Up Front
Edited by Sheridan Prasso
Talk Show
"The U.S. Treasury should be at least as smart as homeowners." -- David Wyss, Standard & Poor's chief economist, urging the government to issue 30-year bonds again to lock in low rates
CONTRARIAN VIEWS
A Big Fat Slap at B-Schools
Are MBAs worth the paper they're printed on? Two Stanford University researchers think not. In a scathing article in the current Academy of Management Journal, they blast most MBA programs for mollycoddling students and teaching ineffectual skills.
Jeffrey Pfeffer, a professor of organizational behavior at the business school, and co-author Christina Fong point out that plenty of successful businessmen, such as Bill Gates and Ted Turner, never bothered with MBAs. They argue that the deluge of MBAs, to 112,000 in 2001--35 times the number 40 years ago--dilutes the degree's value.
Not surprisingly, the article is sparking controversy. MBA supporters are lambasting it in speeches, arguing that MBAs boost annual incomes by $25,000, on average. "Talk to any MBA and he will tell you the programs are well worth the money," says Dave Wilson, president of the Graduate Management Admission Council, which administers the GMAT. Counters Pfeffer: "I'm not trying to kill MBA programs, just make them more effective." He suggests admitting fewer students, beefing up curriculums, and getting rid of courses on how to network. And he calls for quantifiable measures of MBA worthiness.
Stanford, 11th on BusinessWeek's biannual B-school ranking in 2002, stands behind the research. Associate Dean David Kreps says that while Stanford has no plans to change, "we should never think we have the ideal formula, or anything close to it."
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Corrections and Clarifications
In ``A big fat slap at B-schools'' (Up Front, Sept. 23), the No. 11 ranking for Stanford University is from BusinessWeek's 2000 Best B-Schools biennial ranking, not the 2002 ranking, due out in October.
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By Charles Haddad
BOOMING BOURSES
Guess Who Has the Hottest Stock Market
Here's one for the annals of amazing-but-true: The best-performing stock market in the world this year is ... the Karachi Stock Exchange in Pakistan. Stocks are up 54%, miles ahead of the second-best performer, Thailand, with a 19% rise this year. Even more amazing, from its lows right after the September 11 terrorist attacks, the Karachi Exchange has risen more than 80%.
The reason: The U.S. has been bending over backward to keep Pakistan strong for the war on terrorism. Islamabad has gotten loan forgiveness and huge inflows of multilateral aid, and its foreign reserves have bulked up as a result. Some of that has channeled into the small stock market, where a little cash infusion goes a long way, says Sakib Sherani, Islamabad-based chief economist for ABN AMRO Bank. Plus, Pakistan's economy is forecast to grow 4.5% this year, and corporate earnings are looking pretty healthy. As for threats of war and terrorism? "The market seems to be able to shrug them off," says Sherani.
Pakistan's Finance Minister Shaukat Aziz is so proud of all this that on a recent visit to the U.S. he enjoined the Americans he met to invest in Pakistan. Aziz recalls telling former Treasury Secretary Lawrence Summers, now president of Harvard University: "If you have some extra savings, put 0.001% there. He didn't think it was very funny." Turns out, taking Karachi stocks seriously may well be the right approach.
By Frederik Balfour
BOOMING BOURSES
PRODUCT PLACEMENT
This Cleaner Shines Onscreen
The movie My Big Fat Greek Wedding is the second-highest grossing independent film ever, a feat that's generating awe in Hollywood. But that's nothing compared with its reception in Racine, Wis.--the headquarters of SC Johnson, the makers of Windex. "We're thrilled," says SC Johnson director Cynthia Georgeson.
Why the excitement? In the movie, Michael Constantine, who plays the bride's Greek father, keeps spritzing himself and his loved ones with Windex to cure everything "from psoriasis to poison ivy." No matter the ailment, his advice is the same: "Put some Windex on it." The joke comes from real life: Scriptwriter and star Nia Vardalos' father swears by Windex for his skin troubles.
SC Johnson execs were so pleased that they hosted the film's Wisconsin premiere, though it's unclear whether the movie is boosting Windex sales, they say. As for making Constantine or his real-life counterpart a pitchman? SC Johnson will say only that it's "under discussion."
By Kimberly Weisul
THE LIST
GOING BYE-BYE
For Creditors, the Toy Chest Is Bare
What's left at the end of an ugly bankruptcy? Dot-com flameout eToys is a good case study: Creditors hoping to recoup their losses are finding the toy chest virtually empty. In an August filing with the Securities & Exchange Commission, eToys disclosed that it had raised just $41 million to pay creditors in its year-old bankruptcy proceeding. The creditors, ranging from Hasbro (HAS
) and Mattel (MAT
) to UPS (UPS
) and Oracle (ORCL
), have more than $200 million in claims.
Even eToys' former kid customers can do the math: Creditors get about 20 cents on the dollar. Shareholders, who once gave eToys a market value of nearly $10 billion, get zip. "We took a risk and we suffered the consequences," says a large institutional shareholder who was left with nothing. "We're certainly disappointed."
One player, however, is smiling: KB Toys. It paid $15 million in bankruptcy court for eToys' Web site, a warehouse, and rights to e-mail 3 million customers. "This has been the source of significant online revenues for us," says KB spokesman John Reilly. Meantime, shareholders and creditors are left to count their losses.
By Arlene Weintraub
PRODUCT PEEK
Starbucks' Asian Tea Party
What blends green tea powder, nonfat milk, ice cubes, and 1,000 years of Zen Buddhist tradition? A Starbucks Green Tea Cream Frappuccino. The fresh-made, chilled beverage has become a hot seller at Starbucks (SBUX
) in Asia.
It started last year with a test rollout in Taiwan, then spread to China, Japan, Malaysia, the Philippines, Singapore, and South Korea. Starbucks won't break out the sales figures, but company officials say it's among the top five sellers in these countries.
Next, it could go global--but only if a green tea shortage eases. The key ingredient, a powdered form of tea leaf called macha, comes from Japan and has been used for a millennium in traditional tea ceremonies.
But limited supplies of the special tea --grown only in the Uji region of Kyoto--are holding up a U.S. debut. "We have not confirmed a timeline" for an American launch of the beverage, says Starbucks spokesman Soon Beng Yeap. Considering the wide appeal in the U.S of green tea ice cream, green Frapp could translate into even more greenbacks for Starbucks.
By Chester Dawson
EX LIBRIS
Want to Break into the Chicago Fed?
A new crime-and-courts novel, Money to Burn, reads like a how-to manual for robbing the Chicago Federal Reserve Bank. The author, James Zagel, is a federal judge in Chicago and the former head of the Illinois State Police. His book details the bank's layout in intricate detail, and his most hateful villain is the bank's politically deft, patrician president, the fictionalized "despicable fool" Redding Prindiville.
So how is the book being received at the oh-so-proper Fed? On Sept. 10, Zagel was invited to sign scores of copies for the bank's employees. The invitation came from the bank's very real, politically deft, patrician president, Michael Moskow. The judge-turned-author says that Prindiville "is not Moskow in any way, shape, or form," and that Moskow is "a swell guy." For his part, Moskow seems flattered and says that if this "great work of fiction" gets turned into a movie, he can't wait to see who plays the bank president.
As for the robbery, Zagel says he changed some crucial details in the bank's layout, thus rendering imitation impossible. Indeed, officials say the bank's millions are so well protected by security measures that there has never been a robbery attempt.
By Joseph Weber
THE BIG PICTURE
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Copyright 2002, Bloomberg L.P.
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