Monday, July 16, 2007

New era 'to surpass dotcom boom'

New era 'to surpass dotcom boom'
By Kevin Allison and Richard Waters in San Francisco and Francesco Guerrera in New York
Copyright The Financial Times Limited 2007
Published: July 16 2007 03:00 | Last updated: July 16 2007 03:00

The introduction of consumer-driven web 2.0 technologies into businesses is set to usher in a new phase of productivity growth which could surpass that achieved during the late-1990s internet boom, according to John Chambers, chairman and chief executive of Cisco Systems.

"We are at the very beginning of the next phase of creativity that will last, I think, a minimum of 10 years, probably 15 years," said Mr Chambers, in an interview with the Financial Times. "But it will have more impact because . . . the power of [connecting] many to many allows you to do things at a dramatically different speed."

The head of the world's biggest maker of data networking equipment said social networks, wikis, tele-conferencing and other technologies that allow interaction on a large scale could change entire business models. His comments come amid a period of intense interest in consumer-oriented social networking sites such as MySpace and Facebook, which allow users to share pictures, videos and other messages online.

By allowing people within and outside of companies to connect to each other and share information, Mr Chambers said, companies should be able to increase the pace of their business operations, enhance sales models and interact more productively with customers.

He said he had shared his prediction with Alan Greenspan, former chairman of the US Federal Reserve, and other economic policymakers. "While a lot of people say that's very possible or even [probable], just like in 1996-1997, there's a hesitancy . . . about taking risk by some of the established companies and that actually creates an opportunity for us," he said.

During the 1990s, excitement about the potential of internet-enabled technologies led Cisco briefly to pass Microsoft as the world's biggest company by market capitalisation. But enthusiasm over the dotcom boom proved unsustainable. After the bubble burst, Cisco's shares lost more than 80 per cent of their value.

Mr Chambers acknowledged that the bubble and its aftermath had resulted in an "overextended" stock market. However, he said Cisco's predictions about the internet's impact on business productivity had proven correct.

Some second-generation hedge funds

Eclectica Asset Management was set up in 2005 by Hugh Hendry and Simon Batten after they left Odey Asset Management, one of London's longest-established hedge funds. It came to prominence last year when Mr Hendry called for Warner Music to buy EMI, but is mostly less confrontational.

Oceanwood Capital started last year when Chris Gate left Connecticut-based Tudor Investment Corp to set up his own event-driven equity fund. Strong initial returns helped it raise more than $700m.

MKM Longboat was spun out of US hedge fund Sagamore Hill, which remains a backer, last year, and has grown fast to $1bn as its multi-strategy approach delivered.

The Children's Investment Fund has become one of the activist hedge funds most feared by European executives after Chris Hohn, who left Perry Capital in 2002 to found the fund, helped block Deutsche Börse's bid for the London Stock Exchange and pushed ABN Amro to put itself up for sale. The $10bn fund donates a portion of its fees to a linked charity run by Jamie Cooper-Hohn, Mr Hohn's wife.

Toscafund is another hedge fund which pushed for change at ABN. Founder Martin Hughes, formerly of Tiger Management, has persuaded Sir George Mathewson, former chairman of Royal Bank of Scotland, to join him as a non-executive.


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