Haas NewsWire

Haas NewsWire, February 22, 2000

Haas' First Annual International Conference: A Weekend of International Finance
Sixty-One Teams Compete in the Social Venture Business Plan Competition
Haas Accounting Researchers Get to the Bottom of Internet Stock Valuation
The Haas School Honors Loyal Staff with Service Awards
Faculty News
Haas in the News
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The Haas School is hosting a weekend of discussion and debate on international finance beginning with international finance expert Richard Portes' speech on the afternoon of Friday, March 3, as part of the Annual Business Faculty Research Dialogue, and ending with the first annual International Conference on Saturday, March 4.

"Events over the last ten years have forced us to rethink much of international finance," said Richard Lyons, associate professor in finance and associate director of the Clausen Center, a co-organizer of the event. "The benefits of international diversification, the resilience of capital markets, fixed versus floating exchange rates - all these topics are now being approached in new ways. And many of the key actors in this play are going to be here on March 4. If you have any interest in the financial world around you, this conference is a must."

Portes, the Distinguished Global Visiting Professor at Haas and a professor of economics at the London Business School, will give his perspective on the proper role of the International Monetary Fund in the international financial architecture. Portes, who studies financial crises, explained that the push for the new financial architecture was spurred by the Asian and Mexican financial crises and the threat they posed to the world economy.

Portes commented that the topic of this year's Haas Research Dialogue "Towards a New Financial Architecture," is essentially about how the world should run the capital markets. He explained that the International Conference will answer the question, "How do the big players operate in those markets?" Portes is cosponsoring the conference with Dean Laura D'Andrea Tyson in collaboration with the Clausen Center for International Business and Policy. The panel discussions at the conference will cover the basics of how the markets work and what the players in those markets (the lenders, the regulators, the rating agencies, and the private investors) do.

For those students interested in hearing Dean Tyson's thinking on this issue, she will kick-off the conference with a speech on how information technologies are changing the economy, drawing on her participation in the discussions at this year's Global Economic Forum in Davos, Switzerland. Dean Tyson will be playing an active role in all of the events planned for the weekend. "I am also looking forward to learning about how new technologies are changing financial markets and the implications for the real economy," said Tyson, "In particular, I will challenge participants in the conference to give their assessment of whether globalization and technological change in finance are making financial markets more or less stable over time and whether anyone really understands the systemic risks to the global financial system from the dramatic innovations in financial markets that have occurred during the last decade."

"This conference is one more example of why a "buzz" is beginning to attach to the Haas School of Business," said Jay Stowsky, associate dean for school affairs and initiatives. "This is an extraordinary assemblage of leading figures from the world of finance. They come to Haas just as the world economy is undergoing this immense transformation, the outcome of which no one can completely foresee. The opportunity for business students to attend this kind of high-level meeting and to interact with such influential figures - right here at Haas - is just tremendous."

There has been so much interest from the faculty in the conference that the registration is now free to allow all students to attend. Saturday's events begin at 7:30 a.m. with a continental breakfast in the Bank of America forum. Lunch (catered by Rick and Ann's) will be served at 1:00 p.m. All conference activities will take place in and around the Andersen Auditorium. The complete program for the conference can be found at http://haas.berkeley.edu/groups/pubs/haasnews/archives/iconf.html. Please register in advance by e-mailing whitfiel@haas.berkeley.edu.

The Business Faculty Research Dialogue, with Distinguished Professor Richard Portes, will take place at 4:00 p.m. in the Andersen Auditorium on Friday, March 3. Call 510-643-2027 for more information.

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The Haas School's Social Venture Business Plan Competition has attracted sixty-seven teams from twenty-three business schools nationwide to compete this spring. According to organizer Denise Yamamoto, this is the first-ever national competition for socially responsible business plans. All of the teams submitted executive summaries and sixty-one have qualified to enter round one of the competition.

Entries include teams from Harvard, Wharton, Stanford, UCLA, and Darden. Almost all of the teams include students from several institutions and at least one member who is not currently enrolled in school. The organizers also received inquiries about the competition from France and England and one team has a member from Germany.

The proposed business plans cover a lot of entrepreneurial ground. One proposes to help convert Virginia tobacco farms to vineyards. Another would design and manufacture devices to allow the severely disabled to utilize computers. Online ventures include a centralized diabetes data management system and a system to allow people to plan, manage, and streamline charitable giving. In the area of environmentally responsible business, there are proposals for an online emissions credit trading exchange and a REIT that would build environmentally friendly, upscale apartment communities in cities.

The qualifying teams will submit full business plans by March 7 and six finalist teams will selected to compete over the weekend of April 7 and 8 at the Haas School. The finalists will be announced on March 16. The winners will receive a cash prize and the top three will have their plans circulated among a group of angel investors.

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Three Haas accounting professors, Professor Brett Trueman, Assistant Professor M. H. Franco Wong, and Assistant Professor Xiao-Jun Zhang, have found that in determining the value of Internet stocks, investors and analysts appear to be most influenced by two factors - a company's gross profits and the activity level on its web sites.

The study found that e-tailers, portals, and content/community providers with the highest market values also have the highest gross profits (gross revenues minus cost of revenues) and activity levels on their web sites.

The study was motivated by the fact that many internet stocks have been selling at high prices relative to their operating performance, with many of the hottest dot.com firms enjoying soaring share prices while operating deeply in the red. "Observations such as these have led many in the stock market to scratch their heads trying to make sense of these valuations," said Professor Trueman.

The researchers confirmed that bottom-line net income plays little or no role in the valuation of Internet stocks. However, they find that individual income statement line items, in particular gross profits, do have an effect on their prices.

They also found that as usage at an internet firm's web sites increases, as measured by either unique visitors or pageviews (the number of pages web site users click on during their visits), stock prices go up as well. Interesting, though, pageviews appear to have a greater effect on prices than do unique visitors, especially for the e-tailers in the researchers' sample. This suggests that investors consider it insufficient for an e-tailer to bring visitors to its sites; the visitors must actually spend time searching the pages for items to buy.

"We analyzed large amounts of financial and internet usage data to determine which factors were most influential on market value," said Trueman. "Gross profits and the web site's pageviews came up as the most significant."

Media Metrix provided the data on unique visitors as well as the data used by the researchers to calculate pageviews. The study sample included 56 publicly traded internet firms spanning 179 firm quarters.

View the study at: http://www.haas.berkeley.edu/~trueman/valuation48.pdf. [top of page]


The Haas School is proud to announce year's service award recipients - Jan Greenough (15 years of service), Lorraine Seiji (10 years of service), Tina Wong (15 years of service), and Hannah Yoshii (10 years of service). All four of the recipients have worked the Haas School throughout their years of service. They have watched the school change both name and location and have served under several deans.

Each of the recipients will receive a congratulations letter, a Service Award Pin from President Atkinson, and will begin to accrue additional hours of vacation. The UC system and the Haas School have long recognized staff with many years of service. Although past recipients have not been acknowledged publicly, the Haas NewsWire will continue to report new service award recipients as they are announced.

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Every year the Haas School attracts scholars from leading institutions around the world, who wish to conduct research at the Haas School. Those interested in talking to visitors can contact them via the e-mail addresses posted below.

The list of this semester's visiting scholars includes the name of their sponsoring faculty member, their affiliation, length of stay at Haas, and e-mail address (when available).

Michael Ball (Rubinstein), St. Gallen University, Switzerland, 3/00 - 2/01

Chyi-Mei Chen (Villas-Boas), National Taiwan University, Taiwan, 8/99 - 7/00

Jiho Cho (Hakansson), Hanyang University, Korea, 3/00 - 8/00

Shan-Yu Chou (Villas-Boas), National Taiwan University, Taiwan, 8/99 - 7/00

Nicolas Clerc (Leland), University of Lausanne, Switzerland, 8/99 - 7/00, lerc@haas.berkeley.edu

Engelbert Dockner (Reichelstein), University of Vienna, Austria, 2/00 - 8/00, dockner@haas.berkeley.edu

Gila Fruchter (Winer), Technion-Israel Institute of Technology, Israel, 1/00 - 9/00, gilaf@Haas.Berkeley.EDU

Kay Holte (Hochbaum), St. Gallen University, Switzerland, 4/99 - 3/00, holte@haas.berkeley.edu

Takashi Hyodo (Marsh), Yamaguchi University, Japan, 9/99 - 7/00, hyodo@ haas.berkeley.edu

Philipp Kaeser (Miles), St. Gallen University, Switzerland, 9/99 - 5/00, philipp.kaeser@unisg.ch

Anara Kendirbaeva (Jaffee), UNDP/UNIDO Project, Kazakhstan, 9/99 - 5/00

Hyunsoo Kim (Segev), Kookmin University, Korea, 2/00 - 4/00

Oleksandr Kovryga (Williamson), Kharkiv State University, Ukraine, 9/99 - 2/00, kovryga@haas.berkeley.edu

Tore Nilssen (Shapiro), University of Oslo, Norway, 8/99 - 7/00, nilssen@haas.berkeley.edu

Dennis Nobelius (Cole), Chalmers University of Technology, Sweden, 1/00 - 6/00, nobelius@haas.berkeley.edu

Rickard Olsson (Hakansson), Umea University, Sweden, 1/00 - 6/00, olsson@haas.berkeley.edu

Yoshiyuki Segawa (Shanthikumar), Kyotogakuen University, Japan, 9/99 - 3/00, segawa@haas.berkeley.edu

Louis Stern (Winer), Northwestern University, U.S.A., 8/99 - 7/00, lwstern@nwu.edu

Ana Valenzuela (Erdem), Madrid, Autonoma University, Spain, 7/99 - 6/00

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KRON TV News featured Haas alumnus Andre Marquis, MBA 96, as one of "Silicon Valley's New Millionaires" (6pm - February 21, 2000). The video of the piece can be found at http://www.kron.com/cgi-bin/kron/index.cgi?day=1&Go.x=53&Go.y=4.

Business Week's (February 21) article, "An Eagle Eye on Customer" mentions E.piphany, a company that provides data mining services. Advisory Board Chair Roger Siboni (BS 76) serves as E.piphany's president and CEO. E.piphany is classed as a "David" in the company of customer software "Goliaths" in the accompanying sidebar.

A study by Haas accounting professors, Professor Brett Trueman, Assistant Professor M. H. Franco Wong, and Assistant Professor Xiao-Jun Zhang is the subject of an article in the February 18 Oakland Tribune titled "Formula Floated to Value Net Stock."

Dean Laura D'Andrea Tyson was quoted in the Contra Costa Times (February 16) in the article "Ballmer Talks Up PC's Bright Future." While Microsoft CEO Steve Ballmer stressed the future of PC's, Tyson was interviewed on the future emerging Internet companies. She commented that the companies will have to turn a profit eventually, "There will be many winners and many losers."

Hal Varian, dean of the school of information management systems and Haas professor in the Manufacturing and Information Technologies group, was quoted in the New York Times on February 14 on the companies that provide the "backbone" of the internet by transferring information between their privately held networks. Varian commented on the potential for non-cooperation in the future and how regulators might have to address the issue.

The Industry Standard's article "Startup U" quotes John Freeman, professor of organizational behavior and industrial relations, on the Haas School's business incubator. The details of getting into the incubator and the services it provides are included, along with a mention of Timbre Technologies, one of the incubator's successes. The article can be found at http://www.thestandard.com/article/display/0,1151,9636-0,00.html.

Marketing Professor David Aaker was quoted in a Feb. 17 Red Herring article "The house that Lycos builds" by Sarah Lai Stirland. See http://www.redherring.com/investor/2000/0217/inv-lycos021700.html.

Hal Varian, professor in the Manufacturing and Information Technologies group, and Russ Winer, professor in the Marketing group, are quoted in the February 10 San Francisco Chronicle in "Hunting for the Hackers Reno Opens Probe into attacks that disabled top Web sites." Varian explains that he doesn't think the recent attacks on the internet will undermine users confidence. Winer comments that it is the brand image of the sites attacked that suffers, not the Internet itself.

Accounting professor Brett Trueman is quoted in the February 9 issue of USA Today on the necessity of new dot.com companies becoming profitable to hang onto their IPO value.

Red Herring quoted Marketing Professor David Aaker in "Red Eye in Davos" on February 9 about the value of advertising on the web. See http://www.redherring.com/insider/2000/0113/news-redeye.html.

Hal Varian authored an article for Forbes ASAP titled, "5 Habits of Highly Effective Revolution," on how similar the current technology boom is to past revolutions that have changed the economy.

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