Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: rupert1 who wrote (72171)	11/18/1999 7:03:00 AM
From: Bipin Prasad	Respond to of 97611

Thanks, I'll. This is from Fortune; Tech Is King; Now Meet the Prince Saudi Arabia's Prince Alwaleed may be the wealthiest investor outside the U.S.--and the most wired. He has to be. He likes to trade stocks in the desert at night. Who can argue? He was smart enough to buy 6.2 million shares of Apple at $18. By Andy Serwer Plus: The Prince and His Principal Just how rich is the prince? Well, total up his assets and you get nearly $17.2 billion. See how the wealth is distributed in our comprehensive chart. Prince Alwaleed bin Talal bin Abdul Aziz al Saud has just had an epiphany. "Murdoch should sell the Los Angeles Dodgers," he shouts, which is the way he talks when he thinks he's onto something. "It is not a core asset like TV and the movies--it drags those businesses down," he says, gesturing excitedly. At least I think he's gesturing excitedly. I can't really tell. It's the middle of the night, and the prince and I are moving on foot across a vast stretch of desert in central Saudi Arabia. Actually, we're almost jogging. The prince walks very, very fast, and I've already fallen twice. For the prince this is a pretty routine Wednesday night. He's bound to have strong opinions about Murdoch; he holds nearly $900 million of News Corp. stock and therefore owns a piece of the Dodgers. As for walking fast, well, keeping up with him in any endeavor is a challenge. And, yes, he stays up all night and goes on treks across the desert. It helps him unwind. Usually he goes solo, but tonight he has taken me along, mostly, I think, to see whether I can make it back in one piece. There are poisonous snakes here in the Ramah region, some 60 "clicks" northeast of Riyadh, though apparently they're hibernating now. What about getting lost? Not a chance. First of all, you can easily see the monstrous banks of lights at the prince's weekend desert camp three miles back (the weekend is Thursday and Friday in Saudi Arabia). But even if we managed to wander over the horizon, the prince carries a Motorola Star Tac that his boys can track off a radio signal beamed from a 240-foot tower back at camp. The camp, in fact, bristles with technology. Sure, there are tents, a couple of dozen camels, and Bedouin retainers who might have stepped right out of the pages of T. E. Lawrence. But there are also mobile phones, faxes, printers, PCs, laptops, and a $700,000 custom Chevy Suburban communications truck. There's a satellite uplink too--in part so the prince's kids can play around on AOL when they visit. (He also happens to own about $600 million of AOL stock.) When we finally return from our nighttime walkabout, the prince leads me to one of the campsite's open-air living rooms: an expanse of rugs half the size of a football field, bordered by big cushions against which card-playing Bedouins lean. Pots of tea and coffee simmer on grills above two fire pits. A half-dozen hooded hunting falcons roost silently on perches hammered into the bone-dry earth. And there are TVs. With the prince, there are always TVs. To the left of his carpeted command post, one big-screen behemoth carries Bloomberg. On his right, another has CNBC. A little 13-inch job at his feet is tuned to the ART network (Arab Radio Television, which is part-owned by the prince). The prince monitors all three. Suddenly something on CNBC catches his eye. It's a story about Goldman Sachs analyst Rick Sherlund's making negative comments about Microsoft. The prince grabs the phone and starts up in rapid-fire Arabic. The only words I can make out are "Rick Sherlund" and "Microsoft" and "Bloomberg." It takes just 15 minutes for an aide to stride over with a fax of the Bloomberg story with Sherlund's comments. At 3:30 in the morning. In the Saudi desert. By now you're probably somewhat familiar with Prince Alwaleed, the Saudi royal who made his first billion buying a bundle of Citicorp stock when the bank was on the brink in the early 1990s. But the prince isn't just some wealthy oil sheikh who happened to hit one home run in the stock market. Though that richly appreciated Citi stock remains the cornerstone of his portfolio, over the past decade the prince has systematically created a global empire of investments in brand-name companies, worth, he says, some $17 billion. Today Prince Alwaleed, 44, has become a member of the upper-echelon billionaire elite. He's not quite in the same league as Gates (who is?), but he's right up there with Michael Dell and Steve Ballmer. In fact, partly because years of recession and turmoil in Asia have eroded so many great fortunes there, it now appears that the prince is the richest businessman in the world outside the U.S. The prince has also become one of the world's leaders of the information technology industry. As an investor, he holds about $2 billion of Apple, Motorola, AOL, and Teledesic. Which is a paradox, because the prince is a committed value investor, and value investors don't usually own tech stocks. But Alwaleed bought these shares when they were values, finding entry points when they were "hammered," to use his term. And at this very moment the prince is hungrily eyeing another handful of tech stocks for a possible pounce. But Alwaleed is more than simply an investor in tech. He has also become the first mover, as they say, in bringing digital technology to the Arab world, backing an Arab Web portal, an ISP, and a huge satellite wireless network.

To: rupert1 who wrote (72171)	11/18/1999 7:04:00 AM
From: Bipin Prasad	Respond to of 97611

Tech Is King; Now Meet the Prince Part 2 By Andy Serwer Prince Alwaleed doesn't just invest in and fund technology, he swims in it! When Motorola first came out with the Star Tac, the prince ordered 200 of them for himself, his family, and friends. But he quickly ran out. So he bought another 200. And then another 100, and so on, until he'd bought and given away 700 phones. "There is a revolution going on here in the Middle East, just like America and Europe; only we are behind, of course, in telecommunications, in technology, and the Internet," the prince says. "So we'd like to prepare ourselves." It makes sense that the prince should be one of the most wired men on the planet--more so than any of his billionaire peers or, for that matter, any Nethead slouching around Silicon Valley. Remember, this is a guy who lives in Riyadh, Saudi Arabia, exactly 8,091 miles from Palo Alto. He can't just go over to Buck's in Woodside and network, right? At one point I remark to the prince that in contrast with most American billionaires, who take pride in understating their wealth these days--Steve Ballmer could pass for a $600,000-a-year senior executive at Merck--His Highness seems to truly live like a billionaire. The prince nods his head and smiles: "I live too happily, for sure," he says. "I love it." And why not? If your lot in life happens to be "billionaire prince," why not live like a billionaire prince? Let's start with the palace. Completed earlier this year at a cost of $130 million, and located within Riyadh, the style is, well ... How about "modern Arabian palace"? As we come to the gate (the guy driving says, "Open, sesame"--really!), it swings open to reveal a 20-foot-high wall-of-water fountain and a broad avenue lined with palm trees. The palace itself looks a bit like the world's swankiest Four Seasons, which is not a coincidence, since the prince owns 24% of the luxury hotel chain. Inside, a 75-foot-high foyer is framed by dual winding staircases. There is ballroom after dining room after living room after bedroom wing after gymnasium. In all, 317 rooms, 400,000 square feet. At one point several of us actually got lost in the prince's closets. The palace has 520 TVs (somewhere Elvis is smiling), 400 phones, and eight elevators. And of course swimming pools (indoor and out), a screening room that beats David Geffen's hands-down, a bowling alley, tennis courts (indoor and out), and an Astroturf soccer field (that's outdoors). The staff, all 180 of them, carry walkie-talkies. All this for the prince, his new (third) wife, Princess Kholood, 22, and his two children from a previous marriage: Prince Khalid, 21 (see box), and Princess Reem, 17. Even with two kids around, the palace doesn't feel very lived in. After our tour, which takes more than two hours, we meet up with the prince and describe a certain room and ask him about it. He turns to an aide and asks, "Which one is that?" A man with a house like this must own some airplanes, right? Five or six Gulfstreams, maybe? Actually, no. He has no use for them. They're too small. When the prince travels, he takes along a couple of dozen people. This is a man who needs Boeing planes. He has a 737 and a 767. And a chopper and a 288-foot yacht, once owned by Adnan Khashoggi, which the prince bought from Donald Trump (during one of Trump's financial hammerings, of course). The boat is usually parked off the Cote d'Azur in the summer and serves as the prince's warm-weather retreat. As for other homes, he has none. Zip. When he travels, he stays at one of his hotels. The Four Seasons. The Plaza in New York (he owns 41%). The Fairmont in San Francisco (17%). Or the soon-to-be-reopened George V in Paris (100%). Prince Alwaleed is the grandson of King Abdul Aziz al Saud, who created modern Saudi Arabia by uniting the kingdom in 1932. The prince's father, Prince Talal, brother of the current King Fahd, was sort of a black sheep of the Saudi royal family; he married the daughter of the Lebanese Prime Minister and ran off to Egypt for a time. To this day the Saudi royal family is one of the most wealthy and secretive families on earth. It rules Saudi Arabia (or the "kingdom," as the country is often called) absolutely. The nation's economy is almost completely reliant on the price of a single commodity, which has been depressed for years. Its society is one of the world's most conservative--there is little political freedom, the press is censored, and women do not appear in public unless veiled and escorted. Many members of the royal family--including the prince--favor loosening these strictures. Some people, including elements of the Western political establishment, fear change would stir up Islamic fundamentalists and disrupt the status quo, i.e., the mutually beneficial exchange of oil for dollars. It is a very delicate balancing act.

To: rupert1 who wrote (72171)	11/18/1999 7:05:00 AM
From: Bipin Prasad	Respond to of 97611

Tech Is King; Now Meet the Prince Part 3 By Andy Serwer Like every member of the Saudi royal family, Prince Alwaleed started life with silver prayer beads in his hand. But far more than any other member of this clan, the prince took his monthly allowance and ran with it. He graduated from Menlo College, south of San Francisco (at that time a favorite school for rich Saudis) and then got a master's degree in political science from Syracuse University. Though there are some who suggest that he is a conduit for the investments of other members of the royal family, the prince says he made his early millions speculating in real estate in Riyadh and trading stocks. If so, he must have had a real knack, because by early 1991 he was wealthy enough to snap up some $790 million of Citicorp stock. It was a master stroke, and that single position is up more than tenfold. The prince wears traditional Arabic garb in the Arab world and Western clothes everywhere else. He stands about 5-foot-8 and weighs 140 pounds and has a slight tick whereby he jerks his head. He is prone to a bit of exaggeration and has a sizable ego. Perhaps that is understandable: Every week scores of Bedouins line up to kiss his shoulder (a greeting and a sign of respect for royal family members), read poems of adulation, and ask for money. Though he's a bit brisk at first, the prince soon warms up, telling jokes in accented English. He seems most at ease with his Bedouin crew. They razz him, and he razzes them back--throwing cookies, for instance, at one old guy (either 95, 100, or 105, depending on whom you ask) who warbles some ancient desert love song. They say the prince is loved in Saudi Arabia (there are no taxes in the kingdom, but the prince says he hands out $60 million a year in charity--that's off around $500 million of annual income). He is respected by those who work for him, though he's incredibly demanding; he's been known to delay an employee's paycheck after a failed white-glove inspection of his palace. "If you work for the prince, you are on call 24 hours a day, 365 days a year," says one of his top aides. The staff of Kingdom Holdings, as the prince's company is called, numbers only 20 or so professionals, mostly American-educated Middle Easterners (Saudis, but also Lebanese, Egyptians, and Palestinians) who manage his investments, hotel operations, and construction projects. Some are also stock traders and investors who have become wealthy in their own right. It might be tempting to view the prince as an investor who was born on third base and thinks he hit a triple. Certainly he's not in Warren Buffett's league when it comes to analyzing financial markets and securities. Nor does he possess the technological expertise of a Gates or a Dell. But give the man credit: The prince knew enough to buy 6.2 million shares of Apple in March of 1997, when it was trading for about $18 a share. Today Apple sells for $96. That's nearly $500 million of profit in some 30 months in a high-profile stock that was sitting right there in front of everyone. As Citigroup co-CEO Sandy Weill observes, "You sure can't argue with results." In the desert, at the prince's camp, the phone rings. The prince snatches it out of the cradle. "Yes. That's good. Yes," he says, then hangs up. "That was Paul Collins, vice chairman of Citigroup. Rubin is coming to Citigroup; it will be on the news right now." And 20 minutes later, so it is. Right there on CNBC. Take a look at the prince's portfolio, and a couple of points jump out at you right away. First, the overwhelming majority of his holdings are plunked down in three stock groups: media, technology, and banking (he owns about 150 million shares of Citigroup, or 4.4% of its stock, worth $8 billion, which is why he got the courtesy call from Collins). If you were to travel back to 1990 and pick three sectors of the world economy to invest in, you couldn't do much better than that. What makes this even more impressive is that Alwaleed is a value investor who bought what are really growth stocks when they were cheap. He didn't get suckered into metal producers, for instance--which have always looked cheap but have gone nowhere--or oil, about which the prince says he knows nothing. Did he zero in on tech, media, and banking by design? "Yes and no," says the prince. "I really came to these groups because of the companies. I am always looking for the same thing: global companies with a brand name that are basically healthy but that have had a hiccup. That is what led me to these companies." What the prince really is, of course, is a very successful portfolio manager. If you look at the world's richest men, they sort of fall into two camps. In one camp are the founders, like Gates and Dell, who have created their wealth from one great business. The prince falls into the second, which includes men like Buffett and Philip Anschutz, whose great skill is not managing businesses but deploying capital. Depending on how you look at it, the prince, as the great globalist of the group, either has it harder or easier than the others, since he has the whole world as his investing canvas. And he does have poles planted all over the world these days. North America. Asia. Europe. Africa. The Middle East. He has significant holdings everywhere. Well, almost everywhere. The prince didn't get snookered into Russia. "We went to Moscow, and there was nothing," he says, shaking his head. "Nothing."

To: rupert1 who wrote (72171)	11/18/1999 7:05:00 AM
From: Bipin Prasad	Respond to of 97611

Tech Is King; Now Meet the Prince Part 4 By Andy Serwer One of the fictions of investing is that diversification is a key to attaining great wealth. Not true. Diversification can prevent you from losing money, but no one ever joined the billionaire's club through a great diversification strategy. Most often great wealth is created by making bold, concentrated bets. For instance, nearly half of the prince's $17 billion fortune sits in Citi stock. On Nov. 3, a $1 billion chunk of Citi stock was traded, and some immediately speculated that the prince was selling. Not so. In fact it would have been tricky for the prince to sell then, because the day before, Sandy Weill and his wife, Joan, had visited with him in Saudi Arabia. Though the prince is not an insider and can therefore buy or sell anytime--which is partly why he chooses not to sit on any corporate boards--it would look very bad for Weill if the prince sold 18 million shares after a prolonged and private audience with Citi's co-chairman. The prince says he is delighted with Citi (interestingly, the bank has had strong ties to the Saudi royal family for decades). Bob Rubin's arrival, he says, "adds major credibility to our bank. But I do not believe he will succeed Sandy." As for the future of Citi, the prince says what you'd expect from someone who owns a yachtload of shares: "I believe Citigroup is a $100 stock. The full potential of the merger has yet to take place. Also cost reduction. And when the markets begin accepting that Citigroup is a global bank not susceptible to small increases in interest rates, that it grows 15% to 20% every year, then the P/E multiple goes up from 15 to 20. I am patient. I have been hammered twice with Citibank, very badly. I'm a long-termer. I'm not a seller." Remember, if the prince does hang on to all of his Citi stock, then for all practical purposes, where Citi's stock goes, so goes the prince's fortune. During my visit Citi stock moves from $46 to $53, adding about $1 billion to his net worth. No wonder he's in a good mood. But many of the prince's big non-Citi holdings, particularly his tech stocks, have also been on a hot streak lately. A quick review: We've already mentioned how he jumped into Apple in early 1997. Why? Was that because he saw Jobs had come back? "No," says the prince, "that was before Jobs returned [Jobs' redux was July 1997]. I looked at Apple and said, This company has an incredible name. It can't just evaporate. Worst-case scenario, it would be a candidate for a takeover. Some companies did talk to me about taking over Apple. One of them is Oracle--Mr. Ellison. The other I can't name." Was it IBM? The prince won't say. "When Jobs came back, he proved how lousy, bad, and disastrous the management was. All the people between Jobs No. 1 and Jobs No. 2 were lousy." The prince tells of meeting Jobs in Cupertino, Calif., two years ago. "He ran up with a new iMac. That Jobs, he is different." So is the prince in this one for the long haul too? "For the long haul." In October of 1997, with the markets doing their usual fall swoon, the prince made two other big bets on tech, buying pieces of Netscape and Motorola. At first neither move looked particularly astute. He bought some six million shares of Motorola at around $76, and over the next 12 months the stock promptly fell all the way down to $38. Abracadabra, the prince is out some $228 million. You know the story about Motorola: bad chips, bad phones, bad management moves. But since that low last year, the stock has headed due north, soaring to about $90 in early November. So now the prince has a $538 million stake in Motorola, and abracadabra, he's up $82 million. "Sure, that stock could have stayed down for three or four years, but when we analyze a company we really do it, so we knew that we had a plan, and thank God we were proven right." Not that the prince hasn't had issues with Motorola. They come up when I ask him about his 15% stake in Teledesic (Craig McCaw's ambitious wireless network based on a series of satellites), which he bought for $200 million and which is now worth $300 million. "Teledesic is feeling the hurt right now because of problems with Iridium and Globalstar, which I was offered to invest in and didn't, thank God. Teledesic is fundamentally different because it is broadband, the Internet in the sky. And because it is voice and data and possibly video. It is well financed, no leverage, and is backed by incredible people. Now, frankly speaking, this may not make those people happy over at Motorola, but Motorola was one of the causes of the collapse of Iridium. They made a lot of money by selling technology to this company. They were milking it completely. And I told [Motorola CEO Chris] Galvin that, when he came to see me last week." As for Netscape, it too went south after the prince bought four-plus million shares for $130 million. But then last fall, after AOL announced it was buying the browser company in a stock swap, Netscape shares began climbing. This spring, when the deal was completed, the prince's Netscape holdings were exchanged for four million shares of AOL, now worth $600 million. "Netscape to me was just like Apple. It was down, but it wasn't going away. Again, I thought maybe a takeover. Actually, in my meeting with Barksdale, I told him, 'Why don't you think of a takeover by some company?' He said, 'Well, we don't rule it out, Prince.' I am in AOL by default, but I don't mind. It's one of the only Internet companies that makes money. My average cost is $30, and the stock is $150. I'm happy."