Summary:
The article I read mentions that Microsoft was planning to acquire Yahoo. Yahoo underscored the contents of the presentation said that Microsoft's unsolicited the acquisition and it has undervalued Yahoo. Yahoo hopes to double its operating cash flow from $1.9 billion to $3.7 billion for the next three years and Yahoo aims to meet $8.8 billion in revenue. Yahoo anticipates that its growth will outpace in the market, it projected $1.9 billion in revenue from display and video advertising over the last three years. Yahoo is behind Google with 425 million users versus 305 million users for Yahoo. In the last quarter of 2007, Yahoo got 27 percent share and Google got 53 percent of share. However, Yahoo focuses on the position in Asia because of the dull U.S. economy since 2007, it especially focuses on the dominance in Japan. Yahoo is working on some social-media projects, such as Yahoo Buzz and Yahoo OneConnect.
Connection:
The connection to chapter five is the effect of cash flow in financing activities, investing activities and operating activities. as I mentioned before, Microsoft is planning to acquire Yahoo but Yahoo said Microsoft has undervalued Yahoo. Yahoo said they will double their cash flow in order to prevent Microsoft's acquisition. Acquistion requires large amount of cash, Microsoft needs to take out many cash if they wants to acquire Yahoo. It would have a negative effect on cash flow of investing activities. On the other hand, Yahoo doubled their cash flow also increase the amount that Microsoft needs to take out to acquire Yahoo. Microsoft might change their decision because of that. Doubling cash flow is also a strategy to prevent acquisition.
Reflection:
Cash management is one of the really big issues in operating a company. Having a good cash flow is really important. If a company has too little cash on hand would result obstacles in operation of company such as incapable to pay the liabilities and expenses which may affect the credibility of the company or even lead the company goes bankrupt, because other companies worry that it might not be able to pay the debt. On the other hand, having too much cash in the company will definitely reduce the profit that a company can actually make. Company can use the excess cash to invest in order to get a higher return. In my opinion, putting appropriate amount of money in company can highly increase the profit, so proper money management is prior issue in every company.
