24/7 Wall St. is preparing break-up values for several dozen companies that have market caps of $10 billion to $100 billion. The larger number is considered to be the high water mark of what private equity firms can digest now.
To do this analysis, each company is broken into its operating units. At a company like Motorola that would include handsets, telecom infrastructure, and its home set-top business. We then look at the price-to-sales and price-to-book and compare these with comparable public company valuations. Operating profit at each operating unit and the net tax rate are used as part of the valuation.
To get "price per share" each company’s cap table is reviewed for fully diluted share count including stock options, secondary offers, and convertible instruments.
Each analysis is specific to the valuations in its industry. A subscriber may be valued higher in the cable industry than it is in satellite radio. An balance sheet item in investory for steel may be worth less than one for the same amount of cooper.
Apple (AAPL) is actually worth less than the sum of its parts (full analysis), only about $84. The multiple for the computer segment of the business hurts the price.
Disney (DIS), on the other hand, is worth more than its share price (full analysis). The company’s media and broadcasting businesses are worth a ton.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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