siesta in Central Park

One of the greatest things of NY is what newyorkers simply call "The Park". You can either jog (although it's mandatory to wear Nike and iPod when jogging), or bike or skate (during weekends traffice is shut out of the roads that cross the park), just walk around, or row in the lakes, or just lie on the grass and relax, enjoying spring (it's amazing how the trees and the bushes have blossomed in the past 2 weeks!).

We recently spent some time there, and here are the pictures, which as the saying go, are worth 1,000 words....

Some news on the blog....coming soon!!

I'm working on moving this blog to WordPress....still in progress, that's why I haven't posted much lately.

some cool marketing techniques

I just found this right outside our house...and I took a picture with my brand new iPhone (yes....after resisting, I finally gave up and got one!!). It emulates the "missing" board notes that people who have lost their kittens or dogs just hang on traffic poles.

One of the things I've been surprised with in the States, is the ubiquity of publicity, and how creative they can be in order to draw your attention (which is one of the most scarcest resources nowadays). One of the most active industries in the use of advertising is the healthcare/pharma companies, maybe because in Europe it is forbidden in many cases to advertise directly to consumers (unless it's for OTC - not prescription needed, drugs).

Together with this, it is funny to see commercials on TV of many different fast-food options (which sometimes are a bit different from reality), and the immediate after commercial is for dieting products, WeightWatchers (r), and miraculous drugs that can help you lose weight....which probably means that the target markets for those 2 types of product are the same (hey, does it also mean that if I have seen them, I'm also in that target market???). Sad...

Apart from all this, NY continues to be really cool. The spring has finally arrived, and Central Park is blossoming. The only bitter note is that time is flying, as usual: only 3 weeks to go before finishing my term here....and the MBA with it. My 2nd year project was handed in a couple of weeks ago, so once I'm done with NYU, it will be all over.

Oh, and on another note, last weekend I attended the 1st Spanish MBA conference. It was a great opportunity to meet with many other Spanish MBA students from other schools, network with them, and have some fun (after a couple of very interesting panels, I must say).

Will this be the future?

LBS R2 results are out: congrats!

I hear that London Business School sent out last week the invites and results of their second round of applications for the Class of 2010 MBA. Congratulations to all those accepted.

If you were waitlisted, maybe you want to re-read my notes on waitlist management. Keep it up, and remember that not being rejected is already a success!!

Spain's stock market: utilities stocks up

After the elections, the stocks of several utilities traded in the Madrid stock exchange, are going up considerably. This happens because the new government coming out of the elections has a very clear energy policy: no competition (basically: keep the status quo), and sale of assets to foreign (sometimes state-owned) companies. This all implies that a) profits will continue to be strong, and b) there is an acquisition premium priced into those stock levels.

I have little to say about the 2nd issue: as a freemarket supporter, I cannot condemn free sale and purchase of any asset, except for the fact that a free-market requires reciprocity, and it's not possible for anybody to launch an acquisition on a state-controlled utility in France, Italy or Germany.

I am more concerned about the 1st issue though. If the Spanish government continues to ignore that a competitive market is far more efficient than a regulated one, what is going to happen is that consumers will be (again!) the ones who will pay for it. And consumers=voters. I still don't get why a so-called Socialist government is so afraid of market competition in such a critical industry as energy.

Spain is supposed to be a model for other developed countries, because it has managed to create and nurture a local renewable energy industry with global players (windmill producer Gamesa, solar farm developer Acciona, etc.). What is less known is that the prices of energy in Spain are much higher than in the rest of the world, due to the subsidies towards all those "inefficient" energy sources, and to the nuclear moratorium, which forbides any company from building more nuclear plants.

Spain's economy: what's coming up

I read in The Economist that its poll of experts has downgraded the forecast for economic growth in Spain to 2.4% in 2008, and 2.1% in 2009 (and some people forecast as low as 1.8% for this year and 0.9% for the next!!). Of course, the news have been largely ignored by all politicians in the campaign (Spain is having an election tomorrow, March 9th). Now this raises a few questions for me:

- Maybe the superiority of the anglo-saxon culture lies on how people rely/depend on hard data for everything they endeavor (politics, business, maybe even arts and culture). In Spain, politicians are known for spinning the data in their favor, if not to completely manipulate the sources of good data. And the press, even though technically "free", is very partial and contributes to this (some articles on the supposedly "quality press", when talking about both leaders of the main political parties, resemble the depiction of the "Great Leader" in "1984"). In both the UK and the USA, my impression is that people rely much more on impartial data when they take decisions.

Of course, a corollary of that thought is: how could I help change that?? I've always been very interested in education, and I think that's the only way that a country (society, economy, culture...) is able to advance. And by improving education I don't mean just throwing money at it, as the Spanish government has been doing lately.

- the second, and more critical, thought, goes to employment. If the Spanish economy is not able to create jobs at the same pace as people join the workforce while growing at 3.2% (1st quarter of 2008, with a net job destruction of 120,000 jobs), what will happen to the economy when it starts growing at 2%?? It is going to affect me and my friends, but especially it will harm the usual suspects: people in low paying, not very qualified jobs.

In conclusion, the perspectives are quite grim for the Spanish economy. Whoever the winner is in tomorrow's election, he shoul start working on minimizing the damage and getting the economy on the growth path as soon as possible. And if they use some real figures and hard data, that task will be much easier.

differences between home and exchange schools

It has taken a bit long for me to write, because I wanted to post a long, researched article on the differences between home and exchange schools during an MBA. I am enjoying every moment of my time here in New York (who wouldn't!), and I strongly recommend the experience to anybody who is doing an MBA with an international profile. Here is how being abroad compared with my home London Business School:

- since I've accepted a job offer, I can focus on my academics, extra-academics, and the city itself!! This clears your mind from worries, and your schedule from the time-consuming job search. Coming on exchange is a decision that should be meditated (since it's to be taken around march of your 1st year), but if you think you'll get a job offer from your internship, or from the october milkround, go ahead!

- if you take a look at the euro-dollar exchange rate (and bearing in mind that my future salary is in euros!), you'll see why every time Bernanke goes out there and cuts interest rates, I smile...

- New York's weather is different than London's. It doesn't rain so much (although we've had some snow). It's also colder here (but you can easily solve that by wearing another layer, or turning on the heating).

Now, the US MBA experience is a bit different from the European MBA experience. US schools, in general (and God knows I should not generalize, but you can look at the BusinessWeek's rankings to contrast this). For starters, my impression is that students are much younger (maybe it's me who is feeling older in my 2nd year?). Also, they have less business experience, which makes class discussions less rich (still, American students tend to compensate this by being more outspoken). Also, even though there are a few Spaniards, Italians, and French among the students, there tends to be less diversity than at LBS.

Professors, on the other hand, are very good. I'm taking 4 full credit and 1 half credit courses, and I'm very happy with both the topics and the instructors:

- Valuation with Aswath Damodaran. A real valuation, and finance in general, guru. Doesn't get any better.
- Real Estate Operations with Harry Chernoff. An insightful professor and entrepreneur who has made a fortune in NY real estate, trying to share his knowledge.
- Venture Capital Financing with Roy Smith. Professor Smith has been Managing Partner of Goldman Sachs, and has been involved in a great deal of transactions involving start-up firms.
- Advanced Strategy Analysis, with Prof. Gonçalo Pacheco de Almeida, is a great course on some cool strategic concepts (disruption, critical mass, industry convergence, etc)
- Finally, my favorite is Competitive Strategies in the Marketplace, by Prof. john Cziepel. This course considers strategy from a military standpoint (who is attacking, who is defending?), is very applied and implies working on a case and presenting it to the class at the end of the term.

As during the rest of my MBA, you can see a combination of both Finance as well as Strategy courses.

Apart from the academics, the exchange is also an opportunity to do some more networking. The group of exchange students here in NY is very nice, and we do quite a few things together (among them , of course, going out for drinks and dining out!). And there are some interesting conferences and events at NYU, just like the ones at LBS, which allow you to interact with the broader business community of New York.

So, as you can see, there are some differences, as could be expected, but in general, I am very happy with the experience of coming here and living again in the US. And this city is great, I am actually starting to wonder what could I do to come back work here....;)

any troubled company out there?

For my Valuation class with Damodaran, we have to select a company that we want to value, with certain characteristics. I have to value a troubled company, with negative earnings this (or past) year. It can be either American or European.

Since there are many companies that fit that profile given the recent turmoils, I was wondering if my readers had any suggestion. I have until the weekend to select the company, and will be accepting your suggestions until then. Thank you!

Microsoft buys Yahoo!?

I wake up with the news that Microsoft (NASDAQ:MSFT) has made an unsollicited bid for Yahoo! (NASDAQ:YHOO) at a price of $44 billion, or $31 per share. Let's see if I ever learnt something from my Corporate Finance and Strategy classes at the MBA. I think this is also a very good way of starting a new line of posts on current topics.

Yahoo! stock was trading at $19 yesterday. Today, after the announcement of the deal, Yahoo! stock has surged to $29, suggesting that the market is very confident that the deal will take place, and that this is the right price. Interestingly, when 10 days ago Yahoo! announced that it would make redundant 7% of its workforce (around 1,000 people), the stock climbed to $22 before going back to $19 after a couple of days, suggesting that the market did not believe this restructuring plan would do anything to improve Yahoo!'s profitability.

Let's take a look at Microsoft stock, then. It has gone down after the announcement, from $32 to $30.5. This implies that the market assumes that it is slightly overpaying for Yahoo! stock (the bid price represents almost a 60% premium over the trading price of Yahoo! stock in the last weeks), but not too much.

So, what does this all mean? In my opinion, it means that most probably we will see the advent of a YahooSoft. From a strategic perspective, this move makes some sense. Microsoft is a very well-run company, with interests in many business, out of which the online arena (whose revenues come, mainly, from advertising) are just one more. Microsoft's core profits come, let's not forget it, from domestic and professional software and applications (Windows, Office, etc.). Another big chunk of its revenues come from hardware (Xbox and other devices). And a fairly small bit comes from its online activities via advertising (MSN). And this is exactly where Yahoo!'s business is. Besides, Microsoft has had a lot of excess cash in its balance sheet. Lately it has started a big dividend and share buyback programme, but until then, basically it said that there were not interesting investment opportunities to use that cash for (some malign rumours affirm the cash was a provision to settle all the antitrust cases Microsoft is involved with).

Of course, investors will expect some synergies from the elimination of duplicate efforts in engineering, marketing, and so on. At the same time, there might be some increased cross-selling (like more integration of Yahoo!'s services with Microsoft's software products and platforms). Microsoft definitely believes there are, otherwise they wouldn't be paying such a hefty premium. Neither Steve Ballmer, nor Bill Gates (CEO and President of Microsoft, respectively) have ever shown desires to build an even bigger empire with the company funds, so the empire-building, size-for-the-sake-of-it classic motivation for M&A activity does not really apply. Looking coldly at them, they have been quite frugal in their expenses, actually.

The other interesting part of the deal is how it can affect its industry. Let's look at the competition, then, and see what this implies for them, and how have the markets reacted:

- Google (NASDAQ:GOOG) has been playing on a league of its own. It's better technologies make advertising in its platform much more targeted, and so advertisers have been willing to pay more for it. It has developed in short time a great number of different applications in order to drive traffice to its sites. However, that seems to have been slowing down recently, and so its stock is down 24% in the last 6 months. This deal can create a much fiercer competitor for them, and the market acknowledges this by driving Google's stock down from $565 yesterday to $520 today (8% loss in value).

- Ebay is another Internet powerhouse. Its revenues come from the fees people pay online when trading their products on Ebay's marketplace. The new situation should not affect it that much, at least not more than the troubles that it already has (its stock has been basically flat for the past 3 years). Its stock is up 7%, which is quite surprising, but might be due to other news (Meg Whitman, its current CEO, is stepping down and there is a new guy coming on board soon).

- Oracle is the second biggest software company in the world, after Microsoft. Its stock has not been afffected by this announcement, because they focus on coporate database software and enterprise resource management software (ERPs). Its stock is up 2%, basically the same as the Nasdaq index.

- Apple (NASDAQ:AAPL), another big software and hardware producer, has surprisingly not seen its stock move. It is as well an integrated software and hardware supplier (even more integrated than Microsoft). However, when you look carefully at it, its internet revenues come from other sources, mainly from consumers paying for audiovisual content acquired in their iTunes store.

- and finally, a big suprise. AOL Time Warner's shares (NYSE:TWX) are soaring 4.2% today (compared to around 1.2 for both the Nasdaq and the Dow Jones). Why is this?? Basically, the market is repricing the AOL component of Time Warner according to the relative multiples of the Microsoft-Yahoo transaction.

So what is the conclusion?? I think the Internet-software-hardware-media industry is going to be revolutionized by this move. Competition is going to be fiercer, and consequently some companies will be more successful, while other companies will suffer. But it's probably an interesting time to follow it....

All right! I think Damodaran, my professor at NYU Stern, would be proud of this analysis....

blogging from the Big Apple!!

Dear Reader,

sorry for not posting in such a long time. A lot of things have happened (job offers, 2nd year project trips, the Christmas break) and I have been pretty busy. The most important piece of news, as you can see from the title, is that we have moved to New York. And what a great place this is!!

I'm also starting to think that I should change a bit the general direction of the blog. Since my MBA is getting to an end, and there are very llittle new things about it, I'm going to blog more about current topics in management, technology, politics, economics, the arts, or whatever interests me.

Of course this does not mean I will not post any more advices for candidates and applicants. Actually, I am coaching a few candidates, and wish them all the best of luck in the upcoming results for R2 at the London Business School!!