Select an industrial or commercial U.S. based company that is listed on one of the major stock exchanges
in the United States. Each student should select a different company. Avoid selecting an insurance
company or a bank�the financial ratios for insurance companies and banks are different. Write a seven-
to eight-page double-spaced paper about your selected company answering the questions posted under
the Week 2 Minicase assignment posted in Doc Sharing. This Minicase paper should be submitted to the
Week 2 Minicase Dropbox.
The American Stock Exchange comes third after NYSE and NASDAQ of all stock
exchanges in America. It is estimated to handle around ten percent of all trades in America. It
lists companies from all over America. These companies are of different sizes and deal with
different goods and services. It is famous for having the least requirements in terms of minimum
requirements for the listing companies. As a result, it has listed many small companies who find
the other exchanges too harsh. The American Stock Exchange trades in small cap stocks,
exchange trades funds, and other options (World Bank, 2010).
WidePoint Corporation is based in McLean, Virginia in the United States of America.
The company provides products that are closely linked with technology. It targets both the US
government and commercial American markets. WidePoint Corporation has established itself as
a top provider of managed cyber security solutions mobility services, and telecom lifecycle
management. It offers information technology solutions, which are cloud-based, secure and wide
in terms of enterprises targeted. Such solutions are necessary for both government and
companies to comply fully with advanced system requirements and the government-mandated
regulations on information technology(World Bank, 2010). WidePoint has a high discount due to
its position currently. It is in a trend of growing further. The reason behind its bright future is that
it is in a position to acquire a growth trend that can be both inorganic and organic. Looking at the
revenue figures and the expenses incurred by the company, a price point for the next few months
can be estimated (Heisterberg & Verma, 2014). A figure of between two and five is reasonable
as a price point for the company is the aforementioned period. Widepoint Corp received a
financial boost from Homeland Security as fierce court battle. The financial blanket has helped it
cushion it capital debt and is thus less volatile. There are positive estimates for the foreseen
revenue to be generated. Most of America’s powerful brands have reached their level of success
through long-term campaigns that have great visibility. These campaigns are marked a consistent
recital or trumpeting of a simple message for the masses. This move proves a strategy of high
economic demands through vigorous promotions. However, some brands that have emerged do
not follow the vigorous marketing strategies. They instead focus on quiet behind the scenes
approach instead of promoting sales for their products (Mergent, 2009). Widepoint Corp falls in
the first category.
The company has endured a rough period being near bankruptcy, but it pulled through.
The Widepoint Corp has gone through an amazing graduation and growth in the last couple of
decades. These changes have brought forward demand for its products worldwide an objective of
many managers. These numerous changes in competition in a highly attractive motorcycle
industry and the brands extended reach for much-untapped business have resulted in the brand’s
success. The company is now enjoying many sales and gaining lots of profit after reinventing
itself as both a brand and a company(Heisterberg & Verma, 2014)..
Widepoint Corp indicates a beta of 1.61. This beta value shows that its volatility is
higher than of its market. If the company did not have any long-term debts then it would be less
volatile (Mergent, 2009). Within the structure of its capital, the beta would be less than one. This
beta value would mean that Widepoint Corp is less volatile while compared to the market.
The company’s financial statements show a marginal tax rate of 34% for statutory federal
income and 4.9% of state income tax. These figures lead to a cost of debt of 13,281,134 dollars
before interests and tax, 3.6 million dollars of interest expenses and 4.5 million income tax
expenses. The results are 141,302, 128 dollars after tax debt. There is a long-term debt to equity
ratio of 3.71. The total shareholder’s equity sums up to 34.9 million dollars. The average earning
per share is -0.11 down from -0.08. As such, the cash dividend yield went down with an average
sale of shares at 0.73 getting an operating profit of -0.6 with a working capital and tangible
books values of 0.15 each. The average capital expenditure of Widepoint Corp is 0.1. The price
earnings of the shares stand at 5,209,890 up from 3,410,322.
Preferred Stock can be defined as special security for equity. It possesses properties of
the debt and the equity. WidePoint Corp’s preferred stock for the last quarter was averaged at
€0.00 Million. The market value of common stocks has to be added to that of preferred stocks to
get an enterprise value. WidePoint Corp gained an enterprise value for that quarter of €-6.88
Million. WidePoint Corp’s book value per share for the same period was €0.38 with its diluted
earnings per share being €-0.02 million (World Bank, 2010).
The calculations are listed below:
The Enterprise Value = Market Cap +Preferred Stock + Long-Term Debt + Short-Term Debt +
Minority Interest – Cash and Cash Equivalents
= 0 + 0 + 0.833110576495 + 0.916867147821 + 0 – 8.63138198343 = -6.88
Book Value per Share = (Total Shareholders’ Equity – Preferred Stock) / Total Shares
= (31.1004187829 – 0) / 82.48 = 0.38
Earnings per Share (Diluted = (Net Income – Preferred Dividends) /Shares Outstanding
= (-1.2563485699 – 0) / 82.125 = -0.02
It is important to note that all numbers are in millions except for the ratio and the per share data.
The numbers are also represented in their representative currencies.
A group of senior managers reacquired the company after it had been acquired by an
American organization AMF. While under AMF, The Widepoint Corp suffered huge losses as it
tried to cope with competition from similar companies. One chief manager suggested a change of
strategy to deal with the collapse of Widepoint Corp market. He suggested going back to the
details in the IT solutions. This decision was because the business key was in knowing both the
clients and the business environment. The rebuilding of the Widepoint Corp involved
considering the already existing corporate culture beliefs in restructuring its brand image. This
strategy was based on the basic American main principles of being adventurous free and an
individual (Graham et al., 2010). Widepoint Corp’s Management ideology and the plan were
aimed to control innovation and its penetration to the international markets. It also aimed to
adapt to differences in culture and beliefs while at the same time maintaining the brand
image(World Bank, 2010).
A transformational leadership style that was stirred by customers and employees focus on
more than themselves was quickly utilized by the company (Heisterberg & Verma, 2014).
Widepoint’s management team was actively involved by participating in activities like following
their trading online and attending promotional rallies. A policy of not selling transportation but
rather a transformation was important to their marketing (Graham et al., 2010).
The company has had an up and down tent in the stock market. The last two years ,
however, have resulted in a tremendous increase in its shares turnover. The company has thus
enjoyed a successful trend over the last couple of years. It is ranked as an aggressive competitor
when compared to all the stock exchanges in America (Smith, 2012). By these observations the
companies risk structure is tolerant to many risks both financial and operating. Widepoint Corp
has a debt to capitalization ratio of 9.28.
Investing in the company would be beneficial, as the company has made plans to remain
relevant and competitive in America and globally. In controlling the external business
environment, Widepoint Corp has defined a new strategy that focuses on marketing and
advertising. This strategy mainly looked at the odds involved in the setup of relations with stock
consumers. A big portion of their market today consists of members from the professional sector
such as the legal officers, physicians, accountants and teachers(World Bank, 2010). The
management team understands they have to shift focus to their efforts of knowing their
customers to grow a better customer loyalty foundation. Some key factors were considered by
the management team when trying to decide on where to expand. They first had to understand
the culture of the new clients they were targeting. They also had to study critically demographics
on average client size and annual or monthly income. This data would guide them in segmenting
the market (Mergent, 2009).
The company also has a good corporate and clientele handling culture. As thus, it is
likely to maintain its market share. Widepoint Corp realized that people needed to have a vision
that is shared with the company values. This move was aimed at knowing the customer and the
business. It also had an objective to look closely at the details on the products and consumer
preferences. This unique and bright management style gave Widepoint Corp the chance to move
away from a self-managed style to a more customer-based approach. The strategy was to get the
company to braid its customer support base(Koller et al., 2010)and (Wasserman et al., 2009).By
employing a theory on acquired needs, its management used the need to achieve a theory focused
on motivation with the need to overcome its challenges in a better and more efficient way. Some
of these problems were changing the corporate structure, brand and marketing to produce and
sustain its offerings and supply of products. Another way was to monitor closely customer needs
and detail on products and the market. Widepoint Corp management had learned of the
importance of these relationships with workers and clients. Developing these relationships was a
major part of the company’s corporate culture. These values and strategies make it an ideal
company to invest (Heisterberg & Verma, 2014).
The Widepoint Corp has made tremendous efforts in selling technology solutions in the
US and other markets abroad. It has overcome very many problems since it was established. This
success can be attributed to the development of serious management strategies by the company’s
management team. Some of these strategies like the focus on detail and consumer demands were
developed after the company had incurred huge losses. However, these strategies emerged as the
turnaround points for the company’s success. The management team that has been in charge over
the years have done a great deal of work in raising the company to where it is today. It now has a
large shareholder backing making its capital base to be un-marched amongst its competitors.
Graham, J. R., Smart, S. B., &Megginson, W. L. (2010). Corporate finance: [linking theory to
what companies do]. Mason, OH: South-WesternCengage Learning
Heisterberg, R. J., & Verma, A. (2014).Creating business agility: How convergence of cloud,
social, mobile, video, and big data enables competitive advantage.
Koller, T., Goedhart, M. H., Wessels, D., & Copeland, T. E. (2010). Valuation: Measuring and
managing the value of companies. Hoboken, N.J: John Wiley & Sons, Inc.
Mergent, Inc. (2009). Mergent OTC unlisted manual.New York: Mergent.
Smith, R. C., Walter, I., & DeLong, G. (2012). Global banking. Oxford: Oxford University
Wasserman, P., McLean, J. W., & Gale Research Company. (2009). Consultants and consulting
organizations directory. Detroit, Mich: Gale Research Co.
World Bank.(2010). World development indicators 2010. Washington, D.C: World Bank