Hong Kong's chastened tycoon
By Joe Leahy, Ruth Sullivan and Jeff Pruzan
Published: May 17 2001 20:50GMT | Last Updated: May 17 2001 20:59GMT
If 2000 marked Richard Li's finest hour of accomplishment, 2001 has thus far proved a year of endless embarrassments.
Pacific Century CyberWorks, the internet turned telecoms company that bought Hong Kong Telecom from Cable and Wireless of the UK last year, has begun searching for a replacement for its 34-year-old founder and executive chairman.
To be sure, Mr Li acknowledges his board's concerns, but says he will step aside only if PCCW finds a suitable replacement - something he doubts will happen this year. Shareholders may not be quite so patient. Shares in PCCW have lost 90 per cent of their value since February 2000 and have shown only static activity for several months.
The son of Li Ka-shing, chairman of Hutchinson Whampoa and the richest man in Hong Kong, has other problems. The word "lawsuit" has begun percolating, with shareholders angry not only at slumping PCCW prices, but at an apparent falsehood concerning Mr Li's education.
Mr Li has long contended that he earned a computer science degree from Silicon Valley's prestigious Stanford University in 1987. Last month, in connection with his seat on the board of Rediff, an Indian computer group, he admitted that he never graduated. The revelation cast doubt on Rediff's competence, reverberated at PCCW and humiliated Mr Li.
It all marks a dramatic shift in the fortunes of Mr Li, who just 18 months ago basked in the title of Asia's most eligible bachelor, and who lured Whitney Houston, the American pop singer, to provide accompaniment for the popping champagne corks at his millennial New Year's bash.
Richard Li is a product of a business from birth. As a little boy he used to sit silently with his older brother Victor at board meetings of the most powerful business family in Hong Kong, chaired by his stern father. At 13 he was bundled off to Menlo Park, an exclusive school in Silicon Valley where he spent some unhappy years.
Mr Li remained in the Menlo Park area, briefly studying computer science next door at Stanford University. After leaving Stanford in 1987 - though not graduating - Mr Li worked at Gordon Capital, an aggressive Canadian investment bank.
Later he joined the family business for a turbulent period when he clashed with a tough-nosed ex-Foreign Legion executive. Setting up Star TV with family money was the first step into running his own business.
In 1993 Mr Li sold Star TV, the Asiawide satellite network which he had launched at age 24, to Rupert Murdoch for an estimated $950m. He would put proceeds from the Star TV sale to good use by forming PCCW.
The New Year's party marked a good start to a promising year for PCCW. He would make his mark in August with the closing of its HK$28bn ($3.6bn) purchase of HKT, Asia's largest deal outside Japan to date.
The deal with former owner Cable & Wireless also snatched HKT out of the hands his old acquaintance, Mr Murdoch, who had wanted to buy HKT in a joint deal with SingTel and his own News Corporation.
The HKT purchase transformed PCCW from an internet company with some property interests to a telecommunications company that includes an old-fashioned fixed line service - a welcome asset as technology stocks continued weakening.
Though his timing was impeccable - the deal would probably have been impossible a few months later - it could not have been worse for investors who had bought into his internet dream. It also forced PCCW into discussions about loans - assistance that would have seemed unthinkably unneeded at the time of the deal.
But with HKT as its biggest asset, PCCW's commitment both to cyberspace, and to Mr Li himself, seems less clear than it did a year ago.
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