Welcome
Welcome
Pure + Simple Technology
Collateralized Damage: Commercial Mortgage Securities Are at a Standstill
Media outlets and regulators have scrutinized the securitization of risky residential mortgages for their role in the global credit crunch. Less attention has been paid to their less-risky cousin, the commercial mortgage-backed securities (CMBS) market, which has been tarnished by problems on the residential side. Despite their superior fundamentals, says one Wharton professor, the CMBS market is "pretty much gone." The question now: Can it come back?
Does Short-selling Need the SEC's Oversight?
"There's really nothing illegal about it" is a phrase often heard in descriptions of the practice of shorting, or short-selling, which are essentially bets that a stock price will decline. But after some market watchers accused short-sellers of unfairly depressing the stock prices of several key financial institutions, the Securities and Exchange Commission imposed new rules. Wharton finance professors Marshall Blume and Franklin Allen suggest the impact will be minimal.
Fast Forward: Tech Giants Scramble For Bigger Piece of Growing Online Ad Market
Microsoft, Google and Yahoo have been talking about -- and making -- deals that each believes will help secure their future in the fast-growing market for online advertising. No matter how their maneuvering concludes, advertising and marketing firms must get ready to adapt to new technology that promises to speed the migration of ads from traditional media to the web.
Persevering through the Storm: Radian Group's S.A. Ibrahim on Leadership in the Subprime Crisis
In June 2007, the stock price of Radian Group, a Philadelphia-based credit risk management firm, was close to all-time highs at$64. In late June 2008, in the thick of the sub-prime mortgage crisis, the company's stock had tumbled below $1 a share. Yet Radian CEO S.A. Ibrahim honored a commitment he had made a year ago to speak at the recent 12th Annual Wharton Leadership Conference. After all, Ibrahim noted, "What could be more relevant than hearing about leadership from someone in the middle of a multitude of challenges?"
Betting on Betas: How Internet Entrepreneurs Are Creating New Paths to Online Revenue
Some Internet entrepreneurs are blazing new trails to real revenue in the virtual world. In the examples that emerged from the recent Supernova conference, an annual technology event in San Francisco organized by Wharton legal studies and business ethics professor Kevin Werbach, these models have something in common: building long-term relationships with customers.
Winners and Losers in the Rising Tide of Proxy Wars
Companies ranging from Yahoo and CSX to Motorola, H.J. Heinz and Time Warner have been the target of proxy wars over the past few years as disgruntled shareholders try to force changes in corporate behavior and/or top management. But while proxy battles these days are more prevalent and easier to launch than ever, it's unclear exactly what they accomplish. As one Wharton professor notes: "It's a good thing for shareholders that these activists rattle the cage. Whether they ultimately create value for shareholders is another issue."
Africa's Mining Industry Digs Deeper to Meet Demands of Commodities 'Super Cycle'
Diamonds aren't forever. Just ask John J. Teeling, executive chairman of Dublin-based exploration company African Diamonds. During a panel discussion at the recent Wharton Global Alumni Forum in Cape Town, South Africa, Teeling noted that despite its storied past as a leader in gold and diamond production, South Africa "is mined out." Yet conference participants overall suggested that mining will continue to play a major economic role throughout Africa, including in South Africa, as emerging markets like China and India fuel a long-term commodities "super cycle" and African nations become more adept at extracting value from their abundant natural resources.
'Don't Touch My Perks': Companies that Eliminate Them Risk Employee Backlash
Earlier this summer, when employees first learned of a Google plan to upgrade and dramatically raise the price of its day care program, they wept. According to Wharton faculty and compensation experts, that reaction shouldn't come as a big surprise. Trying to eliminate any perk, they say, can cause feelings of betrayal, and even retaliation against the company, on the part of employees. With the current economic slump, more 'de-perking' could be on the way.
Procurement -- Performance-based Logistics
These days, when the U.S. Department of Defense buys a fighter jet from Lockheed Martin, it doesn't simply pay Lockheed for the physical product. Instead, the government has a "performance-based contract" with the defense supplier, according to Serguei Netessine, professor of operations and information management at Wharton. This contract says, in effect, that the government's reimbursement to Lockheed hinges on the jets' performance -- that is, how often the planes are able to fly. In this interview, Netessine describes how performance-based contracts are becoming more common in a variety of industries.
Behind the Curve: Have U.S. Automakers Built the Wrong Cars at the Wrong Time -- Again?
Gasoline at more than $4 a gallon has proved to be the price point at which U.S. consumers make big changes in their driving habits. With SUVs and pickups suddenly out of favor in the world's biggest automobile market, Asian manufacturers who invested heavily in fuel-saving technologies -- and European car makers who sell to markets where expensive gas is nothing new -- are better positioned to meet new consumer demands. Just how dire is the situation for U.S. auto manufacturers and is there any relief in sight?
Jeremy Siegel on the Bear Market, Sky-high Oil Prices and Other Bad News
The stock market's June swoon has carried into July, with key indicators pointing to a bear market weighed down by rising oil prices, the credit crisis and more bad news from Detroit, as the Big Three auto manufacturers reported substantial losses. Meanwhile, the G-8 gathered in Japan to discuss global warming and the economy, but didn't include the two largest emerging economies -- China and India -- in the talks. Knowledge@Wharton spoke to Wharton finance professor Jeremy Siegel about these developments and others.
Two Companies, Two Different Blueprints for Reducing Global Warming
Companies spend too much time worrying about the burdens brought by global warming -- the possibility of carbon taxes and greater regulation of emissions -- and ignoring the potential commercial upside, according to participants in a recent Wharton conference titled, "Winners and Losers in Green Technologies," sponsored by the William and Phyllis Mack Center for Technological Innovation. To showcase a proactive approach to the issue, two companies -- DuPont and NetJets -- shared their tales of "going green."
'Regulation-induced Innovation': The Role of the Central Bank in the Subprime Crisis
When are investors like termites? When they are trying to avoid government rules. And that is one reason a host of new regulations won't prevent a crisis like the subprime housing mess from happening again, according to a speaker at the recent annual financial risk roundtable held by the Wharton Financial Institutions Center and the Oliver Wyman Institute. He and others focused their discussion on the causes of, and possible solutions to, the housing and banking crises.
Southwest Airlines' Colleen Barrett Flies High on Fuel Hedging and 'Servant Leadership'
At a time when the airline industry is under assault from skyrocketing fuel prices and a sluggish U.S. economy, it's hard to imagine that a talk by the president of the leading American carrier would not be dominated by discussions of job cutbacks, reduced routes and higher fares. But then there aren't too many major airline executives like Southwest Airlines' Colleen Barrett, 63, who rose from legal secretary to president over a span of 23 years. Barrett discussed customer service, her charismatic boss and making a birthday cake out of toilet paper during the recent Wharton Leadership Conference.
'Not a Site, but a Concept': Tapping the Power of Social Networking
Companies like Hewlett-Packard, Ernst & Young and Del Monte Pet Foods have more in common than one may think: They are all savvy participants in the growing trend of consumers' use of social networking technologies to access information and get what they need. According to speakers at the recent Supernova conference in San Francisco, too few companies study how people actually interact with the Internet and utilize online collaborative tools, and are therefore not using the social networking phenomenon to their advantage.
The New Global Middle Class: Potentially Profitable -- but Also Unpredictable
A new global middle is rising up in emerging economies around the world, providing competition for labor and resources along with enormous promise for multinationals eager to sell to the burgeoning ranks of first-time consumers. But don't expect this new group to act in the same way -- and have the same preferences -- as prior generations of middle-class consumers, suggest Wharton faculty and analysts.
Steve Loranger, CEO of ITT: Aiming for Long-term Growth
Since 2004, Steven R. Loranger has been chairman, president and CEO of ITT, a diversified high-technology engineering and manufacturing company that plays a key role in global defense and security. The company had $9 billion in 2007 sales, $4.2 billion of which were generated by its defense electronics and services business, and it ranks among the top 10 U.S. defense contractors. Loranger recently spoke with Knowledge@Wharton about how ITT has positioned itself for growth despite the economic slowdown, the company's response to environmental concerns, and long-term trends for the defense industry.
Procurement -- Managing Commodity Risk
Managing commodity risk has emerged as a key issue in today's economy. Consider airlines, which have seen fuel costs rise seven-fold over the last few years, says Bob Tevelson, a partner and managing director at BCG. In this interview, Tevelson says commodity risks are associated with both price volatility and supply availability. More and more companies may wish to turn to hedging strategies to manage commodity risk, he notes, but such strategies can pose risks themselves unless they are properly implemented.
Procurement -- Subcontracting and Product Quality in China
Marshall W. Meyer, professor of management at Wharton, has made many trips to China to research the rapid growth of its economy and the successes and difficulties it has had in growing so quickly. In this interview, Meyer discusses the recent controversy surrounding China's exports of substandard toys and pharmaceuticals to the United States, and the implications for supply-chain management.
Obama and McCain: Different -- and Evolving -- Visions for the U.S. Economy
Presidential candidates John McCain, Republican senator from Arizona, and Barack Obama, Democratic senator from Illinois, are staking out contrasting positions, mostly along traditional party lines, in their campaign to win election in November as the 44th president of the United States. One thing they have in common: Both offer tax and spending plans that would deepen the deficit. Wharton professors, as well as commentators from around the globe, weigh in on the economic views of each candidate.
