Daktronics Dividend Policy in 2010 Harvard Case Solution & Analysis

Daktronics was the world's leading supplier of electronic scoreboards, large electronic display systems, and digital messaging solutions for use in communications, transport and sports. The firm was going through a tough period the past three years. Security analysts projected sales to fall from a high of approximately $581 million in 2009 to an estimated value of $424 million for fiscal year 2010 finishing in May. Stock price had also dropped from a high of $38.66 per share on December 1, 2006 to $7.72 per share on March 3, 2010. But with the economy showing some signs of recovering from the downturn, Dr. Kurtenbach believed it was time to review Daktronics' present dividend policy: "We can manage to return some added cash to stockholders given our confidence that the firm is turning around." Cash balances were growing rapidly and also the prognosis for future cash flows was favorable. In making the selection, Dr. Kurtenbach desired it to be based on an evaluation of the business's current cash position and future cash flow projections: "I do not want this dividend to reward short- term holders at the expense of our long-term investors" Dr. Kurtenbach requested Mr. Ritterath to make a recommendation at the next Board meeting (in four weeks) on a new dividend distribution, including both the amount and type of the distribution.

PUBLICATION DATE: September 01, 2013 PRODUCT #: NA0240-PDF-ENG

This is a Finance and Accounting case.

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