Market capitalization

About: Market capitalization is a research topic. Over the lifetime, 3583 publications have been published within this topic receiving 77288 citations. The topic is also known as: market cap & market value.

The Changing Role of R&D

Abstract: Ten major trends are affecting product development today. Your company's survival is dependent upon its ability to adapt to these new trends and execute its strategy faster than the competition. OVERVIEW: Powerful trends affect product development and the creation of business value today. "Main-Street" companies must improve their profits and "all" companies face aggressive revenue targets. For everyone this means finding new ways to fill the gap between current and projected revenue goals. A company increases its market capitalization by filling this gap, a burden resting predominantly on R&D. R&D has traditionally been focused internally on product development and, to some degree, on mergers and acquisitions. R&D's role must now expand and take on a greater scope to meet the financial goals of the company. This article outlines the trends that are both creating and enabling changes in R&D. Although presented as though they were fixed or inviolate, these trends are in reality unfolding before us. As companies experiment with methods to take advantage of the trends, or thwart their impact, their efforts, at a minimum, distort the environment for everyone. Thus, whether or not these trends are in fact "real" or "inevitable" is not the point. The point is that some companies are reacting to each and every one of the trends discussed, and their behavior distorts and adds to the chaos we all experience. Each of the trends described below has been present to some degree before. But it is the building of, and the confluence of, these trends that is creating extreme opportunities and threats for everyone. Synergy among these trends has created a completely different business environment for companies today. My preparation for Industrial Research Institute national programs afforded the opportunity through personal conversations and access to IRI committee work to analyze the approaches taken by today's companies. I learned that some organizations were managing clusters of these trends, but no company was dealing with and blending the opportunities from all of the trends. The most successful companies will be the ones that face the majority of these trends head on and adopt effective strategies to thrive in this new environment. Patterns Among the Trends Ten major trends affecting R&D today can be segmented into three areas: * New avenues for building corporate value. * New development processes. * Trends that are warping time. The first set of trends encompass new avenues to building corporate value. These include the changing basis of market capitalization, building companies to flip, off-balance-sheet spin-offs and licensing-out as a business practice. These market forces are redefining what value means to a company. The basis of market capitalization is changing from a focus on tangible to intangible assets. Companies are no longer being built solely to withstand the tests of time. Instead, some new companies are being built to flip. Spin-offs are going off the balance sheet and licensing-out is emerging as its own business unit. All of these trends are affecting how a CEO explains value to the company's shareholders and how R&D expenses are explained to the analysts. Second, new development processes afford tremendous opportunity for substantial returns from the new business models. These trends are "spiral" product development, synchronous portfolio selection and management, iterative integration of product development and portfolio management, and connection-focused new product developments. Product development and portfolio selection are moving from conventional funnel models to spiral development. Acquisitions and partnerships are replacing some of R&D's traditional role in bringing new products to the company. These trends are both reducing the time to bring new products to market and adding greatly to the complexity of managing R&D. …

Apple's Changing Business Model: What Should the World's Richest Company Do with All Those Profits?

Abstract: Apple Inc. stands out as the world’s most famous, and currently richest, company. To the general public, Apple is known for three things: its intriguing CEO Steve Jobs, who has achieved iconic status in death as in life; its amazing iOS products, especially the iPhone and the iPad, and their predecessor the iPod, which have literally placed sophisticated technology in the hands of the masses; and its stratospheric stock price, which even when in March 2013 it had dropped to 63 percent of its September 2012 peak, gave Apple the highest market capitalization of any company in the world. As a result of its phenomenal success, at the end of fiscal 2012 Apple had $121 billion in liquid assets. In April 2013 the company committed to distributing as much as $100 billion to shareholders in stock buybacks and cash dividends by the end of fiscal 2015. By employing the theory of innovative enterprise to analyze how over the course of its 37-year history Apple became so profitable, we argue that there is no economic justification from a risk-reward perspective for this distribution to Apple’s shareholders. Taxpayers and workers have superior claims on these profits. In analyzing by whom value is created as a basis for considering for whom value should be extracted, we raise the implications of Apple’s changing business model for the future of innovation at this heretofore exceptional American company and even in the U.S. economy as a whole.

Changes in REIT Liquidity 1990-94 : Evidence from Intra-day Transactions

Abstract: In this study, we use data on intra-day transactions to analyze whether REIT liquidity as measured by the bid-ask spread changed from 1990 to 1994, a period during which the industry's market capitalization increased from $9 billion to $45 billion. We find that REIT spreads narrowed significantly. We then use a variation of the empirical model proposed by Stoll (1978) to analyze the determinants of percentage spreads including whether spreads are determined by return variability, share price, exchange listing, and asset type. We find strong support for Stoll's model, in that return variance and share price are the primary determinants of percentage spreads in both periods analyzed. This suggests that the liquidity of REIT securities is similar to that of non-REIT securities with similar prices and return variance. In addition, we find that spreads are wider for REITs trading on NASDAQ. In contrast with an earlier study, we find that market capitalization is not a significant determinant of REIT spreads.

The Stock Market as a Screening Device and the Decision to Go Public

Abstract: We argue that many firms become publicly traded on a stock exchange as the first stage of a longer term divestment plan. Making a direct sale of unlisted stock may be associated with great adverse selection costs. The publicly listed stock price reduces adverse selection by aggregating the information of several investors, and this market valuation, rather than the cash infusion, could be the main benefit of an initial public offering. This theory provides a unified treatment of a whole range of empirical observations, in particular why initial owners frequently exit completely subsequent to an initial public offering (IPO) and why the number of stock market introductions increases with the stock price level. The model also reformulates the "sweet taste" explanation of IPO underpricing in a way which is consistent with recent evidence. Finally, we argue that the number of firms which go public is inefficiently large.