Project Descriptions

Objective:

The specific objective of this graded written research project is to prepare an “executive level financial report” to the Chief Financial Officer (CFO) of Hyper Theory Incorporated (HTI), a mythical company in which you are employed as a senior financial analyst.  This report will pertain to the financial evaluation of a real, publicly-traded, company, MicroStrategy, which will require: independent research (web-based or library), careful financial analysis, and the proper application of key financial theories and formulas.

The company that is to be analyzed for this project is MicroStrategy, a publically traded software company headquartered in Tyson Corner, VA.

Situation:

You are a financial analyst with the mythical Hyper Theory Incorporated (HTI.) HTI is an established manufacturer of a line of fully-integrated wireless communication products, which services an international market.  A competitive technical and economic product evaluation has determined that MicroStrategy is the best potential candidate for a long-term software security partnership.  MicroStrategy is offering a competitively favorable deal.  However, based on some serious general concerns about the fallout of companies in the software industry in general, the CEO has asked your CFO to conduct a financial analysis of MicroStrategy to determine if it is prudent to commit to this company’s software systems.  The cost of cutting over to the new software system is significant and any interruption in support during the next few years would adversely affect HTI’s performance and profit. Specifically, the question is what is the financial viability of MicroStrategy?

Specific Assignment:

Your specific assignment is to research, analyze, and prepare a report for the CFO on the actual financial performance of MicroStrategy for the last three years. In addition to reviewing the traditional financial performance indicators, you are also to review MicroStrategy’s past and current stock performance for the last one year.

Your report is to consist of three parts:

(1)An evaluation of MicroStrategy’s financial performance for the last three years.

(2)   An evaluation of MicroStrategy’s stock performance for the last one year.

(3)   Finally, a specific recommendation, with supporting rationale, as to whether or not MicroStrategy’s recent trend in financial and stock performance is of sufficient financial strength to warrant entering into a long-term commitment.

To assist you in your task, the CFO has provided the following general guidance:

1. Since it is widely recognized that the Software industry is undergoing a major adjustment, it is very important to comparatively evaluate MicroStrategy’s financial and stock performance trends against its Industry.

1. You will likely need to include all necessary and relevant financial performance and stock information, trends, and projections in supporting your recommendation. To include: financial ratio trends with industry comparatives, capital spending, stock growth, Beta values, credit rating service valuations, bond rating valuations, and management and investment reports – when and where such documents are available.

Report Requirements

Research and analyze the following information for MicroStrategy

• Annual Balance Sheets for the last three years.
• The Income Statements for the last three years.
• The Cash Flow Statements for the last three years
• Annual reports, 10K or 10Q SEC Reports
• Industry Performance Statistics
• Analyst’s Stock and Bond Performance Evaluations
• Analysts’ reports on past performance and projected performance
• Management reports or press releases

Using the above financial research information, develop an evaluation of the financial performance and stock performance of MicroStrategy using the outline guidelines and rubric presented below.  The outline numbers (1- 2) correspond to the Grading Rubric presented on page 11.

         –     Introduction – A Summary of MicroStrategy’s Background and Industry – (1/2 page)

1. 1.       Develop an Analysis of MicroStrategy’s investment Performance

Prepare and present an analysis of MicroStrategy’s long term investments, in capital spending, product development, and research against a major competitor and industry standards.

1. 2.       Develop an Analysis of MicroStrategy’s Capital Structure  – Debt and Equity

Prepare and present a comparative analysis of MicroStrategy’s debt and equity capital structure against a major competitor and industry standards. Where possible, consider the following: cost of capital, dividend programs, and bond rating valuations.

Using the following outline to guide the design and preparation of your financial research report on MicroStrategy:

1. 3.       The overall organization, format and presentation style of  the research paper including: the Title page, Introduction, Body, and Summary

1. 4.       Use of tables, figures and other graphics to summarize and support the analysis presented in the research paper

1. 5.        Logical and smooth flowing transitions and relationships among concepts of the research report
2. 6.       Research sources and significance of the research information and data; use of APA citation methodology