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Ust Finance

In: Business and Management

Submitted By happyttime
Words 1046
Pages 5
1) Frame the issue. Briefly describe that UST is planning to reverse a long-standing conservative financial policy.
Issues:
a) UST had seven pending health related lawsuits at the end of 1998. P.66
b) There’s previous uncertainty is enhanced by a lawsuit that alleged that UST had violated antitrust and advertising laws and participated in anti-competitive conduct. The industry agreed in November to settle state Medicaid lawsuits with a $206 billion settlement and bans on advertising and promotions that appeal to youth. P.66

c) UST is a dominant player of most smokeless tobacco, or most sniff, controlling approximately 77%. Also, UST expanded the category and continued to rise prices, smaller players eroded UST’s market share primarily by cutting price. However, it is not able to compete and against price-value brands.
(which raised small companies concerns) price-value brands. P.64
d) The EPA report classifying environmental Tobacco smoke as a known human carcinogen.
e) There is chance that hard to expand the tobacco to international market due to cultural issues tobacco

2) Evaluate the business risks of UST from the viewpoint of a credit analyst or potential bondholder.
Issue a,b) UST had seven pending health related lawsuits at the end of 1998, which is uncertain about the result. It the company lost in the lawsuit, it will lost lots of money. Also, the tobacco will be push by the new law of settle state Medicaid, which prevents youth to use tobacco. Since there are lots of litigation and research against tobacco companies, it will affect the tobacco industry development in the future then affect the future cash flow of UST more risky.

Issue c) The UST sales strategy of launching similar product is not able to against with the price –value brands. On the other hand, it still rise the price while the business is performing well in the sales market....

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