Case Scenario 2: Raptec

question 39

True/False

Case Scenario 2: Raptec.
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, and medium and small businesses and consumers. Since the time it went public, Raptec has experienced rapid growth and consistently profitable operations. In early 2002, Raptec 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-
2002 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. Axio's family of products includes category leaders in CD/DVD burning, digital photography, and digital video. Axio's new management team is composed of Lex Luthor, CEO, and previously the President of New Business Development for Universal Studios Recreation Group; Karal Kool, COO, and previously General Manager of Raptec's OEM Solutions Group; and R. Elliot Maxter, CFO, and previously corporate controller for Raptec. The interim four-member board of directors is currently comprised of Raptec senior officers, but the terms of the public offering require them to step down in 2 months. Thus, Axio will need to construct a new board, which in turn will be responsible for overseeing Axio's management and their compensation.
-(Refer to Case Scenario 2). Raptec would enhance the effectiveness of its board if it appointed a "lead director" who would be responsible for the board agenda and oversight of nonmanagement board activities.

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Definitions:

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its share price, serving as a measure of return on investment.

Earnings Per Share

A financial ratio that calculates the portion of a company’s profit allocated to each outstanding share of common stock, serving as an indicator of a company's profitability.

Market Value

The present cost at which a good or service is available for purchase or sale in the market.

Price-earnings Ratio

A valuation metric for assessing a company's current share price relative to its per-share earnings.