A TALK WITH PRINCE ALWALEED: 'I WANTED TO BE IN TECHNOLOGY'
During a visit with Saudi Arabia's Prince Alwaleed in Riyadh, Rome Bureau Chief John Rossant chatted with the prince about the stock market and other matters.
Q: When did you get interested in tech stocks?
A: One year ago. I was looking for new opportunities and started looking at airlines and technology simultaneously. I wanted to be in technology more because it's the future. We looked at a lot of companies, screening more than 20. We ended up with 10. From the 10 we short-listed four, and from the four we chose Apple Computer.
Q: Will you get more involved in the management of Apple?
A: [CEO] Gilbert Amelio extended an invitation to me to go to Apple, to be introduced to management and hear their objectives and see what they're doing. I'll try to arrange it in the next couple of months. He's saying publicly that recovery is only two, three, [or] four quarters away. But he has to assure me privately that's the case. Apple has to focus on areas it is strong in. Their biggest problem is that they expanded too much and are fighting on too many fronts. They've got to focus and cut costs.
Q: Why did you buy into TWA?
A: I talked to CEO Gerald Gitner for the second time since buying shares. I was impressed. I bought after the bad news [of the fatal crash of Flight 800]. The price was low. TWA is something that could be repaired, and my conversation with Gitner confirmed that. Until now, TWA has had a burden of a high cost of fuel because of their old fleet of 747s and L-1011 TriStars. Now, all the TriStars have been sold, and by the end of this year, all the 747s will be phased out. All the planes will be 757s and 767s--all new. That's a big plus. TWA is going to be a toughie, but it's very much doable.
Q: Are you still enthusiastic about Citicorp?
A: I'm very bullish. It's a growth company, a growth bank. Many people say, ''if U.S. interest rates go up, that will devastate the company.'' But more than 50% of their income is coming from emerging markets. It's not based on the local economy of New York or Washington. It's a global bank that depends on the economies of the entire world, from China to Mexico.
Q: What's your outlook for the U.S. economy in the medium term?
A: I'm very optimistic. You rarely have the U.S. in such an enviable position whereby you have good growth, low inflation, and almost full employment. The Fed's [Mar. 25] move was preemptive, and I admire it. You should not wait until the last moment and then act when inflation is across the street. I think there's a price to pay for that--the 8% correction we're seeing in the stock market. But I am optimistic about the U.S. economy. The budget deficit is almost under control. And the change in the relationship between the U.S. and the ex-Soviet Union means that defense outlays can be channeled to other sectors, which can boost the U.S. economy even further. If the Fed and the U.S. government act steadily, it can go on like this another several years.
Q: What is your investment strategy for the Middle East?
A: I would not say I'm disappointed because the peace process is not moving the way it should be. I'm still optimistic. The trend is toward a peaceful resolution of all the problems between the Israelis and the Syrians, Lebanese, and the Palestinians. Take Jordan, Syria, and Lebanon. No investor wanted to go into these countries in the past 10 years because of the ups and downs of peace. But there is a peaceful trend in the Middle East, there will be no wars from now on--maybe some hiccups--and because of that, I'm going to be invested in Lebanon, Syria, and Jordan.
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