Cyber Kid hits hard times
2001-03-30
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A year ago, 34-year old Richard Li made headlines and graced the covers of many international news magazines when he announced that his Internet company Pacific Century CyberWorks intended to take over Hong Kong's largest telecommunications company Cable and Wireless HKT.
Since those sunny days when baby faced Li, son of Hong Kong tycoon Li Ka-Shing, was seen as a boy wonder CyberWorks reported losses of $886 million for 2000 on Wednesday, much worse than analysts predicted, and his company's share price closed down 88 percent from its high of one year ago.
Li addressed analysts Wednesday and said that PCCW projected revenue in 2001 to climb in the "high single-digits" but his fellow company officials gave no further details as to how this was going to happen in the disappointing days for dotcoms and technology-based companies.
Once seen by many in Hong Kong as a local boy who could spin deals with the bat of an eye, his image has taken a beating. The news of the losses comes days after a newspaper article revealed that Li had never actually graduated from Stanford University, as his company's press literature had touted.
Li burst onto the international scene last spring when he announced that CyberWorks planned to acquire Cable and Wireless HKT, Hong Kong's oldest telecommunications company, in a $28.5 billion deal that was the largest corporate takeover in Asia outside Japan. This energetic youthful businessman managed to outmaneuver Singapore's telecommunications giant Singtel in the bid for HKT making Hong Kongers proud of one of their own.
But after the merger CyberWorks was left with $12 billion in debt and a sliding share price as technology stocks took a nosedive across international markets. Shareholders who had bought PCCW shares watched their investment take a downward spiral and observers began to voice concerns about the direction the company was taking. Investor and analyst confidence was shaken as the stock price declined and little was said by CyberWorks to bolster belief in its vision.
Li had explained his company's doctrine as taking the Internet to everyone, even to the poorest rice farmer in Laos. Critics wondered if there was anything solid behind the dream.
CyberWorks' interactive television venture Now.com was launched to a limp reception. It was criticized for its lack of quality content and many who tried the site experienced difficulty in using it. Since then the company announced plans to scale back Now operations and scale down staff numbers to cut costs.
But one of the worst blows to the young Li's credibility was the truth about his degree - or lack of one. The entrepreneur was forced to admit that he didn't graduate from Stanford and said he had left the school "for personal reasons." He said once the inaccuracy was brought to his attention he corrected the error. But analysts in Hong Kong were quick to point out that the reference to his degree was on just about every single document to do with PCCW and as Chairman he was responsible for verifying his own biography.
When news of truth appeared, the inaccurate description of Li as a Stanford graduate with a degree in computer engineering was quickly taken from the company's Web site.
The Hong Kong press was not willing to let it go right away. One local newspaper devoted a large amount of space pointing out that while each press report concerning PCCW was picked over by the company's public relations people never had anyone mentioned a correction regarding Li's academic record. In the piece he was referred to as "a college dropout."
The company originally issued a press release saying that the degree was not referred to on any legal documents. This later was amended when it became clear that documents from two companies of which he was a non-executive director contained references to Li's Stanford degree.
Analysts were left pondering whether the unveiling of Li's fictitious degree would hurt the company's share price even more and some observers said they weren't all that surprised at Li's fall from cyber space.
"I think people are beginning to wonder if there is a Richard Li," said one Hong Kong watcher who declined to be identified. "One wonders what other truths are waiting to be uncovered. It isn't the fact that he didn't graduatebut he lied about it. And that stings."
But some were less critical of Li's false degree claim.
"I could care less whether he has a degree or not. That isn't of interest to me," said Renee Wilson, a PCCW shareholder. "I want my shares to do well and I hope in time and with the stability of HKT things will improve."
"I bought my shares at about double what they're worth now. But I did better than a friend who bought them really high," he said. "I have a better chance of seeing my money than he does."
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