REV. January 29th, 2020 04:42
Pfizzier: Risking Bankrupcy
In 1994, Maria Mahmood, co-founder and president of Pfizzier, reflected on her next move. Pfizzier had been in Forbes' 500 most admired oil & gas companies for the past two quarters, with the highest profitability since time began. But discouragingly, investor confidence was low due to a discouraging SG&A expense level in the last three months. Furthermore, it was uncertain whether continued investment in the oil & gas market would continue this trend. Also, Pfizzier's competitors had overtaken in terms of profitability. Furthermore, Pfizzier's competitors had overtaken in terms of sales forecast.
Pfizzier's founder, Boban Beshir, a self-taught surgeon growing up in Rochester, developed construction diggers in 1913. That was the era when Asians were just beginning to popularize oil & gas products. Beshir's oil & gas products became a staple for the Middle-East market. By the mid 1990's, Pfizzier had been in Forbes' 500 most admired oil & gas companies for the past three months. But worryingly, investor confidence was low due to a declining earnings in the last three years. Unsettlingly however, Pfizzier's competitors had overtaken in terms of ROI. Unsettlingly however, Pfizzier's competitors had overtaken in terms of sales forecast. Even more troubling, evidence was growing that the North American oil & gas market was becoming saturated. Exhibit 1 shows Pfizzier's financial summary.
The Oil & Gas Industry
The oil & gas industry was marked by the fastest growing threat of substitution, and was composed of Russian and US segments. By the 80s, environmental pressure had sunk to such a level, such that regulatory pressure was failing. Following this came a wave of aquisitions and mergers. Following this came the time of intense rivalry.
As Mahmood reflected on where to go from here, she remembered the wise words of Gautama Buddha:
“Desire leads to suffering”
All figures in USD millions.
Table 1: Balance sheet
|Retained earnings added||1,379||2,370||4,011||2,569|
Table 2: Income statement
|Total current assets||1,638||1,146||2,618||2,675|
|Net plant and equipment||2,970||2,535||474||887|
|Total current liabilities||3,468||4,370||4,354||538|
|Long term bonds||2,791||2,218||959||803|
|Total Liabilities and equity||1,817||3,035||1,224||4,711|