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The stockmarket often viewsthedeclaration of

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Unformatted text preview: off other potential buyers in order to make the deal close faster. And, in retrospect, since no other bidders emerged, the $60 strategy may have been a sound approach to the acquisition. d. External events (such as technological change) can cloud the future for companies and, since stock prices are driven by valuing a company’s future, affect the stock valuation. When events beyond the control of management change the prospects for a business, the market will react by pricing in those expected changes. If the internet will drive advertisers away from traditional newspapers, the future cash flow of those newspapers will drop; the market reacts by simply pricing the stock today in anticipation of those lowered expectations. ID12–9 a. “Net” proceeds mean the actual cash received by the company after commissions to underwriters and expenses are paid. “Gross” proceeds would equal all the cash paid by investors buying the offered shares. b. Dividing the proceeds by the number of shares issued indicates that the stock price has been climbing rapidly. The proceeds per share issued climbed from $68.29 to $287.72 and then leveled off at $268.05 for the three years shown. c. Google has been one of the...
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