The Case Of The Shrinking Margins

1334 Words Apr 9th, 2015 6 Pages
DigiMaxCon (A): The Case of the Shrinking Margins

Patrick Wiseman

Boise State University

GenBus 450-001

DMC needs to identify their main business problems and develop a new strategy along with procedures to address it. Although DMC had grown into a multi-billion dollar company and regularly ranks in the top of the industry, gross margins have decreased steadily between 2010 and 2012. Depicted the Table 1 below, margins ranged from a net income loss of $2.6 billion in 2010, $1.7 billion in 2011, down to just $940 million.

Table 1: Simplified Income Statement Summary

2012 2011 2010 2009 2008

(in millions)
Net sales $ 8,050 $ 8,500 $ 8,200 $ 4,500 $ 5,200
Gross margin 940 1,700 2,600 (400 ) (50 )
Operating income (loss) (590 ) 700 1,500 (1,500 ) (1,450 )
Net income (loss) (1,000 ) 1700 1,900 (1,900 ) (1,500 )
Net income (loss) attributable to DMC (1,003 ) 150 1,850 (1,800 ) (1,500 )
Diluted earnings (loss) per share (1.00 ) 0.15 1.75 (2.30 ) (2.00 ) Cash and short-term investments 2,100 2,000 2,800 1,300 1,200
Other current assets 5,600 5,800 6,000 3,300 3,400
Property, plant and equipment, net 7,000 7,450 6,000 6,900 8,200
Total assets 14,700 15,250 14,800 11,500 12,800
Total current liabilities 2,200 2,300 2,700 1,800 1,500
Long-term debt 3,000 1,800 1,740 2,350 2,100
Other noncurrent liabilities…
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