Georgia-Pacific

Paper Summary:

This paper explains that International Paper, considering industry-wide overcapacity, would not necessarily lead to improved profitability, and the risks of owning Georgia-Pacific stock include the company's severe exposure to asbestos liabilities and environmental lawsuits and the high leverage on the balance sheet. The author points out that the stock market "bulls" state that IP occupies the industry's number one spot in coated and uncoated paper, bleached board and land ownership; the number two spot in softwood lumber production and the number three spot in container-board, which translates into scale advantages. The paper relates that the "bulls" state that the sale of Georgia-Pacific's low-margin construction-products distribution business will free up more than $1 billion to put toward debt reduction. Many tables and charts.

Table of Contents
Introduction
Strategy
Management
Financial Health
Growth
Valuation
Risk
Conclusions regarding International Paper
Bulls' Opinion
Bears' Opinion
Conclusions regarding Georgia-Pacific
Bulls' Opinion
Bears' Opinion

From the Paper:

"Over the past three years, International Paper has consolidated its position in the industry. Its strategy was to use acquisitions in order to build momentum and sell any assets that cannot be used in one of the company's three core categories. International Paper bought Champion International for $9.5 billion in 2000 and subsequently sold non-essential assets which were in total value of $3 billion. When it comes to strategy, Georgia-Pacific's intention is to distance itself from commodity wood and paper products, and move into high-value-added businesses, that also present the advantage to be close to the consumer. In 2001, the company spun off its timber operations and sold a portion of its pulp and paper assets. In 2002, the company sold its paper distribution business. Finally, in 2004, GP sold its construction-product distribution business and two pulp mills."

More papers on Georgia-Pacific:

• Term Paper # 129814 : "Georgia Pacific and Corporate Compliance"
• Essay # 137745 : "Executive Briefing"
• Essay # 69986 : "The Brawny Man"

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