Robert Holthausen - Faculty Research in Knowledge@Wharton

Dot-Com Bubble, Part II? Why It's So Hard to Value Social Networking Sites

Wed, 04 Oct 2006 15:16:03 EST

Less than three years after emerging from nowhere, the hot social networking website MySpace is on pace to be worth a whopping $15 billion in just three more years. Or is it? And is the much smaller Facebook really worth the $900 million or more Yahoo is reported to have offered for it? The problem, say Wharton experts, is a dearth of information -- including data on expected revenue generation and cost structure -- to plug into the standard valuation models.

Can AIG Stay on Top?

Wed, 01 Jun 2005 16:49:37 EST

To the lengthening list of fallen executives, add one more: Maurice "Hank" Greenberg, legendary CEO of American International Group, was forced to step down March 14 as investigators look at whether the company used complex insurance transactions to improperly pad its bottom line. Greenberg's departure, after a four-decade reign that turned AIG from a sleepy also-ran into the world's biggest insurer, immediately raises questions about whether the company can stay on top -- or whether shareholders will suffer, as they have in so many corporate scandals.

Why Do So Many Mergers Fail?

Wed, 30 Mar 2005 10:14:25 EST

With the recently announced mergers involving Procter & Gamble and Gillette, and SBC and AT&T, it's time to ask one of the most common questions about mergers: What does it take for a company to be successful, post merger? After all, many mergers ultimately fail to add value to companies, and even end up causing serious damage. Wharton faculty and other experts discuss the unique challenges that mergers pose, and offer suggestions on how to minimize the potential downside.

AT&T Wireless: Will Cingular's Big Bet Pay Off?

Wed, 10 Mar 2004 16:03:36 EST

Last week Cingular, the second-largest wireless telephone firm in the U.S., beat Britain's Vodafone in a bidding battle for AT&T Wireless with a $41 billion bid. If regulators approve, the merger will create the country's largest wireless telephone company. But will Cingular be able to build real value from the deal? Experts at Wharton and elsewhere give the merger a thumbs up in terms of strategy, but warn that it is still too early to say whether the acquisition will be good for Cingular. One key problem: the whole wireless industry is in a flux.

M&A Activity: Back with a Whimper

Wed, 17 Dec 2003 14:49:23 EST

In recent months

U.S.

companies have announced a slew of merger and acquisition (M&A) deals. Among them: The St. Paul Companies' decision to merge with Travelers Property Casualty to form the second-largest insurer in the U.S., Bank of America's proposed merger with FleetBoston, and GE's intended acquisition of Amersham, a Britain-based life sciences and medical diagnostics company. To some market watchers, these transactions signal a comeback for the M&A market, which has been in a slump for the past few years. But Wharton faculty and other professionals say the M&A frenzy of the 1990s is unlikely to be repeated this time. Instead, they suggest, valuations and expectations that reflect reality, not desire, will drive this round of activity.

Has Sarbanes-Oxley Made a Dent in Corporate America's Armor?

Wed, 20 Oct 2004 17:07:42 EST

In the 12 months since it was signed by President Bush, the landmark Sarbanes-Oxley Act has caused U.S. companies to spend heavily on compliance and altered the culture of many boardrooms. But has improved behavior on the part of some companies been inspired by Sarbanes-Oxley, or is it the result of disclosures of wrongdoing at firms like Enron and WorldCom? Wharton faculty members look at the impact � both real and symbolic � of this still controversial legislation.

Board Members Facing Public Scrutiny Should Bone Up on Finance, Accounting

Wed, 18 Jun 2003 00:00:00 EST

The courts, the government and shareholders are beginning to play hardball against board members who were asleep at the switch as their companies were committing massive accounting fraud. Given the passage of Sarbanes-Oxley and the increasing scrutiny of board member activities, it�s time for directors, especially those who serve on audit committees, to understand the responsibilities � and risks � of their job.

Is Andersen�s Number Up?

Wed, 13 Mar 2002 00:00:00 EST

Arthur Andersen is fighting for its life � and so far the battle is going badly. The Big Five professional services firm is trying to strike deals with the U.S. Justice Department to avoid a criminal indictment and with the Securities and Exchange Commission over accounting irregularities. It is also trying to sell some or all of its operations to KPMG or other rivals, and trying to keep key clients from leaving � as 34 have done already. Will Andersen survive? Experts at Wharton and elsewhere believe the chances are slim.

Will Mergers & Acquisitions Take Off in Europe?

Wed, 27 Feb 2002 00:00:00 EST

Cross-border mergers and acquisitions in Europe have been in a slump lately � as they have in the U.S. and other parts of the world. Falling stock prices, economic uncertainty and tight credit markets led to an easing of transactions in Europe to $179 billion in 2001 compared with $526 billion a year earlier. But as industries such as automobiles, telecommunications and pharmaceuticals continue to consolidate, the pace of deals could accelerate again, according to experts at Wharton and elsewhere. Some executives expect M&A activity to pick up this year, especially if the U.S. economy revives � which now seems increasingly likely.

Has DaimlerChrysler Hit the Breakdown Lane or Just Stopped to Fill Up?

Wed, 20 Dec 2000 17:40:31 EST

Two years ago, the merger � or was it an acquisition � of Daimler-Benz and Chrysler made eminent sense in an industry that was experiencing worldwide consolidation. Today, DaimlerChrysler�s capitalization is about half what it was two years ago, it has been sued by shareholders, its debt has been downgraded, its leadership is depleted and auto sales in general are in the midst of a slump. Talk about a turnaround challenge.