Richard Li's Lack of Stanford Degree Unlikely To Matter
By RITA RAAGAS DE RAMOS
March 22, 2001
Dow Jones Newswires
DOW JONES NEWSWIRES
HONG KONG -- Investors are generally not expected to care that Richard Li, who pulled off Asia's biggest corporate takeover last year, didn't graduate from Stanford University as erroneously claimed by his company in some documents.
"Did Bill Gates graduate (from a university)?," was a typical reply from analysts covering Hong Kong and Li's company, Pacific Century CyberWorks Ltd. (PCW), PCCW.
Gates attended public elementary school and the private Lakeside School, where he discovered his interest in software and began programming computers at age 13. In 1973, Gates entered Harvard University as a freshman. In his junior year in 1975, Gates left Harvard to focus on Microsoft Corp. (MSFT).
Herbert Lau, director of research at Celestial Asia Securities, said Li's capability in running PCCW won't be diminished by his lack of a university degree, citing Gates as the best example of a college dropout who did wonders for the information technology industry.
"Whether or not someone has a degree shouldn't matter at all," Lau said.
In a statement, and in reaction to media reports questioning Li's educational background, PCCW said Li attended Stanford for more than three years from 1984 to 1987, but left before completing his degree. PCCW attributed the university degree foul-up to erroneous company materials.
"In some isolated instances, company public relations materials have been produced that inaccurately reported Mr. Li had graduated from the university," PCCW said.
PCCW stressed, however, that the error didn't appear in public disclosures filed by the company to regulatory agencies.
Li pulled off Asia's biggest corporate takeover in August when his fledgling internet company bought Hong Kong's oldest and largest telecommunications company, Cable & Wireless HKT, from its British corporate parent in a deal paid mostly by stock that has since plunged. Li's father is the billionaire Li Ka-shing, who runs numerous businesses in Hong Kong and elsewhere.
Analysts Say Issue Overblown
Meanwhile, some analysts find the issue too trivial to the point that they wonder why the media even made such a big deal of it.
"I don't even want to get into that," said Mark Simpson, regional head of research at Nomura International, adding the issue is too petty to be factored in by investors.
Questions about Li's educational background was first raised by the International Herald Tribune, with the newspaper's article picked up by international news agencies and Hong Kong media.
At least one analyst, however, believes the issue on hand may have more significance in the long run.
"This may fall into the category of plain gossip, but still it's a credibility issue," said Cris Tinker, regional strategist at Deutsche Securities.
Although Li himself didn't propagate the mistake about his graduating from Stanford, Tinker said Li's failure to correct the error until now puts into question the way he runs his business.
"In an instance like this, the credibility of management wholesale is put into question," Tinker said.
"Investors were led to believe Li graduated from Stanford, and who knows, maybe this made investors put a little more faith into the company at the onset because of this," he added.
Still, even Tinker agrees with other analysts that PCCW's stock won't be affected by this issue.
"Investors may rethink whether Li is the whizzkid that he was thought to be, but I don't expect them to sell stocks on the back of that," Tinker said.
Many analysts recommend that investors underweight PCCW, but largely because they believe the stock - even at its current level - is overvalued considering its earnings prospects over the next few years. PCCW is expected to release its financial results for 2000 next week.
In late afternoon trading, PCCW's stock was trading at HK$3.60, down 4% from Wednesday's close of HK$3.75, but mainly on stock price overvaluation in relation to the company's assets and not on Li's university degree, analysts said.
-By Rita Raagas De Ramos, Dow Jones Newswires;
852-2832-2331; Rita.DeRamos@dowjones.com
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