This case examines Cray Research's spin-off of Cray Computer, assessing its impact on earnings and shareholder value.
This case examines the spin-off of Cray Computer Corporation (CCC) by Cray Research, Inc. (CRI). The details of the spin-off are examined carefully. Possible motivations are discussed, as well as the extent to which the improvement in CRI's 1990 earnings signals a true recovery. In addition, students must evaluate whether shareholders gained or lost from the spin-off. Finally, the financial statements of CCC provide an excellent example of the reporting requirements for development stage enterprises.
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Kimberly J. Smith (1995) studied this question.
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