Caso 3 Y 4
CASE
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3
it it :t
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le
Glen Mount Furniture Company
:0
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Iy
8, es ~e
on er e lnt la. ts) Ich
Furniture magnate Carl Thompson couldn 't believe the amount of pressure security analysts could put on a finn.
The Glen Mount Furniture Company was a leading manufacturer of fine home furnishings and distributed its product directly to department stores, independent home furnishing retailers, and a few regional furniture chains. The firm specialized in bedroom, dining room, and living room furniture and had three plants in North
Carolina and two in Virginia, Its home officewas in High Point, North Carolina.
In a recent presentation to the Atlanta chapter of the Financial
Analysts
Federation, Carl Thompson barely had taken a bite out of his salad when two analysts from Smith Bamey, Harris Upham
& Co., a stock brokerage firm, began asking questions. They were particularly concemed about Glen Mount 's growth rate in earnings per share.
Carl was aware that security analysts considered earnings performance to be important, but he was somewhat distressed by the fact that this seemed to be their overriding concern. It bothered hirn that the firm had just spent over $10 million to develop exciting new product lines, modemize production facilities, and expand
distribution capabilities, and yet all the questions seemed to deal with near term eamings performance. He felt that he would eventually have an opportunity to discuss the above-mentioned management initiatives and their impact on the company for the next decade, but current earnings per share seemed to gather the attention of the analysts.
Carl knew only too well from past experience that the earnings performance of the finn would affect the company 's priceearnings ratio and its market value.
Furthermore, before Carl became president of Glen Mount Furniture Company, he had attended a six-week Executive Development
Program at the Harvard Business School in which he heard a number of professors stress the
f t r
3
it it :t
:r
le
Glen Mount Furniture Company
:0
:?
Iy
8, es ~e
on er e lnt la. ts) Ich
Furniture magnate Carl Thompson couldn 't believe the amount of pressure security analysts could put on a finn.
The Glen Mount Furniture Company was a leading manufacturer of fine home furnishings and distributed its product directly to department stores, independent home furnishing retailers, and a few regional furniture chains. The firm specialized in bedroom, dining room, and living room furniture and had three plants in North
Carolina and two in Virginia, Its home officewas in High Point, North Carolina.
In a recent presentation to the Atlanta chapter of the Financial
Analysts
Federation, Carl Thompson barely had taken a bite out of his salad when two analysts from Smith Bamey, Harris Upham
& Co., a stock brokerage firm, began asking questions. They were particularly concemed about Glen Mount 's growth rate in earnings per share.
Carl was aware that security analysts considered earnings performance to be important, but he was somewhat distressed by the fact that this seemed to be their overriding concern. It bothered hirn that the firm had just spent over $10 million to develop exciting new product lines, modemize production facilities, and expand
distribution capabilities, and yet all the questions seemed to deal with near term eamings performance. He felt that he would eventually have an opportunity to discuss the above-mentioned management initiatives and their impact on the company for the next decade, but current earnings per share seemed to gather the attention of the analysts.
Carl knew only too well from past experience that the earnings performance of the finn would affect the company 's priceearnings ratio and its market value.
Furthermore, before Carl became president of Glen Mount Furniture Company, he had attended a six-week Executive Development
Program at the Harvard Business School in which he heard a number of professors stress the