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CASE STUDY IN FINANCIAL MANAGEMENT

CASE: 15 BUSINESS SEGMENTS AND RISK RETURN TRADE-OFFS OF TELETECH CORPORATION 2005 LECTURER: KHOY LIM HONG

Group: 6

1. Ky Leanghorn 3. Sao Bora 5. Ung Sokonthea 2. Tha Mathearith 4. Leang Soklang 6.Sao Saravuth

OUT LINE OF THE PRESENTATION

I. II. III. IV. V.

Introduction of Case Study Case Problem Literature Review Case Solution Conclusion

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I. INTRODUCTION OF CASE STUDY

Company overview:

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Established in 1982 as Teletech Holding Inc. by Meneth Tuchman. Teletech Corporation, Headquartered in Dallas, Texas, define itself as a “provider of integrated information movement and management”. - Maxwell Harper- Teletech’s CEO - Margaret Weston- Teletech’s CFO

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I. INTRODUCTION OF CASE STUDY

Company’s business (Cont’s):

The firm have tow main business segments: 1. Telecommunication Services: which provide longdistance, local and cellular telephone service to business and residential customers. 2. Products and Systems: manufactures computing and telecommunication equipment. Products and System was acknowledged to be a technology leader in the industry.

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I. INTRODUCTION OF CASE STUDY

Company’s business (Cont’s):

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The firm’s prospective ROC: 9.58% (9.10% * 75% + 11% * 25%) Corporate Hurdle rate (WACC): 9.30% Top management applied the hurdle rate 9.3% to all capital project and in the evaluation of the performance of business units. Firm’s current book value (CBV) of net asset: $16 Billion Telecommunication services accounted for 75% of Teletech’s market value (MV) while the remaining 25% is Products and Systems.

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I. INTRODUCTION OF CASE STUDY

Company’s business (Cont’s):

1. Telecommunications services segment: Segment that provided long distant, local and cellular telephone service to more that 7 million customer lines throughout the South and Midwest. Revenue in this segment grew at average rate of 3% over the 2000-2004 .  In 2004:

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ROC : 9.10% Book value of...