PROBLEM 8-12 Given Solution Legend EXHIBIT 1 Value given in problem Formula/Calculation/Analysis required Qualitative analysis or Short answer required Earthlink Yahoo eBay Microsoft MSFT Financial Information 2003 Shares Outstanding 2003 Fiscal Close Stock Price Market Capitalization Short Tem Debt Long Term Debt Cash & Equivalents Short Term Investments EBITDA Net Income Calculated EPS LNK 159,399,000 10,800,000,000 25.64 $1,593,990,000 29,521,758,060 S 41,790,975,590 276,912,000,000 655,602,000 S 646,819,000 - Goal Seek or Solver cell 10.00 $ 45.03 S 64.61 Crystal Ball Input = Crystal Ball 900,000 $ 2,800,00O $ -750,000,000 S 124.500,000 $ 349,740,000 713,539,000 S 1,381513,000 $ 6,438,000,000 595,975,000 S 340,576,000 42,610,000,000 455,300,000 S 818,200,000 14,656,000,000 9,993,000,000 89,088,000 218,100,000 (62,200,000) 237,900,000 S 441,800,000 $ 36 68 Solution Average Price to Eamings Enterprise Value EBITDA muttiple Part a EBITDA Cash Debt Net income Shares EPS IPO proceeds 800,000,000 430,000,000 10,000,000 400,000,000 271,219,643 1.47 1.670,000,000 Earthlink Yahoo eBa Microsoft Average Imputed IPO price per share from PE ratio Impute EV from EBITDA multiples Part b Part c b. Which of the four comparable firms do you think is the best comparison firm for Google? Why? c. How has the stock performed after the IPO? Do you believe that Google is cur- rently correctly valued in the stock market? Explain your