Code JDMBA2b: February 2005

Monday, February 28, 2005

PSPT Valuation

Compared to SAY, INFY, WIT and other larger Indian outsourcing companies, PSPT seems very attractive.

It also appears that PSPT will be continuing its rapid growth in 2005. It looks like they will be getting some additional revenue from existing clients and adding new major clients at the same time. With the relatively low cost of labor in the Philippines I see no reason why the growth cannot continue as long as management continues to hire and train good people and deliver quality service to clients. As the cost of labor continues to rise in India, look for more companies to look to PSPT as a potential outsourcing partner. As of this moment I do not own PSPT but would seriously consider buying shares on any pullback over the coming weeks.

Linktone Beats 4Q Expectations by $.02

Linktone beats 4Q Expectations by $.02. Forward guidance looks okay and it appears 2.5G services are growing strongly. My biggest concern from the conference call was learning about the government investigation into Linktone's expected tax refund. Although they are getting more and more revenue from non-SMS services, I still am somewhat hesitant to buy shares in LTON with their heavy SMS reliance. I do not own any Linktone shares at the moment and do not plan to buy any shares at this time.

I found an excellent recap on the China Stock Blog:


I have to get back to class so I have not had time to fully look at the 4Q earnings for either firm yet. I plan on listening to the conference calls and analyzing the quarterly earnings releases later this evening. I will post some additional comments on my blog later tonight. Meanwhile look at the press releases here:



Free Online Translation

I do not currently read or speak Chinese although I plan to start studying Mandarin soon. Sometimes it can be frustrating doing investment research on Chinese firms when I cannot read the language. There are many free translation services online. Here are a few translation websites that I like:

You will find that some words do not directly translate very well. Many times word order is much different also. It takes a little while, but I can usually figure out the basic meaning of an article written in Chinese with one of these translation services.

Sogou Website Traffic Update

It looks like the traffic to has started to really pick up again since Sohu launched version 2. It seems like it is much faster than the original version. We shall see what happens to the traffic over the next few weeks. There was also a big jump in traffic after the launch of version 1 but it fell off quickly. Hopefully this time the popularity of Sogou will improve long term. Sohu really needs some good news right now. For anyone who tracks the Chinese portals I find Alexa ( a pretty good resource for estimating traffic trends. For online games traffic it is best to look at the server data when available and track it over time.

Yahoo Denies Reports They Will Buy Sina Stake

The article is here:

"Yahoo Inc (NASDAQ: YHOO - news) has denied reports that it plans to purchase a stake in Chinese web portal operator Sina in order to thwart a hostile takeover of Sina by online game company Shanda Interactive Entertainment (NASDAQ: SNDA - news) . 'Yahoo does not comment on market rumors,' said Yahoo China spokesperson Zhao Tanbing. 'Yahoo pays great attention to China's market and will increase investment in China,' she added, without offering further details.Yahoo China's president Zhou Hongyi was also quoted in the National Business Daily as saying, 'It's neither possible nor meaningful for Yahoo to get involved now.' This follows reports in local media that Yahoo intended to purchase a stake in Nasdaq (NASDAQ: news) -listed Sina. The report said that Yahoo would not interfere in Sina's management and would not consolidate Sina's financial results in the event of an acquisition of shares."

As much as Yahoo might benefit from buying Sina I doubt it is very likely right now. The Chinese government is unlikely to favor Sina being taken over by a major U.S. firm. The new Sina poison pill will also make any hostile takeover attempt more difficult. Here is a link to another blog with some interesting comments on SINA/SNDA/YHOO speculation:

77th Annual Academy Awards

I did not watch many movies last year so I cannot comment on most of the Oscar winners. One movie I did watch was RAY. Jamie Foxx was incredible in the film and I am very glad he picked up the Oscar for his role. It turns out that Jamie Foxx is actually a very good piano player in real life. He was very natural in the role. By the end of the movie you really felt like Jamie Foxx was Ray Charles. Read about his win here:

ABA Position on Asbestos Litigation

The ABA Asbestos Litigation Task Force which is part of the ABA Tort Trial & Insurance Practice (TIPS) Section recently released this paper with their position on the issue:

More information and detailed research on Asbestos related issues can be found on the ABA TIPS website:

Chris Webber Trade

Sacramento has to be crazy. After being hurt for part of the season the last few years, Chris Webber is playing well again. I think Sacramento made a horrible mistake by including him in a multi player trade last week. Who was the big winner? Philadelphia should now have a real chance to make the playoffs thanks to the Webber/Iverson combo.

Saturday, February 26, 2005

Celebrex, Bextra and Vioxx Litigation

These articles are must reads for investors in Pfizer (PFE) and Merck (MRK) who are interested in litigation concerning Celebrex, Bextra and Vioxx:

On February 18th the shares of both firms skyrocketed as a FDA advisory panel voted in favor of declaring the drug safe for use in certain patients. Although there may be new harsh marketing restrictions placed on the drugs and they will only be allowed to be prescribed for certain patients this is great news for both Pfizer and Merck. Although sales will likely not reach the levels they experienced in the past they will still be significant. The advisory panel's decision may also add credibility to the Pfizer and Merck legal defense team as they pending Vioxx, Celebrex and Bextra cases are taken to court.

Is there a conflict of interest problem inherent in the way the FDA operates? Should a different department be created to oversee and regulate prescription drugs separate from the department that approved the drugs in the first place? These are questions that the FDA (and Congress) should address in the near future.

More On The Need For Asbestos Reform

It is amazing how much politics can influence the stock market. Some interesting excerpts from this article:

"Grace escaped the usual bankruptcy burial not because of management magic or financial wizardry, but because President Bush and the Republicans who control Congress decided to limit the liability of companies in the asbestos business, which face lawsuits seeking billions of dollars for health damages.
Politics is so important to Grace and other asbestos companies that the day after the presidential election, Grace stock jumped 14 percent. It was not just Bush's reelection but also the defeat of Senate minority leader Thomas A. Daschle (D-S.D.), who had led the opposition to the asbestos legislation.
Since Election Day, Senate leaders have begun work on an asbestos bill that is to be a top legislative priority after Congress reconvenes tomorrow. It would create an industry-wide fund to pay all asbestos claims and severely restrict lawsuits. Thanks to widely reported cases in which people who worked with asbestos, but have no health problems, have won big judgments, the measure has become a showpiece for people who contend that too many lawsuits are filed in the United States. "

Cooper Industries, Crown Holdings, Halliburton, Owens-Illinois and Sealed Air are just a few of the many other publicly traded companies with a huge interest in asbestos litigation reform:

Friday, February 25, 2005

Asbestos Litigation

Last Saturday I blogged about the new class action reform bill recently passed by Congress. What Congress needs to worry about is passing asbestos litigation reform legislation. According to the Asbestos Alliance, asbestos litigation is wreaking havoc on our economy:

"Asbestos leaves many victims in its wake. First and foremost, the sick and their families have suffered. But the flawed asbestos litigation system, which the Wall Street Journal terms "The Asbestos Blob," not only hurts the sick and their chance at receiving fair compensation, but also claims other victims. These include employees, retirees and shareholders of affected companies whose jobs, savings and retirement plans are also jeopardized by the tide of asbestos cases. With asbestos litigation affecting so many companies, this also impacts the overall economy due to the trickle-down effects, including jobs, pensions, stock prices, tax revenues and insurance costs. According to a 2002 study by Nobel laureate Joseph Stiglitz, asbestos bankruptcies have cost nearly 60,000 workers their jobs and $200 million in lost wages. Employees' retirement funds have shrunken by 25%. Read the study (PDF)."

This article talks about the scope of asbestos litigation. "The impact of what Supreme Court Justice David Souter terms the "elephantine mass" of asbestos litigation is vast and far-reaching. Nearly forty years have passed since the first lawsuit was filed, but hundreds of thousands of claims are still pending and new claims are accelerating, especially by those who are not sick. The flood of claims and resulting settlements are forcing companies into bankruptcy and putting at risk compensation for those who are sick today or may become sick in the future. The "elephantine mass {is} still growing" (Chicago Tribune, July 22, 2001) and there is no end in sight."

I already gave my opinion about the new class action legislation. Perhaps if President Bush and Congress really want to reform litigation in this country they should concentrate on asbestos legislation instead of worrying about class action lawsuits of medical malpractice claims.

Here is a link to my comments about class action reform:

Upgraded Search Engine for SOHU

Today Sohu announced the launch of their upgraded Sogou ( version 2.0 search engine. Apparently the new version has indexed 500 million Chinese web pages and will reach 1 billion in the coming months. The new version also will have a faster search time and quicker updating of indexed we pages. Let's hope that the new engine will drive more traffic to If you look at the Alexa website ranking for Sogou here:
You can see that Sogou initially did very well thanks to the publicity it got after its first release in August of last year but then quickly fell off as the Chinese have preferred other local search engines such as Baidu. Let's hope this time around people are happier with the Sogou engine so that Sohu can make some real progress in this market. I am currently long SOHU.

Here is the press release:

Thursday, February 24, 2005

JAMDAT Moblie 4Q Earnings

Revenue and adjusted net income for the 4th quarter appear pretty strong. Guidance for 1Q was above expectations. I have not had a chance to listen to a recording of the conference call yet. I like the mobile gaming business in general and see tremendous growth ahead both in the U.S. and oversees. I am not sure about Jamdat's current violation however. Right now it is too early to forecast who will dominate the mobile gaming market in the long term. THQI, ERTS, INSP and others will also be making a big push in this area. With expectations that the market will get so large I would not be surprised if Sony and some of the other big content providers try to make their presence felt in mobile gaming also. TOMO (who recently acquired India Games) and some of the other Chinese portals have also been attempting to expand mobile gaming operations both in China and overseas. While I like the mobile gaming market, I am not buying JMDT at its current market price at this time. TOMO, KONG and even INSP seem to be better values to me at the moment. I am currently long TOMO.

The press release is here:

Increasing Government Health Care Spending

It looks like health care will amount to half of the federal budget by 2014. There is no end in sight to increasing health care costs. The new Medicare drug benefit that starts next year will be a disaster since government will be forced to pay retail prices for the drugs. It looks like the lobbyists really paid off for their pharmaceutical company sponsors in this deal.

The United States really needs to think creatively to correct this problem before our nation’s economic growth is irreparably hampered. The United States is really at risk of losing its economic superpower status as some point in the next century if our government does not put spending in check.

Interesting Sina article

Kevin Kelleher thinks that Shanda's 19.5% purchase of Sina could signal a rush to consolidate the Chinese Internet Sector. Compared to Netease, Sohu, Shanda and Tencent which all have very large insider holdings, Sina is a very attractive takeover candidate. The article talks about Yahoo and Softbank being two possible bidders for Sina:

Wednesday, February 23, 2005

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Public Service Careers

I am interested in public service (particular civil rights) as much as anybody. My family has a long history of public service. My law school in particular seems to be full of people who move here with the intention of doing public service work after graduation. Our school offers countless legal clinics which give us access to great public service experience. Unfortunately is seems that at some point many of us realize that a career in public service is not very practical even with a Loan Payment Assistance Program, unless we want to dedicate ourselves to lower middle class status indefinitely. Unfortunately most public service careers pay very little which is particularly troubling for those of us with a large student loan balance. I will always be interested in public service and am taking advantage of related clinical opportunities during law school. However I realize that I will be seeking a six figure job like many of my classmates after graduation so that I can pay off my loans and make a good living. Public service will have to be a part time pro bono avocation for me.

Tuesday, February 22, 2005

3D and Casual Games from Netease Conference Call

Netease was asked about 3D games during the conference call. They believe that only 40-50% of the pc's in China right now can actually support the hardware requirements of Lineage 2 (Sina/NC Soft Joint Venture). They said that WOW name is well known in China but the game will be expensive for The 9 to operate and the pricing structure may therefore have to be more expensive than the competition. Localization to Chinese cultural preferences will also be a concern for WOW. Netease hopes that by delaying the launch of their 3D game more computers in China will become available that can support the greater technical requirements.

Netease also plans to launch around 9 internally developed casual games towards the middle of the year. They plan to integrate their casual game platform with PoPo their instant messenger service. I think this is another possible growth area for Netease based on the success Tencent, Shanda and Sina have had in casual games in 2004.

NTES 4Q 2004 Earnings and 1Q 2005 Forecast

The earnings release is here:

It sounds like both WWJ2 and FWWJ both experienced double digit growth last quarter (benefiting from expansion packs) and are still growing. Wireless services revenue was weak as expected. Advertising revenue was also weak since many Chinese firms spent a larger portion of their ad budget in the third quarter during the summer Olympics. Overall 4Q performance was relatively similar to analyst expectations.

Forecasted 1Q revenue growth looks pretty good although a one time expense of $2.5 million resulting from the purchase of a 3D game technology related to the future development of online games will depress earnings. I am happy that NTES will be conservative in expensing this charge instead of trying to capitalize it to dress up their earnings. They say that the new technology will help them producing additional 3D games going forward.

I am listening to a recording of the conference right now. It looks like their new game Fly For Fun (now is beta testing with 20,000 peak concurrent users and 8,000-10,000 average concurrent users) has been having some technical difficulties and will not be commercially launched until next quarter (May 2005). They may also delay the release of their new 3D game (on purpose because the market for 3D games is not fully developed yet). They are also planning more expansion packs for WWJ2 and FWWJ in 2005 (maybe 3-4 per year for each game). Netease does not expect FWWJ to experience flat revenue growth until late 2006 or early 2007. They expect WWJ2 to reach its peak later this year.

Overall I think 4Q 2004 earnings look okay. While I am disappointed that 1Q 2005 EPS will be hurt be the one time 3D technology charge I am pleased they are investing in future internal game development. A lot will be riding on the new 2.5D and 3D game that Netease plans to launch later on 2005. Advertising revenue should grow nicely in 2005 with Ebay stepping up its ad budget substantially. Netease has already signed an exclusive auction advertising contract with Ebay for 2005 with an extension option for 2006. I plan on continuing to hold my current NTES shares going forward.

Role of a Securities Lawyer

Over the past few days I am really feeling better about my career goals and decision to continue my CFA exam preparation during law school. Guess who designed the poison pill for SINA (and collected some large fees for doing so)?

"The Board of Directors has retained Morgan Stanley as its financial advisor, and Skadden, Arps, Slate, Meagher & Flam LLP and Maples and Calder as legal advisors, in assisting the Board in implementing the Rights Plan."

Whether I end up working for a large I-Bank such as Morgan Stanley or a world renowned corporate law firm such as Skadden I am certain by my business knowledge and in depth legal and financial training will come in handy. Now if only I could learn Chinese!

SOHU Repurchase Program

Sohu repurchased another 885,605 shares between February 10 and February 17, 2005. "Through three stock buybacks in the past ten months we have repurchased 2,246,105 shares, or 6% of total shares outstanding. We believe the buy-back is an attractive investment for the company and sends a positive message to our shareholders," said Charles Zhang, Chairman and CEO of SOHU.

Read the press release here:

As a SOHU shareholder I am happy about this as it increases EPS and gives investors' confidence in company management. It is nice to see management actually put their cash to a good use after all the mistakes they made last year. I hope they start a new repurchase program again in 2005.

CTRP Earnings

Ctrip announced 4Q 2004 earnings today:

It looks like they had a strong 4th quarter beating expectations. They also gave a promising guidance on 2005 but guided 1Q 2005 below expectations citing a seasonal slow down in travel this time of year. I am not buying any shares right now but plan to continue following this stock.

SINA Poison Pill

It looks like I was on the right track suggesting a poison pill. Sina announced one this morning:

Basically the plan will dilute company shares in any hostile shareholder by creating the right to purchases shares at half price if any entity purchased more than 10% of SINA (or 0.5% more for existing 10+% shareholders like SNDA). It looks like a great plan to me. The option need not be exercised and can be cancelled by the board in case of an agreed merger plan, etc. Sina is not up as sharply as I had expected this morning. Perhaps the market was hoping for a merger with Shanda (or news of another interested party). I am happy a merger is not taking place (at least in the short run). I am a long tern SINA shareholder and want to give management the chance to execute their long term strategy in China.

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Monday, February 21, 2005

Interesting Article about Business Training in Law School

"If the law is becoming more of a business, should law schools become more like business schools?"

This is a very interesting article weighing some of the pros and cons of mixing business education into the law school curriculum. It also discusses joint JD/MBA degrees.

From the New York Law Journal and posted on:

CTRP Chinese New Year Reservations up 200%

According to Pacific Epoch:

Chinese New Year Travel Packages are up 200% at Ctrip as compared to last year. I do not currently own Ctrip but plan to look closely at their 2004 4Q earnings and forecast tomorrow. With the 2008 Olympics coming closer and more and more people interested in traveling to and around China Ctrip is in a good position as the market leader. It appears that Ctrip will have some more competition going forward however from some of the domestic airlines, Fortune Trip (Sina) and Elong (now 52% controlled by Barry Diller and InterActiveCorp).

I sure wish involved with the Carlyle Private Equity fund that purchased for 25.97% of Ctrip for $8 million prior to its IPO! I do not own any CTRP shares but am continuing to follow the stock for possible future investment.

Tom Online

I am eagerly awaiting the 2004 4Q earnings release on Tom Online. Although Tom's portal does not currently receive nearly as much traffic as SOHU or SINA, TOMO has managed to gain wireless market share in 2004 from some of the other major players.

The main reason why TOMO now has a market cap close to that of SOHU is because of stronger management. Last year Sohu purchased several SMS companies (and later sold some of them off to company executives at a lower price funded by corporate loans) in a market that was experiencing many regulatory challenges and other growing pains. My feeling is that if SOHU had waited they could have purchased those same firms today for far less than they did last year.

Meanwhile, TOMO has done a great job signing contracts with mobile phone manufacturers and other partners to help increase distribution and access to their products and services. I am very impressed with the India Games acquisition and hope to hear more about it during this quarter’s conference call. I think Tom Online has the ability to expand into other foreign markets as well. What do I like most about TOMO? I like their management team (the connection to Tom Group is also beneficial) and valuation. With a current average analyst forecast of $.99 EPS in 2005 (according to Yahoo finance), at a current price of $12.31 TOMO is one of the least expensive Chinese portals.

Note: I currently am long many Chinese ADR's including TOMO, SOHU, SINA, NTES and SNDA

NTES 4Q Earnings Release Tomorrow

I feel good about my long NTES position going into tomorrow.

Netease is far less dependant on advertising and wireless revenue than SINA and SOHU. As a company now primarily driven by gaming revenue they seem to be well positioned to take advantage of continued growth in this market. The valuation of NTES also seems very reasonable when compared to SNDA or NCTY. With over 300k peak concurrent users for both Fantasy Westward Journey and Westward Journey 2 during the forth quarter it appears as if both games are still growing. Going forward I expect Fantasy Westward Journey to see more growth and Westward Journey 2 to flatten out or slightly contract later in 2005. I hope that both Fly For Fun and the 2.5d and 3d game Netease plans to launch in 2oo5 can become successful as well. With NCTY licensing WOW and SNDA mentioning possibly licensing a major foreign game in 2005 I would also like to see NTES look into this area to supplement internal game development efforts.

Other potential positives going forward are Ebay advertising (Ebay has pledged to step up its China spending in 2005 and the other 2 major portals are not real options since Sina has an auction partnership with Yahoo and Sohu signed an exclusive action advertising contract with Taboa) and casual games (Tencent, Shanda and Sina all seem to be doing well in the casual gaming market as of late).


I own both SINA and SNDA right now. I am not too sure if a merger would be a good thing or not.

One negative would likely be Shanda losing its Ebay advertising revenue since Sina has an action joint venture with Yahoo already. It will also be difficult to find a way to easily merge together two businesses with overlap in several areas.

There are some potential positives to the deal. One of the biggest advantages would be the possible cross promotion on Shanda's game offerings among Sina's massive user base. Another advantage would be the size of the new combined firm with a leadership position in many Chinese Internet categories. Size may be a defense to help prevent a hostile takeover bid from larger foreign internet firms. While E-Commerce in China is still in its infancy, I believe that over the next 5-10 years the market will grow substantially. A combined SINA/SNDA may have a good chance of emerging as one of the most successful Internet firms in China.

I think that management of both firms should seriously considering using poison pills or other defensive measures to help discourage a hostile takeover from a larger foreign Internet firm. I would rather own a piece of the fast growing Chinese Internet market over the long term, than be acquired at a small premium by a larger global Internet company today.

How will SINA and SNDA perform on Monday? I predict SINA will open several points higher than the last after market sale on Friday. SNDA will likely trade relatively flat. Of course this is just my guess. If Shanda's recent Sina investment causes other firms to consider a Sina takeover (Yahoo might be one possible bidder since they already own 66.6% of the Yahoo/Sina Chinese Auction Partnership) then Sina may move even higher. Again I consider Sina a long term investment and would rather not see Sina taken over by Yahoo or any other foreign Internet company at this time.

Social Security Reform

I have mixed feelings on the issue. I generally like the idea of private accounts but am not sure if the President has designed the best possible plan. It will be very difficult to pass in its current form. It is clear that something does need to be changed and I agree that the change is better sooner rather than later. I am a little offended by the AARP and other special interest groups who appear so biased against private accounts. First of all people already in retirement or nearing retirement age (Current AARP members) would not be affected by any changes. Second, younger people are not forced to "opt in" to the private account plan and have the right to stay with the current system under the Presidents plan (although they would be better off opting for the private account). I think the AARP and other groups are using scare tactics and taking advantage of the generally uneducated public when it comes to this issue. I think it will backfire in the end. After all today's young population will become prospective AARP members one day and we will remember that they lobbied against proper reform of the Social Security system.

Some interesting links:

I also highly recommend reading this report:

If we do not choose to reform social security with private accounts there are really only 3 other options to avoid future insolvency. Each of these options will most likely hurt future generations more than current retirees:
1. Cut benefits
2. Raise taxes
3. Raise the retirement age

Saturday, February 19, 2005

2005 NBA All Star Game

It looks like the West is currently favored by about 6 points:
6.5 on
5.5 on

I am not betting on this game, but if I was I would pick the East to cover the spread. Yes, I know that the West has won four out of the last five years. I think that the rise of Lebron combined with Shaq moving to the Eastern Conference may be enough to pull out the win in what should be a close game.

Value of JD/MBA for a Corporate Lawyer

Here is an interesting article from Vault:

The article gave mixed opinions on the value of the mixed degree depending on who you ask and what your ultimate career goals are.

One fact that I was not aware of:
"Note that several large law firms in New York and other major cities give JD/MBAs an additional year's credit for purposes of seniority, pay and partnership qualification. In such firms, a JD/MBA would enter the firm as a second-year associate, as would a graduate who had spent a year completing a judicial clerkship. Check with prospective employers to negotiate seniority credit for an MBA."

New Class Action Bill Signed Into Law

President Bush signed the bill yesterday. I do not like it at all.

According to CNN "Under the legislation, class-action suits seeking $5 million or more would be heard in state court only if the primary defendant and more than one-third of the plaintiffs are from the same state. But if fewer than one-third of the plaintiffs are from the same state as the primary defendant, and more than $5 million is at stake, the case would go to federal court." Who is Congress to decide that our state court systems are not competent to decide these cases?

The bill also limits lawyer fees on "coupon settlements". I see nothing wrong with coupon settlements. While individual class members often receive only coupons on limited monetary value towards free or discounted services there are other advantages. The fear of this type of class action litigation helps keep large companies honest. Large firms know that an individual consumer is unlikely to sue over $20 in late rental fees at their video rental store. Without fear of these class action lawsuits (which may result in large lawyers fees and "coupon settlements" for class action plaintiffs) how can we pressure companies to stay honest and not rip us off on the small stuff? With the reduction on lawyer fees (fees will now be tied to coupon redemption rates or hours spent on the case) attorneys may be less likely to take these cases.

We have to remember that class action attorneys do not win every case. They take a large risk in time and resources to litigate these matters. Who else will be hurt by this bill (besides class action lawyers)? My opinion is the American consumer!

Take this political quiz!

I found this short political quiz on the internet today. So far, everyone I know that took it agreed with the result. See how you score!

Alan Greenspan Endorses Private Accounts

More on Fed Chairman Alan Greenspan's testimony before the Senate Banking, Housing and Urban Affairs Committee on February 16, 2005:

Shanda buys 19.5% of Sina in the open market

Here are some interesting comments from someone in the China Internet Sector:

Thursday, February 17, 2005

Lebron James for MVP?

I think he is helping his team more than just about any other player in the league (except possibly Steve Nash). Nobody else is even close to matching his 25ppg, 7apg, 7rpg averages. He is also second in the league in steals per game. I think Cleveland has to be happy after going one of the worst teams in the league in ticket sales just a few years ago to one of the better teams in ticket sales today. The kid is still only 20 years old! Can he ever replace Jordan? Perhaps.

Wednesday, February 16, 2005

My Investment Banking Interview

I had an on campus interview today with an Investment Bank. The interview was very short (they had many candidates to talk to) and was scheduled to last for 30 minutes. We lost track of time and went about 15 minutes over which I take as a good sign. This firm places MBA Interns in Investment Banking, Equity Research or Asset Management. The person who I spoke with recruits for the Equity Research Division as well as for the MBA Intern Program. I am interested in both Investment Banking and Equity Research but I felt as though she was really trying to sell me on the Equity Research position during the interview. Perhaps she liked what I told her about my financial modeling experience or maybe she liked that I am planning on taking the CFA exam in June. I have already put my thank you letter in the mail. She told me I should hear back by later next week. This investment bank appears to be growing very quickly right now and I have the sense that they will continue their massive hiring spree over the next few years. I will update my blog when I learn more sometime late next week.

Sample Interview Questions:

1. Why are you interested in working for our firm?
2. Why did you decide to attend law school after finishing your MBA?
3. How do you plan to combine your business and legal education?
4. Why did you leave the financial industry to attend law school?
5. Are you most interested in I-Banking, Equity Research or Asset Management and why?
6. What do you think would be your biggest challenge as a new associate with our firm working in Equity Research or Investment Banking?
7. Where have you gained most of financial analysis skills to this point?
8. Would you prefer a formal extensive training program or learning on your feet by being thrown into the fire?
9. What is your geographical preference?

Monday, February 14, 2005

Interview Dilemma

I now have multiple firms in another state that would like to interview me. While this is great, I feel I have already had sufficient interviews to land multiple job offers. Over the past few weeks I have been so busy with extracurricular activities I have fallen slightly behind in my outlining. I also missed a few classes already due to interviewing. Should I go out of state and miss another entire day of class at this point? Or should I ask the firms if I can schedule an interview over spring break (at which point they may have already made all their hiring decisions already)? Most likely I will email the firms and let them know the best dates for me to interview right now and give them the time frame for my spring break also. I will let them decide how soon they want to interview me. Hopefully I will get the offers I expect soon and I will not have to go on these interviews at all

China Cracks Down On Internet Bars


Sunday, February 13, 2005

Law School Gossip

Law School reminds me way too much of High School. Every time I decide to go on a date with a classmate (even if she is not in the 1L class) someone seems to see us together and the whole school seems to know about it the next day. Why is there so much gossip in law school? Is it because we spend so much time together on a daily basis? College was not like this so why is Law School? As far a social maturity it seems like law school is a step below undergrad. Personally I do not like gossip and choose to never spread rumors. I have made a personal decision to no longer date law students.

For now I will just choose among the countless attractive undergrads girls and the few attractive women in medical school or other graduate programs. With the many thousands of undergrads out there I should have no problem dating as many women as I like without having to worry about being caught talking to more than one girl at the same time or hearing gossip about who I went out with the next day at school.

Lack of sleep

This has been a very busy week. Between interviews, reading, volunteer work and going out Thursday, Friday and Saturday night I am worn out. After sleeping in late today I realized that I really need to get to work! I hardly have started to read for next week and I have a memo due in legal writing tomorrow that I am barely started on. I also have a few thank you letters to put in the mail by tomorrow morning, grocery shopping and laundry to do. I wish there were more hours in a week. Unfortunately, next week will not be much better since I have more interviews.

Friday, February 11, 2005

Another Firm Interview Today

Something surprising happened today in my firm interview. After being continually told how important grades are in law school, I was expecting every firm to demand my transcript. Today I had a great interview with a partner in a practice area I am very interested in. He told me he chose to interview me because of my background, since he was tired of having to explain basic business concepts to new associates.

The interview went well over an hour and grades never came up! I also have a few friends at school who have landed firm jobs already without being asked for grades. One classmate even tried to hand the hiring partner at a very large firm his transcript during his interview but was told "I do not want to see your grades. I am the firms managing partner and had bad grades in law school". Perhaps the stories that we all need spectacular grades to land a good firm job is overblown.

Today I was told the hiring committee will meet in a few weeks to discuss summer associate candidates. I really feel like this was my best interview so far. Today, another midsize firm near my hometown asked me to interview. I will likely oblige since I would be happy living there and like the firm. Unfortunately since it is in another state I will have to miss yet another class (or classes depending on the day) to attend the interview. I hope this process is over soon. It is hard to concentrate on school with multiple interviews every single week.

Thursday, February 10, 2005

NTES and SNDA to Benefit From EBAY China Efforts

We already knew that SOHU decided to sign an exclusive deal with Taboa for the China auction market. As I previously mentioned as a possibility, now it appears that NTES will be the primary portal beneficiary for Ebay/Eachnet's big marketing push this year. SNDA and EBAY will likely form a lasting and mutually beneficial partnership. SNDA benefits from the advertising revenue. EBAY benefits as SNDA's massive user base sells their "virtual items" from MMORPG's on EBAY/EACHNET. From Marketwatch:

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JAG does not seem too bad

I had my JAG interview this morning. I had another phone interview with the State Attorney General's Office earlier in the morning so I had to hurry to make it to my JAG interview on time. I actually ran several blocks in my suit and arrived EXACTLY on time. The woman who was interviewing me (who was very attractive by the way) asked me how far I ran and then made some comment that I would have an easy time passing the physical fitness test. To this point I had not even thought about the physical requirement. I happen to be in great shape. After my interview I ran into someone who said he had a friend that was declined by JAG last year solely because she was overweight. Personally I do not see why it matters much for a JAG position, but I guess those are the rules. Since there were 1000+ applicants for the 100 or so summer intern positions around the country I guess my chances will be better if some people do not qualify based on weight, etc. However, I still do not think that is fair. Over the last few days I had done some research on JAG. Until recently, I guess my knowledge was warped by all the television programs and movies I have seem over the year. After my research and my interview, I now think I may enjoy working there for a summer (I am not sure about as a career option because of the risk of being sent to Iraq, etc). There are opportunities to work in the area of contract law dealing with the thousands of military suppliers. There are also many other legal areas that a JAG attorney can specialize in besides criminal prosecution or defense. I should find out by early April if I am accepted or not.

Wednesday, February 09, 2005

JAG Interview

I have to be honest here. I do not think I would ever consider working for JAG after graduating law school. Nevertheless I applied to JAG for my 1L summer and will be going to my interview tomorrow.

Why would I do this? Frankly, as a 1L I do not have a large number of options for extremely lucrative legal employment this summer. Even if I did however I would still likely agree to quite a few interviews until I actually accept a job offer. Although I have had many interviews over the years, law related interviews seem a little different. Is it wrong for me to interview just for "practice"? Who knows, maybe JAG will impress me and I will end up working there this summer. Or maybe they will sense my true feelings toward the military and reject me. I will find out soon enough.

Importance of Sending Thank You Letters

I thought this was common sense, but perhaps to some it is not. I overheard this conversation today at law school (with fictitious names of course):

Jack "So how did you call back interview with XYZ law firm go yesterday?"

Jill "I think it went pretty well. I sent out my thank you letter later yesterday afternoon. They should probably receive it today."

Jack "Thank You letter? I did not think of that. Do you think I was supposed to send one?"

I cannot imagine doing an OCI and not sending a thank you letter, much less a call back interview. Perhaps it is just because of my business background where I would always send thank you letter (or even small gifts) to prospective clients. Or perhaps it is because many students at our law school came straight from undergrad and have never held a substantive full time job in their life. If Jack has not learned yet, he will learn very quickly about the importance of a simple thank you letter next fall during 2L fall interview season.

China Economy Will Surpass US in 2025

"WASHINGTON - China's unprecedented rise, fueled by foreign investment and technology, has put the Asian giant on a path to surpass the United States economically by 2025, the author of a new book on China said on Tuesday."

From China Daily:

Due to a lower cost of labor and highly educated workforce Chinese companies will threaten the U.S. giants over time. Already privately held Huawei Technologies is using multiple shifts to keep working 24 hours a day, so that its engineers can bring product to market more quickly. Huawei has grand international expansion plans that one day could threaten the market dominance of Cisco.

Tuesday, February 08, 2005

Tencent/Google Search Cooperation

"Tencent And Google Cooperate on Search And Advertising"

From Pacific Epoch:

It looks like Tencent is really making a big push to raise the profile of their portal. They do have one major competitive advantage in their market leading position in the Instant Messenger Market. If they can get their IM users to log onto their portal and buy other services they should do well. To bad it is hard for American investors to buy Tencent directly. We can purchase the South African ADR NPSN which has a large ownership interest in Tencent among other business lines.

Law vs. I-Banking for 1L Summer

After being rejected by the SEC and all of the large law firms I have applied to. I may be left to choose from small or medium law firms, various other government agencies, or a judicial externship.

Of the legal positions I will likely be able to choose from the small or medium sized firms will pay something, but not nearly as much as I could make in the business world. If offered a job after my I-Banking interview next week I will likely take it. I also have applied to several other I-Banking firms that I am waiting to hear back from. I will have to explain to law firms during OCI next fall why I chose to take a non legal position as a 1L. Since I want to practice securities law I think I can give a good explanation. Regardless I will feel better after receiving my paychecks over the summer at an I-Bank than I will feel at some small law firm or government office.

Taking the CFA exam during law school

I have some bad news to report. I received a rejection letter from the SEC today following my interview next week. I know they receive many applicants and have few open positions. I think my background is the perfect fit for the SEC. I also felt my interview went very well. Unfortunately my grades were not near the top of my class and there were also many applicants from top ten schools (I am at a mid tier 1 school). Apparently I was not the best applicant (in their view) for the position at this time.

I am still determined to work in Securities law, Private equity or M&A. I love finance and could not imagine doing anything else. I have decided to study for and take the CFA exam in June (See I realize that outside the SEC and law firms with a large emphasis in the practice areas above, few legal employers will care about it. Regardless, I want to study for and take the exams for my own benefit. I also think that an enhanced knowledge of accounting and finance will become more and more important for corporate attorneys post Sarbanes-Oxley. I also believe that clients will respect an attorney that can better understand their financial statements as compared to most other JD's. The time investment for this exam is fairly significant. Time will tell if it was worth it.

Sample Law Firm Interview Questions

Several people asked me to post what sort of questions came up in my law firm interview yesterday. Frankly I was amazed at all the "soft" questions. It was much easier than any business interview I have ever had. Honestly I never felt any real pressure.

Some of the questions that I was asked:
What made you decide to quit you career in the financial services industry after earning your MBA and move here to attend law school?
What legal practice area are you most interested in?
How did you first semester go?
Who were all your professors?
How would you best describe what unique qualities (not shared by all your other classmates) that you could bring to our firm?
What makes you interested in our firm?

Some of the questions that I asked the employer:
I noticed that your firm has a very high retention rate. What do you think is the primary reason lawyers at your firms seem to be so satisfied and stick with the firm when your close competitors have such high turnover among associates in their first 2-4 years?
She gave me an answer about the work life balance, better chances of making partner and a lower billable hour requirement than other comparable firms. You mentioned to me that you are hiring several 1L's this year but you do not plan on hiring any 2L's.
As you know this is very unusual in the marketplace. Could you explain to me why you do not intend to hire any 2L's this year?
She told me that they were waiting to hire any 2L's until the 1L's they had made offers to let them know if they were coming back again as 2L's. By the time they turned down the offer, fall 2L interview season had passed and all the best 2L candidates were taken. "We only like to hire people we could see making partner one day so we are very picky. We did not think we could find any suitable 2L candidates this late in the process."
Which of the practice area's that we talked about do you think we experience the most significant growth over the next few years?
She told me about the growth they were experiencing in several areas.

Besides the Q&A we basically just chatted about how I initially because interested in the law and my background. She also told me quite a bit about her background and why she was happy at the firm. She gave me more information on the summer program and answered my questions about dept rotation and training. Again this interview was very brief due to tight back to back scheduling. I am sure the call back interviews will be more in depth.

Monday, February 07, 2005

Correction to my SOHU comments below

It appears as if EBAY will not be a SOHU customer much longer. I just listened to the SOHU conference call and it appears they have signed an exclusive adverting contract (for the auction market) with Taboa. This means EBAY/Eachnet will have to advertise somewhere else. Where will EBAY advertise? Cleary not SINA (SINA/YAHOO 1Pai is a competitor) and not SOHU. Perhaps EBAY will advertise with NTES or Baidu (IPO coming in 2005)?

Regulations Having a Negative Impact on Chinese Portals

It looks as if the harsh regulatory environment we began to witness last year is going to stay. The bad news is that wireless revenues will likely be down sharply across the board this coming quarter. To date these are the major new regulatory changes the portals we have to deal with:

1. Migration of MMS onto the MISC billing platform (this will be similar to the SMS migration from last fall). Under the new system, costs will increase since the portals will have to deal with each of the individual provinces.

2. New revenue recognition policy at China Mobile will mean no payment to the portals for undeliverable messages

3. New SARFT regulations on TV and radio advertising will make it hard for the portals to drive future new usage based business based of the current banned format.

4. Although unsubstantiated to this point there has been talk for some time of the existing revenue share agreements being renegotiated by China Mobile, China Unicom, etc.

The negatives above are clear and should continue the downward pressure on share prices in the near term. However there are many long term positives and the recent sell off may be a buying opportunity for long term investors with a high risk tolerance.


NTES- Relatively small wireless exposure. The online gaming market is continuing to grow fast and NTES is a major player. I hope to see them step up their casual gaming and mobile gaming efforts going forward. The quality of new 3D games will need to improve post WOW so it is possible there could be some delays in the release dates on new games. However NTES does have strong internal game development capabilities, can tailor games to local Chinese culture, high margins and a reasonable valuation. I look forward to seeing their earnings report

SINA- Their casual gaming platform I-Game is growing quickly, as is the YAHOO/SINA auction partnership (although significant auction profits should be a long way off). Wireless continues to be under pressure, but SINA may benefit if other smaller players are pushed out of the business in the new environment. Advertising should continue to grow strongly in the long term as more and more Chinese people gain internet access. The 2008 Olympics should raise the profile on the entire section. I think SINA is a good long term bet, but it is hard to predict short term performance

SOHU- They have continually disappointed me on their execution in the gaming and wireless area. They are no longer relying on wireless (as a percentage of their business) to the extent they used to be. However SOHU is still the second most popular portal in China (they also hold, and which are valuable as well) and trade at a very reasonable valuation. Short term positives may include increased advertising from EBAY as EBAY tries to battle with and Taboa. In the long term even totally discounting every other revenue source, advertising should be enough to support the stock.

TOMO- The portal is not as popular as the above, but I have been impressed with management thus far. The Skype/TOMO IM partnership seems to be gaining ground quickly and the India Games acquisition seemed very smart. TOMO may have the best international expansion possibilities of the portals above. The valuation is also attractive.

SINA falls over 20% in after hours trading following earnings release

Just when I thought it could not get any worse on the regulatory front the Chinese State Administration of Radio, Film and Television (SARFT) creates more advertising restrictions. This combined with the coming migration of MMS onto the MISC platform will create a nasty 1Q 2005 for SINA. Here is the link to the earnings report:

SOHU 4Q 2004 Earnings

Sohu’s wireless business has not been doing well since the China Mobile sanctions last year. SINA, TOMO and others seem to be taking market share. On a business so heavily based on distribution it seems SOHU is not executing as well as its peers. Advertising revenue is clearly now the primary growth driver. What I was most interested in is the future guidance. With Taboa and SINA/Yahoo both gaining ground on Ebay/Eachnet in the China auction market, EBAY recently announced increased marketing efforts in China for 2005. Of the three major Chinese portals (SINA, NTES, SOHU) SINA and SOHU seem like the best match for Ebay's target demographic. However since SINA/YAHOO ( is an EBAY competitor, SOHU will likely be a major beneficiary of EBAY's large marketing budget in China. I do not understand why the advertising guidance for 1Q 2005 is so low. Either they are being overly conservative or something else is wrong. I am also a little concerned with the performance of their MMORPG Blade Online. I hope to hear about new promotions of other development in their online gaming business when I have a chance to listen to the conference call. Even fully discounting gaming and wireless it seems SOHU is reasonably priced based just on its advertising model since more and more Chinese will be coming online in the next few years and the 2008 Olympics are in sight.

I am not making investment advice, only stating some of my opinions. Please do not invest based on anything you read on this blog. Do your own research and determine your risk tolerance before making any investment.

My Interview

I think it went very well. The firm had many interviews scheduled back to back so the time allotment was short. My interview went several minutes over which I take as a positive sign. I came well prepared for the interview with possible questions in mind. I was rather impressed with the firm's high retention rate. It is probably partially due to their lower billable hour requirement than other local firms. Training and attention during the summer program seems to be above average, as are the chances for associates to make partner. I feel like I had a good answer for every question they asked me. My only concern is grades since I know they are highly important and there were many applicants, some of whom performed better than I did during our first semester. We will see what happens. Immediately after my interview I scheduled an interview at the State Attorney General's office where I am from. I also have another firm interview on Friday and an I-Banking interview next week. I hope to hear back from the SEC about a jog offer soon. There are several other small/medium sized firms where I plan to interview in the coming weeks. The more interview practice I can get the better!

Law Firm Interview in the Morning

I am just about ready to go to bed. I just finished doing some research on the law firm I am interviewing with in the morning. It is not a large firm (about 50 attorneys) but it is close by and I would not have to move this summer. I think last year they only hired 2 first year law student for the summer and I know they had dozens of applicants this year. I interview well, but I know my grades are not at the top of my class right now. We will see what happens. I also have another firm interview in a nearby city on Friday and several government 1L interviews coming up soon. Although I now doubt I will find Big Law summer employment this year, I am sure I will have numerous other law related options.

Sunday, February 06, 2005

Very funny article about a Tulane law student

Here is the link:

Lack of JD/MBA employment statistics

Although it is relatively easy to find data on average salary statistics for recent JD and MBA graduates, I am having a hard time tracking down much in the form of JD/MBA statistics. My impression is that many JD/MBA grads pursue the same initial jobs as their JD or MBA counterparts. I do know that some big law firms grant 2nd year associate pay to JD/MBA students similar to how they may reward judicial clerks.

I do wonder about how JD/MBA grads tend to perform in the long run compared to their JD or MBA peers. Are they more likely to make partner at their law firm or investment bank? More likely to leave big law to go work as in-house counsel? More or less likely to start their own business?

If anyone knows of reliable statistics relating to this please let me know and I will post the link on my blog.

What stocks do I own right now?

I currently maintain positions in and/or am looking at purchasing more shares in:


Day Trading in class

I am thinking about switching to Index funds, closed end funds or ETF's for this semester and not making a single trade. Fortunately I did very well in the market last semester. Unfortunately my performance was based on frequent trading during class which was quite a distraction at times. So although I did okay my first semester I have to wonder if I could have done even better if I had been paying full attention at all times instead of trying to execute more trades.

What ETF's am I looking at?

Let's just say that I take a long term view that much better opportunities exist in the Emerging Markets (China, India, etc) than there are in the US...

Investment Banking Application Deadlines

After my initial success with attaining interviews with Investment banks at school (The business school here has agreed to let me use their Career Services and OCI since I am currently a law student here despite the fact that I earned my MBA from another school) I decided to send out a few more applications on my own. Unfortunately it seems that similar to many large law firms, I-Banks have app deadlines and do their interviews in the fall. It seems I am a few months late this year in most of my MBA summer associate type job apps.

Another problem for 1st year law students looking for 1L summer business jobs is that 2L summers are really a lot closer to 1st year MBA summers in terms of logistics. 1st year summer MBA students will graduate in a year and could theoretically accept a job offer to begin full time employment the following summer. This is basically the same as the 2L summer law firm summer associates who receive offers for full time employment after they graduate. As a 1L business firms will have to think about me taking another full year to graduate after all of the other MBA's in the summer class already begin working. Exactly how I-Banks, Consulting Firms, etc will view this is yet to be seen.

Saturday, February 05, 2005

How will law firms view my MBA?

Overall I feel that I will not have much trouble convincing law firms of my intent to practice law after graduation. After all, I did come to law school after completing my MBA and have a clear explanation of why I chose to do so.

To this point I have came to the following conclusions...

  1. I can use my business to business sales background and MBA as a selling point during interviews when talking about my ability to become a rainmaker for the firm in the future
  2. My finance experience speaks clearly to my interest in M&A and securities law
  3. Most of my fellow classmates have a more limited knowledge of the business world and law firm economics in general


  1. Law firms could potentially question my desire to practice law and wonder why I am making a career change
  2. Some law firms may fear that I may work for a few years then quit to go work for an investment bank, hedge fund, etc.

The reason why this issue is on my mind right now is that I am having a hard time finding employment at a large firm this summer. While I really do want to gain some substantive law experience this summer, I really would like to make a few dollars since I am a full time student again. It seems that my best option to make any real income at this point would be to seek employment at an Investment Bank for this summer. The question is as follows... How would this influence law firm's view of me when I am interviewing for 2L summer associate employment next fall? More on this topic coming soon

To be continued.....

Job Search Results as a First Year Law Student with an MBA and Significant Work Experience

After sending out my resume to hundreds of firms over the last few months, I have made a few conclusions. Unless you attend Harvard, Yale, Stanford and perhaps a few others it is very difficult to find a first year summer associate position at any large law firm (say 300+ attorneys). Even at a tier 1 school such as the one I attend it seems that without an Electrical Engineering background or hard science PHD few large law firms are even interested in interviewing first year students who are not at least in the top 10% of our class. Thankfully, I am now getting multiple interviews with numerous small and medium law firms and government agencies. I believe that I will have many employment offers in the coming weeks although likely not at the huge corporate law firms I most wanted to work at this summer.

To date I have applied for 1L summer positions as follows:

Large law firms (0 interviews, 95% "we do not hire 1L letters" an invitation to a open house, and several request for grades) - Prediction = few if any interviews, 0 job offers

Medium law firms (multiple pending interviews, many "we do not hire 1L letters") - Prediction = several job offers

Small law firms (multiple pending interviews, many "we do not hire 1L letters") - Prediction = many job offers

Government jobs (many interview requests) - Prediction = many job offers

Judicial Clerkship position (I have not applied yet but may in the coming weeks)

MBA type jobs (to date I submitted 1 I-Bank application, 1 interview) After my 100% success rate in getting an interview thus far I likely will apply to more I-Banks soon (assuming the application deadlines have not all passed)