Do you agree or disagree with his analysis and conclusions

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At the company's quarterly strategy meeting, senior management decided to expand into business education materials aimed at corporations that require entry-level and mid-level managers to complete training courses to improve their business skills. For such training, content (in the opinion of JWI's senior management) is best delivered via the Internet since it has cost advantages and allows flexibility in scheduling employee training. JWI has existing content in almost all business areas, including accounting, finance, marketing, management, and information systems, as well as connections to authors who can develop new materials. However, the firm does not have experience delivering content over the Internet and does not have a sales force with experience selling to the corporate training market. Given that JWI wants a rapid entry into this market, it plans to develop a strategic alliance with a company that has experience in selling to the corporate market and in delivery of content via the Internet.
One of the companies JWI is considering as a partner is Net Knowledge, Inc. Net Knowledge is an infrastructure and services company that supports corporate communication and training. The company has approximately 65 satellite-linked communication centers that corporations can use for live video conferencing or training. Net Knowledge has also developed a platform to deliver prerecorded training to personal computers via the Internet. For clients that need help developing training materials, Net Knowledge has three production studios for designing and recording client content.Calculation of revenue estimate for year 3:

Revenue in fiscal 2011 ...............$18,800,000
Revenue in fiscal 2012 (fiscal 2011 with 20% increase) ..$22,560,000
Revenue in fiscal 2013 (fiscal 2012 with 20% increase) ..$27,072,000
Revenue in fiscal 2014 (fiscal 2013 with 20% increase) ..$32,486,400

Required:

The financial statements for Net Knowledge for fiscal 2011 and fiscal 2010 are provided below. You should analyze them as you deem appropriate. Based on your work, comment on the memo from Ted Chapman. Do you agree or disagree with his analysis and conclusions? Would you recommend pursuing an alliance with NK?

Reference no: EM13952512

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