rate Growth Rate

  18. IBM Recap • Target Price of $173 (38% upside) • High Margin solutions, Enterprise focus • Globally diversified • Industry diversified • Market Leader

  19. Oracle Company Overview • World’s largest enterprise software company • Began in 1977; was incorporated in 2005 • 2009 Revenues of $23.3 billion • Software and Services Businesses • 5 Operating Segments: • New Software Licenses • Software License Updates and Product Support • Consulting • On Demand • Education

  20. Oracle Drivers: GDP

  21. Oracle Drivers: CPI

  22. Oracle Drivers: Fed Funds Rate

  23. Oracle 12 Month Performance

  24. Oracle vs. S&P 500

  25. Oracle Financial Analysis

  26. Oracle Valuation

  27. Oracle Company Overview

  28. Oracle Sensitivity Analysis

  29. Oracle Conclusion • Stock is trading at $22.09/share • Target price is $30.41 • Upside is 37.6% • Recommend BUY 91 basis points

  30. NCR: Company Overview • Number 1 producer of ATMs, retail self-checkout, airline and healthcare self-check in, and paper roll production • Headquarters recently moved from Dayton, OH to Deluth, GA • 2008 Revenues of 5.315 Billion • Main industries include financial, retail, food, health, and travel

  31. Pros: 1) Vertical Integration 2) Global Presence 3) Reputation 4) High Barriers to Entry ($148M R&D) Cons: 1) Entry into DVD Kiosk arena 2) Some fragile markets 3) State of economy (Beta = 1.61) 4) Low EBT ratio NCR Pros and Cons

  32. Drivers: GDP

  33. Drivers: Capital Spending

  34. Graph of Stock Performance

  35. NCR Financial Analysis

  36. NCR Valuation Average Target Price of $11.39/share

  37. Sensitivity Analysis Growth Rate Discount Rate

  38. NCR Conclusion • Stock is trading for $9.67/share • My target is $11.90 vs. mean target of $13.76 (upside of 23.06% - 39.55%) • Will recover as economy and capital spending improve • We have been killed by this stock, but don’t give up on it just yet.

  39. Other IT Stocks Considered* * Prices as of 11/29/09

  40. IT Sector Recap • Sell all MSFT (least upside) • Buy IBM +252 bps • Buy ORCL +91bps • Buy NCR +118 bps

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