Proctor and Gamble 2000 Annual Report Download - page 9

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Q: Why should I invest in P&G when companies
in other sectors, like technology, are growing at
a faster rate?
A: Investment decisions require an assessment of
risk. Many high-growth, high-return stocks come
with a relatively high risk. Investors willing to
absorb that risk will pay a share price premium.
P&G, on the other hand, delivers real profits and
significant cash flow today with an expectation of
steady growth in the years ahead – a combination
we have proven can result in meaningful share
price appreciation.
We’re not trying to be a high-risk, high-growth com-
pany. We’re committed to delivering the same kind
of reliable shareholder returns that we’ve delivered
historically – and that is precisely the reason many
people will continue to invest in us. In fact, it may
be the reason why we’ve added more than 200,000
new shareholders in the past year alone.
Q: What criteria guide your acquisition plans?
A: We look for acquisitions that will provide a good
financial return for our shareholders, while consider-
ing key strategic issues:
>We want brands that can help expand our leader-
ship in existing categories. Tampax, for example,
strengthened our feminine care business by get-
ting us into the tampon segment.
>We also look for opportunities that help us enter
entirely new businesses, such as Iams, which took
us into premium pet health and nutrition.
In addition to these basic criteria, we look for acqui-
sitions with which we can leverage our considerable
strengths in marketing, distribution scale and cus-
tomer relationships. Iams is actually a great example
of all of this: It brings us product technology that
leverages our own competencies in health and
nutrition, and a brand that we can expand world-
wide with our superior marketing and distribution
know-how.
Historically, we’ve focused on small-to-medium size
acquisitions. Of course, if much larger opportunities
emerge, we’ll look at them, but they’re not essential
to our growth goals.