A Case Study on MiniScribe Corporation

for
BA 219 - Corporate Financial Reporting

Submitted to:
Dr. Helen S. Valderrama

by
ARELLANO, Alyssa Loren
ASADON, Rovin Vincent
BLANCO, Melissa
CHU, Goodwealth
DE GUZMAN, Cla
PRELLIGERA, Chriss Jan

July 9, 2013

Master in Business Administration
University of the Philippines
Diliman, Quezon City
EXECUTIVE SUMMARY In October 1988, Paula Perry, a research analyst for the brokerage firm Alexander and Ferris, was tasked to analyse the financial condition and performance of MiniScribe Corporation. The latter was a manufacturer of disk-drives for personal computers, and was rumoured to be experiencing cash flow and inventory problems. The objective of Paula’s analysis is to
Other possible threats to the established firms and industry leaders were the new entrants who designed disk-drives with less parts and thus lower cost. Finally, the industry faced the challenge of a forecasted decline in the US PC market to 29%, 17% and 9% for 1987, 1988 and 1989, respectively. This forced MiniScribe to actively look for niche customers who could produce demand for smaller disk drives. The disk drives could potentially be installed in fax machines, laser printers and photocopiers.

II. PROBLEM DEFINITION

Due to MiniScribe Corporation’s record of consecutive quarterly increases in revenue and profits, it became one of Wall Street’s favourite stocks, and was recommended by many investment analysts and firms in Wall Street, including the prestigious brokerage firm of Alexander & Ferris.
However, in light of intense competition, overcapacity issues, the forecasted decline in the US PC market, and rumours that MiniScribe was experiencing cash flow and inventory problems, Alexander & Ferris deemed it necessary to re-evaluate MiniScribe’s financial position and performance.
Research analyst Paula Perry of said brokerage firm was requested by her manager to analyse MiniScribe’s latest financial results and recommend whether to retain MiniScribe Corporation on its ‘Buy’ recommendation list or not.

III. ANALYTICAL