Acer Mobile Systems Unit (B) Back on the Road to Growth

Development project selection is a key link between company strategy and the development of new products. Project selection is an integral part of the overall product development process and should be done systematically. The case presents a company where project selection is divorced from strategy and performed ad hoc.

Crossair, a Swiss regional airline, has to decide on how to obtain a critical new technology, GPS. It can develop the technology in house (with a supplier) or source it from the open market in the year 2000. A discounted cash flow (DCF) analysis shows only a marginal benefit from developing the technology in house, which does not justify the management attention.

This case discusses the potential benefits and costs of issuing floating-priced convertibles, also referred to as "death spirals". These are convertibles where the conversion price is a discount from the market price in a look-back period. The management of Log on America is blaming investment banks and convertible investors for the stock price collapse after the convertible was issued.