Case Scenario 2: Raptec

question 147

Essay

Case Scenario 2: Raptec
Raptec was incorporated in 1991 and went public on the Nasdaq Stock Market in 1996. Raptec's strategy is to become the global leader in innovative storage solutions. Raptec is an S&P 500 and a Nasdaq Stock Market 100 member. The company's hardware and software solutions for eBusiness and Internet applications move, manage, and protect critical data and digital content. Raptec operates in three principal business segments: Direct Attached Storage ("DAS"), Storage Networking Solutions ("SNS")and Software. These hardware and software products are found in high-performance networks, servers, workstations, and desktops from the world's leading OEMs, and are sold through distribution channels to Internet service providers, enterprises, medium and small businesses, and consumers. Since the time it went public, Raptec has experienced rapid growth and consistently profitable operations. In early 2007, the company announced its plan to spin-off the software segment, subsequently incorporated as Axio, Inc., in the form of a fully independent and separate company. Software was Raptec's most profitable and fastest growing segment. By mid-2007 Raptec had completed the initial public offering of approximately 15 percent of Axio's stock, and then distributed the remaining Axio stock to Raptec's stockholders in a tax-free distribution.
-(Refer to Case Scenario 2). Why would a successful firm like Raptec spin off its most promising business?

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Definitions:

Hibernation

A state of minimal activity and metabolic depression entered by animals to survive winter or other adverse conditions.

Estivation

A period of dormancy or inactivity in some animals during hot or dry periods.

Acclimatization

The process by which an organism adjusts to gradual changes in its environment, improving its performance over time.

Migration

(1) The periodic or seasonal movement of an organism (individual or population) from one place to another, usually over a long distance.