The Stanford Business Reporter

Hewlett Packard's Destiny

Next Friday the twelve board members of the David and Lucile Packard foundation, including three of the four Packard children, will review a report by Booz-Allen & Hamilton, the consultant hired by the foundation to assess Hewlett-Packard's $23.6 billion bid for Compaq Computer.

With more than 10 percent of the company's shares, the Packard Foundation is the largest single shareholder in Hewlett-Packard. Its decision could decide the fate of the merger, of the company, and, perhaps, of Carleton S. Fiorina, the chief executive of the company and the leading proponent of the merger.

Susan Packard Orr, the chairwoman of the family foundation, appears to share some of Ms. Fiorina's views, while her brother, David Woodley Packard, announced last month that he opposed a merger with Compaq. Walter Hewlett, joined by his two sisters, Eleanor Hewlett Gimon and Mary Hewlett Jaffee, had already said that they would fight the deal.
So far, the shares of the family members who oppose the deal, and those of the foundations they control, total 7.5 percent of Hewlett-Packard.

More significant, Walter Hewlett, the lone remaining family member on the board of Hewlett-Packard, is actively lobbying institutional investors to vote against the deal. Last week, he traveled to New York and Boston, meeting privately with several large institutional shareholders.

Mr. Hewlett, then, is in an unusual, touchy position. Although he and his advisers say there is no personal edge to his campaign, Mr. Hewlett is directly confronting Ms. Fiorina, who was recruited from Lucent Technologies (news/quote) two years ago. The unlikely face-off pits Mr. Hewlett, 57, a consulting professor of music at Stanford University and a genial intellectual with advanced degrees in music, engineering and operations research, against Ms. Fiorina, 47, a forceful, charismatic outsider brought in by the board to shake things up at Hewlett-Packard — a model company in many ways, but one that had become inbred and sluggish.

Ms. Fiorina's reputation is pinned to the Compaq deal, which she has championed as a bold step to reinvigorate Hewlett-Packard and to make it more competitive in difficult times. If Mr. Hewlett prevails and the deal collapses, Ms. Fiorina is likely to be looking for another job, analysts say.

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State department will restrict visas

The Managing Director of the State Department’s Visa Office recently announced that, due to the Sept. 11 terrorist attacks, it is placing special requirements on non-immigrant visa applications.

Third country nationals, in this case foreigners who are from neither Mexico nor Canada, will no longer be able to apply for their visas in those countries.
This temporary measure could force Stanford’s international students to return to their home countries to renew their F visas, or student visas. This process poses financial, logistical and safety issues to affected students.
The State Department Web site explains that this decision was made to prevent people from being held up in Mexico or Canada while awaiting their new visas.
“In order to avoid having third country national visa applicants at our consular posts in Mexico and Canada marooned in those countries for lengthy periods of time, U.S. visa processing posts in Mexico and Canada will not accept non-immigrant visa applications from non-residents of those countries while these special processing requirements are in effect,” the Web site reads.

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Endowment dips by $800 million

Stanford’s endowment has experienced a decline from its highest value of $8.8 billion to $8 billion this year, representing a nine percent drop, according to University officials.
Provost John Etchemendy cited the ailing economy and slipping stock market as one of the principle reasons behind the decrease.

“The endowment is invested in a wide variety of things, but a large part is invested in stocks,” Etchemendy said. “When the stock market drops, so does the endowment value.”
The government’s response to the unsound economy has also affected the endowment.
“The Federal Reserve reacting to a bad microeconomic picture causes asset prices to fall,” said Economics Prof. Peter Hammond. “Stanford’s endowment then fell accordingly.”
The decline of Stanford’s endowment will have ramifications throughout the University, even if minor ones.

“The drop decreases the endowment payout a bit, and so there is less money for the University budget,” Etchemendy said.

However, to protect against radical changes in payout due to fluctuations in the endowment, the Stanford Management Company, an entity responsible for overseeing the University endowment, has developed a “smoothing formula.”
“As far as over the next five years, we don’t have to worry about a [significant] decline in payout for the University,” Michael McCaffery, president and CEO of the management company, told The Stanford Daily last month.

 

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Books on break "full" in four hours.

"Recreational reading is one of the most common activities done while on vacation? Once you regain your senses, you will be bored over the holidays? There are more ways to get to know faculty and your classmates than at FOAM? (Wait, faculty don't go to FOAM.... do they?)" mentioned Student Life Director Courtney Payne on an email last week.
Books on Break gives students the chance to read an interesting book and then discuss it after the holidays in a small group led by a faculty member. After only four hours of opening the process for signups, each of the six books offered "booked out" completely. However, other books will probably be added to the list in the coming weeks to open the opportunity to more students.

The books so far offered are: Guns, Germs, and Steel by Jared Diamond to be hosted by Even Porteus; Snow Country by Yasunari Kawabata to be hosted by Jim March; Jack: Straight From the Gut by Jack Welch and John Byrne to be hosted by Paul Oyer & Brian Viard; The Innovator's Dilemma by Clayton Christensen to be hosted by Sefanos Zenios; The Essays of Warren Buffet, Lessons for Corporate America to be hosted by Leslie Hodder; and Churchill: a Biography by Ron Jenkins to be hosted by David Kreps.

 

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Kreps Receives Honorary Degree

The prestigious l'Université Paris-Dauphine, one of the institutions that comprise what was formerly known as the Sorbonne, awarded Stanford Graduate School of Business faculty member David M. Kreps an honorary doctorate. The November 12 award ceremony was held in the legendary "war room" of the converted NATO headquarters that now houses the university.

Kreps is the Business School's Paul E. Holden Professor of Economics and a senior associate dean for academic affairs. Considered an economic theorist of international reputation, Kreps is known for his path-breaking work in dynamic choice behavior and economic contexts where dynamic choices are key. Among his many contributions to the literature of financial economics and dynamic games, he has authored a widely used graduate-level textbook on economic theory. He also co-authored a textbook about general management perspectives on human resources management with Business School colleague James N. Baron.

One of the most prestigious of the French universities, Paris-Dauphine, or Paris IX, was chartered in 1968 as a school of mathematics, applied math, computer science, economics, and business management. The university annually confers an honorary doctoral degree on approximately three distinguished scholars from around the world after a years-long review process by members of the French academic community.

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