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Archives for: November 2004

The Painful Process of Pricing - It's Not as Simple as You Might Think
Frank Demmler, Associate Teaching Professor of Entrepreneurship says that "perhaps not explicitly stated, but implied, the value of your company is heavily influenced by the quality of your earnings and the rate of growth of your earnings. All of this leads us to focus on one particular aspect of your business – pricing.

EXA Infosys Announces The Addition of John C. Walton
Mr. Walton became Partner and Chief Financial Officer and also co-founded, Appaloosa Management along with David Tepper (MSIA 1982). Appaloosa is a $3 billion hedge fund investment firm based in Chatham, N.J. The firm is a general partner of Appaloosa Investment Limited Partnership I and invests in debt and equity securities on behalf of individuals, foundations, universities and other organizations. Appaloosa Management also advises Palomino Fund, Ltd.

THE DAILY NEWS, 11/2/2004
District voters expected to flock to polls
In the 39th District, including Clairton, Elizabeth, Forward Twp., Jefferson Hills, West Elizabeth, part of Elizabeth Twp. and several northeastern Washington County communities, Forward Twp. Rep. David Levdansky faces Republican Brad Grantz (BS 2003)of Elizabeth.

Flex time "no brainer" for firms
Flexible schedules have become so popular that experts estimate more than half of American companies now offer the perk. The growing percentage of women in the workforce and the efforts of a new post-baby boom generation to juggle the demands of work and family are contributing to the trend. “Companies increasingly are saying to employees, ‘Here’s the work that needs to be done, and you know how you work best, so figure out how to do it,’ ” said Robert Kelley, Adjunct Professor of Organizational Behavior and Theory

Did the election distract you from your work, too?
Many workers are distracted by the hotly contested presidential election and therefore aren't as productive as usual this week. Whether coming in late or leaving early to vote, reading at the office about polling place problems, prognosticating with colleagues at the water cooler or gnawing their nails as the outcome is decided, workers in red and blue states found it hard to concentrate on Election Day. But few employers seemed concerned with a temporary drop in productivity. Companies have learned to take these blips in productivity in stride, said Robert Kelley, Adjunct Professor of Organizational Behavior and Theory. Although more people will be voting this year and late-night results could mean exhausted workers, Kelley said organizations knew that business goes on.

Election News
Brad Grantz (BS 2003), said he still believes that a "career politician" like Levdansky should be voted out of office in order to make positive changes in the state. But, he said, his message wasn't accepted "in a very conservative area where politics have been played a certain way for 20 years and people are reluctant to change."

Tepper School of Business at Carnegie Mellon Presents Inaugural India Business Conference
The South Asian Business Association (SABA) at Tepper School of Business at Carnegie Mellon University presents the India Business Conference on Friday November 12, 2004, 8 a.m. to 4:30 p.m., Mellon Auditorium. COST: Free for students, $50 for alumni and $75 for other participants. EVENT CONTACT: Rajeev Kutty (MBA ’05), 724-612-0518

Lots of Market Neutral Trees and a Map for the Forest
As Bruce I. Jacobs (MSIA 1974) and Kenneth N. Levy, co-founders of Jacobs Levy Equity Management Inc., Florham Park, N.J., use the term, though, "market neutral" is a broad heading that can include anything non-directional-market neutral equity falls under this umbrella, along with the arbitraging of government bonds, corporate convertibles, asset backed securities and the two sides of a merger.

The Road to Prosperity: The 21st Century Approach to Economic Development
Adam Lerrick, The Friends of Allan H. Meltzer Chair in Economics; Director of The Gailliot Center for Public Policy, is a contributor to this event scheduled for November 16, 2004

The High Cost of Hiring Errors - Is Milestone Investing Wise?
"You are going to make hiring mistakes. It comes with the territory. Yet rarely does a first-time entrepreneur’s plan reflect that eventuality. Most plans imply that every hire fills the necessary slot forever," says Frank Demmler, Associate Teaching Professor of Entrepreneurship in his thirty eighth article in a series written for this publication.

The Hidden Cost of Buying Information
Don Moore, Assistant Professor of Organizational Behavior & Theory and Francesca Gino are exploring the question of whether people behave differently toward advice based on the task they are facing. That is, does advice-taking depend on task difficulty? And if so, do people weigh others' opinions below or above what they should be weighed? Does this change based on the difficulty of the task?

Double Duty
Giving CIOs dual--sometimes even more--executive jobs isn't unusual. As business processes become more tightly knit with the IT infrastructure, companies have brought their CIOs out of the data centers and into corporate suites, where they head non-IT units and departments. Multitasking is a trend that isn't impacting just CIOs. Some companies charge heads of human resources or legal departments with managing customer service, for instance. It's a win-win for the company and the individual, according to Robert Kelley, Adjunct Professor of Organizational Behavior and Theory at the Tepper School of Business. "The more exposure to different kinds of business units, the more versatile, and hence more valuable, you become," he says.

Women Running the Show
The odds were heavily stacked against Debra "Debbie" Cafaro when she took over in 1999 as chief executive of Ventas Inc., an owner of nursing homes and other health-care facilities. Five years later, Ms. Cafaro, a former real-estate, corporate and finance lawyer, has beaten the odds. Ventas is now one of the hottest companies in the industry. "She's a pretty good negotiator," says David Tepper, president and founder of Appaloosa Management LP, a $3.3 billion hedge fund based in Chatham, N.J. Mr. Tepper held debt in Vencor and went toe to toe with Ms. Cafaro during the Vencor restructuring.

BARRON'S ONLINE, 11/8/2004
Heavy Metal
David Tepper, the head of Appaloosa Management, the company's second-largest shareholder, recently told management on its earnings conference call that U.S. Steel "has the lowest valuation" among the world's major steel makers. The latest publicly disclosed data shows that Tepper's Chatham, N.J.-based firm, a distressed-debt specialist that manages $3 billion, owns 5% of the company's 130 million outstanding shares.

REUTERS, 11/8/2004
Bush Seen Pressing on with Change in Global Lenders
"The previous administration threw a lot of money at countries and their problems rather than trying to take advantage of those situations to get a smaller number of reforms," said Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy, a former member of the President's Council of Economic Advisors.

Profitable Tumbleweeds
You want to make big money, start a hedge fund. Warren Buffett says they're risky fads. We say they're risky flim-flams. But there's no denying there's money to be made in them - if you own one. George Soros added $750,000 million to his fortune last years - thanks to his hedge fund profits. David Tepper, founder of Appaloosa Management, made more than half a billion. Together, the top five hedge funds earned $2.5 billion in 2003, according to Institutional Investor magazine.

Carnegie Mellon's Key: Clear Goals
Ken Keeley, executive director of the Career Opportunities Center at Carnegie Mellon's Tepper School of Business says too many MBA students are "clueless" when it comes to their careers. He's out to cure that. David Tepper is also mentioned in this article.

BLOOMBERG.COM, 11/10/2004
Greenspan, Fed Governors Warn on Spending as Succession Looms
In the last two months, Greenspan and at least seven other Fed officials have warned lawmakers about tax and spending policies that have led to record budget and current account gaps. Fed historian Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy at Carnegie Mellon University in Pittsburgh is quoted in this article.

MERCOPRESS, 11/10/2004
Reforms anticipated in World Bank
Until September 11/2001 the Bush administration didn’t show much interest in multilateral organizations, but since it closely scrutinizes these institutions in the framework of its campaign against money laundering and terrorism financing. Professor Alan Meltzer ,The Allan H. Meltzer University Professor of Political Economy from Carnegie Mellon University who was member of a panel tasked with restructuring the World Bank and the IMF said that “the previous US administration gave several countries too much money instead of insisting that problems be addressed and a minimum of reforms be advanced”.

BLOOMBERG, 11/10/2004
Greenspan, Fed Governors Warn on Government Spending (Update 3)
Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy, is quoted in this article, a third update from yesterday's recent news listing titled "Greenspan, Fed Governors Warn on Spending as Succession Looms."

Heard on Campus
Business professors Finn Kydland and Edward Prescott won the 2004 Nobel Prize in economics for their macroeconomic research on time consistency of economic policy and the driving forces behind business cycles. Other CMU Nobel laureates include Herbert Simon ('78), Franco Modigliani ('85), Merton Miller ('90), and Robert Lucas ('95).

Conference to focus on India, Pittsburgh helping each other
Just as companies and start-ups are peppering the landscape of his hometown, Bangalore, India, Rajeev Kutty (MBA 2005), 29, moved to the United States to attend the Tepper School. Some local Indian business leaders see Kutty as a model and would like more entrepreneurs from their homeland to follow him here. To speed things along, they are convening the first India Business Conference in Pittsburgh today -- a daylong seminar dedicated to showcasing what Pittsburgh and India have to offer each other. Sunder Kekre,Professor of Operations Management and Manufacturing and Director, Center for E-Business Innovation, is the event organizer

ONLYPUNJAB.COM, 11/14/2004
Intelliseek Names Mike Nazzaro CEO; Mahendra Vora Becomes Executive Chairman
Intelliseek Inc., a leading marketing intelligence solutions company, today announced that President and COO Mike Nazzaro (BS 1988) has been named Chief Executive Officer.

JOBWIRE for the week of November 14, 2004
Employment experts estimate that more than half of US firms offer flex time to their employees to help them achieve a better work/life balance. Companies are responding with schedules that open up all kinds of possibilities. "Companies increasingly are saying to employees, 'Here's the work that needs to be done, and you know how you work best, so figure out how to do it,'" notes Robert Kelley, Adjunct Professor of Organizational Behavior and Theory

THESTREET.COM , 11/15/2004
Taxes Have a Role in Asset Allocation
Most of us pay heed to the basics of asset allocation -- placing your investments in a variety of different assets, such as large company stocks, small company stocks, bonds and real estate, to maximize returns and minimize risk. Three professors of finance have given the issue serious consideration including Chester Spatt, Mellon Bank Professor of Finance; Director, Center for Financial Markets (On Assignment AY 2004-2006 - Chief Economist, Securities and Exchange Commission)and Robert Dammon, Professor of Financial Economics.

WIRED NEWS, 11/15/2004
Profiting From Nonproductiveness
According to the stats on America's need for sleep, plenty of people could use a nap. More than 50 percent of Americans are sleep-deprived and the average American gets fewer than seven hours of sleep per night -- less than the prescribed gold standard of about eight hours.Enter MetroNaps, where company creators Arshad Chowdhury (MBA 2003) and Christopher Lindholst are hoping Manhattanites looking for a midday pickup will stop by their office, kick back in one of their eight adjustable chairs and catch a light snooze, for $14 a pop.

How to Raise Cash Without Giving Up Equity - The Revenue Participation Certificate
The vast majority of start-ups will not go public, nor get acquired. Yet, those who invest in such companies do want to get a return on their investment. Being the shareholder of a closely held corporation may not be the right structure for such investors says Frank Demmler, Associate Teaching Professor of Entrepreneurship in this thirty-ninth article in a series of articles written for TechyVent.

Striking it Big
After 24 years of using the same vendor, Major League Baseball has chosen a tiny Pittsburgh-area company to create its 2005 regular season schedule. Butler-based Sports Scheduling Group, a four-person firm including Michael Trick, The Bosch Professorship; Professor of Operations Research, President, Carnegie Bosch Institute for Applied Studies in International Management, landed the six-figure contract last week when MLB announced next season's schedule.

Location, Location, Location
According to Carnegie Mellon finance professor Robert Dammon, Professor of Financial Economics, putting securities into the wrong type of account can easily slice 20% off your ending nest egg. It's especially costly to young and middle-age investors, because their mistakes have longer to compound. Fortunately, though, a recent study in the Journal of Finance authored by Dammon and Chester Spatt, Mellon Bank Professor of Finance; Director, Center for Financial Markets (On Assignment AY 2004-2006 - Chief Economist, Securities and Exchange Commission), sorts through all of this and comes up with some fairly simple rules of thumb.

REUTERS, 11/16/2004
Santomero- Fed policy will consider economic risks
Santomero said his forecast for economic growth of 3.5 percent to 4.0 percent next year already took into account oil prices remaining at their current levels. Santomero was speaking at the Carnegie Mellon University Business Outlook Conference in Pittsburgh which was hosted by Carnegie Bosch Institute for Applied Studies in International Management.

Fed's Santomero: Companies Still Lack Pricing Power
In comments after a speech on the economy and monetary policy, Santomero said "my sense is a neutral monetary policy is dependent on a lot of things in the economy." He was speaking at the 2005 Global Economic & Investment Outlook Conference, at Carnegie Mellon University, in Pittsburgh hosted by the Carnegie Bosch Institute for Applied Studies in International Management.

Fed Santomero: Future Rate Hikes To Be At 'Measured' Pace
"I expect we will continue to move the federal funds rate toward neutrality at a pace that is likely to be measured," Santomero said in comments prepared for delivery before the 2005 Global Economic & Investment Outlook Conference at Carnegie Mellon Universitywhich was hosted by the Carnegie Bosch Institute for Applied Studies in International Management. He added, however, that "the precise course the Fed takes in moving monetary policy depends on the course the economy takes on the path to sustained expansion."

Rebound expected locally
Carnegie Mellon University's annual Global Economic and Investment Outlook Conference, hosted by the Carnegie Bosch Institute for Applied Studies in International Management, predicted that the region's job growth and income would inch up in 2005, with business payrolls expanding about 5,000, but that the real gains would be made in the years beyond 2006.

Economists: Two good years coming
Businesses and individuals are likely to enjoy the next two years, with growth humming along and employers picking up the pace of hiring. After that, things could get a lot bumpier. That was the view of economists and panelists yesterday at Carnegie Mellon University's annual Global Economic and Investment Outlook Conference that was hosted by the Carnegie Bosch Institute for Applied Studies in International Management.

Economists try to paint a rosy picture
A gaping trade deficit, a yawning budget deficit and volatile oil prices together aren't likely to be enough to derail an economic expansion that is picking up steam, a group of top economists predicted Tuesday at an annual economic outlook conference hosted by the Carnegie Bosch Institute for Applied Studies in International Management highlighted by a keynote speech from Anthony M. Santomero, president of the Federal Reserve Bank of Philadelphia.

Kmart-Sears Deal May Be Awkward Fit For Lands' End
While Kmart Holding Corp. (KMRT) and Sears, Roebuck & Co. (S) are touting their merger's potential to pool their product brands, the deal looks to be an awkward fit for at least one label, Lands' End. But if Sears does elect to somehow grow the Lands' End business within the merged company, there are plenty of potential pitfalls, warns Peter Boatwright, Associate Professor of Marketing.

Astronaut shares the view from space
NASA astronaut Jay Apt, Executive Director of Carnegie Mellon Electricity Industry Center, Associate Research Professor, Distinguished Service Professor in Engineering and Public Policy, gave students and visitors at the University of New Hampshire on Wednesday the same view of the Earth that he had from space. Apt showed how the planet is changing, both naturally and through the actions of man.

What's Behind Edward C. Prescott's Nobel Prize?
Last month Edward C. Prescott, of Arizona State University, a Ph.D. alumnus and former faculty member from Carnegie Mellon, and Finn E. Kydland, Professor of Economics, won the 2004 Nobel Prize in Economic Sciences for two important papers they coauthored that advanced the field of dynamic macroeconomics. As the Royal Swedish Academy of Sciences put it, Prescott and Kydland's work "has not only transformed economic research, but has also profoundly influenced the practice of economic policy in general, and monetary policy in particular."

Former FreeMarkets chairman invests in College Prowler
Meakem has invested $500,000 in the publisher of college guides, which are designed to provide incoming students what they really want to know about campus life. He also will serve as chairman of the venture, co-founded by Carnegie Mellon University graduate student Luke Skurman(BS 2002).

Fed Chief's Style: Devour the Data, Beware of Dogma
In September 1996, Alan Greenspan was fixated on a statistic neglected by most economic forecasters. It was service-sector worker productivity, a measure of how much an employee could produce in an hour. "He was right about the productivity change," says Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy and Fed historian at Carnegie Mellon University. "He was wrong about much of the profitability of the productivity change."

CIO INSIGHT , 11/22/2004
Expert Voices
Carnegie Mellon University's MBA program is ranked second and third, respectively, by The Wall Street Journal and BusinessWeek for its IT focus. We asked Kenneth Dunn, the dean of CMU's Tepper School of Business, what recruiters want MBA graduates to learn about technology, and how CMU has responded to their needs. Earning an ROI from IT investments, using IT for decision-making and soft skills are at the top of this dean's list.

More on Raising Capital without Parting with Equity
This week's deal structure is a Loan with a Purchase Option and a Purchase Option Buyback. That's three separate agreements that work in concert to "do a deal" says Frank Demmler, Associate Teaching Professor of Entrepreneurship, in his fortieth article in a series for Techyvent.

FOSTER'S ONLINE, 11/23/2004
NASA astronaut visits UNH with photos taken from orbit
With NASA astronaut Jay Apt, Executive Director of Carnegie Mellon Electricity Industry Center, Associate Research Professor, Distinguished Service Professor in Engineering and Public Policy, as the guide, people lined the halls of Morse Hall to watch a slide show of detailed photos taken from orbit. The presentation was part of Geographical Information Systems Day 2004, the goal of which is to celebrate the technology which gives us a more detailed view of the features that make up our globe and individual communities.

Coal's so hot, it warms Walter
If Walter Industries were to get a lump of coal in its stocking this year, its shareholders would be very merry indeed. The Tampa company's stock is up 53 percent over the past month, has doubled over the past year and closed Wednesday at a nine-year high of $24.83. New Jersey hedge fund manager David Tepper, acquired half of the shares and has since boosted his stake to more than 15 percent, up from zero a month prior. His affiliated companies include Appaloosa Management LP and Palomino Fund Ltd.

How to manage the toughest of bosses
Managing your boss can be key to your success, leading to a more secure working environment. The first step is to understand who you work for. To help, Management Today magazine identifies five familiar bosses, providing advice on how to handle each. One strategy used by car salespeople will often draw out price negotiations, hoping that the amount of time you invest in the process will increase your commitment to making the deal. To defuse this strategy, Don Moore, Assistant Professor of Organizational Behavior & Theory, says you should give the salesperson a deadline of one hour to make a deal.

Stanley Fischer 'criticizes' Klein's policy
Stanley Fischer, former first deputy managing director at the International Monetary Fund, aimed a thinly veiled criticism at Bank of Israel Governor David Klein's monetary policy during a conference Monday marking the 50th anniversary of Israel's central bank. "There is no good argument for pegging," said Fischer. "And the process often ends in tears." After weighing the possibility of pegging, Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy, concluded, "Since the floating exchange rate has succeeded in obtaining stability, why change?"

Fund Early Products with Purchase Order Loan Preserve Equity, Secure Investor
Raising money without giving up equity remains a popular topic. This week Frank Demmler, Associate Teaching Professor of Entrepreneurship,looks at a special situation and a possible response: the Purchase Order Loan in his forty-first article in a series.

PR NEWSWIRE, 11/30/2004
Research on Asset Location and Allocation Wins the 2004 TIAA-CREF Paul A. Samuelson Award
Allocating investments between stocks and bonds, and between tax-deferred and taxable accounts are two key issues for investors that were addressed by this year's winning submission for the TIAA-CREF Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security. The authors winning this year's award are Robert M. Dammon, Professor of Financial Economics, Chester S. Spatt, Mellon Bank Professor of Finance; Director, Center for Financial Markets (On Assignment AY 2004-2006 - Chief Economist, Securities and Exchange Commission) and Harold H. Zhang for their article, "Optimal Asset Location and Allocation with Taxable and Tax-Deferred Investing," published in the June 2004 issue of The Journal of Finance. The award carries a $10,000 cash prize.

BUSINESSWIRE, 11/30/2004
On the Prowl: After Revolutionizing B2B Commerce, FreeMarkets’ Glen Meakem Shakes up the Traditional World of Publishing
After spearheading the B2B online revolution, launching the fourth most successful IPO in the history of the NASDAQ stock market, and selling his firm for $500 million, Glen Meakem is on the prowl. Now, the former Founder of FreeMarkets is taking on a new industry, and he's doing it with the help of some recent college grads, including Luke Skurman (BS 2002). As part of his next move, Meakem has invested $500,000 in College Prowler, a publisher of college insider guides.

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