Module 1 - SLP 3: Initial Public Offering



Module 1 - SLP 3: Initial Public Offering

Introduction

An initial public offering, or IPO is when a company sells its shares to the public for the first time. An IPO occurs in the primary market . Before the IPO, was a private company, but now the company is allowing the public to participate in its growth and profits. Instead, the company can raise money by selling parts (Clinton, 2011). To expand its business, increase your inventory or maintain their operations, companies need to raise money. There are two main ways to raise money, incur debt or sell shares (Klammer, 2004). I have chosen Lockheed Martin for this IPO project.

Brief Description of the Company

Lockheed Martin Corp.. is an American defense contractor. The company researches, develops, designs, manufactures, integrates and operates advanced technology systems, products and services. Lockheed Martin has customers who come from both the national and international defense markets. The main customer is the U.S. government (Lockheed Martin, 2012). Lockheed has been the number one information technology provider to the U.S. government for 17 years running, and the business is housed in the Information Systems and Global Solutions (IS/GS) segment. The segment's growth prospects remain constrained following multiple continuing resolutions over the last couple of years and the expectation for another in late 2012. Backlog has declined to $8.7 billion from $9.7 billion at year-end 2010 as a result. Government employees responsible for contracting with companies focus more intensely on checking all parameters before requesting services during periods without an approved budget. While all segments will be affected, the IS/GS tends to be more sensitive with quick-turn orders.

Valuation, Growth and Profitability

The fair value estimate for Lockheed is $71 and incorporates assumption changes following the passage of the Budget Control Act of ...