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busin

new economy

barry.d.libert@arthurandersen.com

Value?
What is
Agenda for Today
nWill the Real Economy...

nDo Profits Matter?

nWhat’s a Business, Anyway?

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 1
Introducing Our New Book

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 2
Will The...
Real Economy Standup

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 3
Bull or Bear - $100 Invested in 1982

n$1,200 in a market basket

n$31,700 in software

n“Real estate is a hedge...

nAgainst making money”

nLess than $400

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 4
And It is Just the Beginning...

80

60

40 2000
2002
20

0
buyers sellers

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 5
...Both in US and Abroad!
$ B in 2002 - 4
400
300
200 B:C
B:B
100
0
Japan Europe US

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 6
The Rules Are Changing!

nIntangibles drive Value

nGlobalization is Key

nNew Technologies expanding

nThe War ... is for Relationships

nVolatility is here to stay!

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 7
How Do Businesses Create Value?
180
160 AOL vs Time Warner
Market Value ($ billion)

140
120
100
80
60
40
20
0
3/31/92
9/30/92
3/31/93
9/30/93
3/31/94
9/30/94
3/31/95
9/30/95
3/31/96
9/30/96
3/31/97
9/30/97
3/31/98
9/30/98
3/31/99
9/30/99
1993 1999

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 8
Business Models Determine Value
180
AOL Simon Property
160
Market Value ($ billion)

140
120
100
80
60
40
20
0
1993
3/31/92
9/30/92
3/31/93
9/30/93

3/31/94
9/30/94
3/31/95
9/30/95
3/31/96

9/30/96
3/31/97

9/30/97
3/31/98
9/30/98
3/31/99
9/30/99
1999

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 9
Business Models Determine Value
40,000 NTT
Yen (billions)

30,000
20,000 NTT
Docomo
10,000 Shinnittetsu
0
Softbank
93

95
97

99
19

19
19

19

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 10
Do Profits
Matter?

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 11
How Do YOU Calculate Value?

Balance Sheet Income Statement

Assets Revenues

Cash Flow

Liabilities Expenses

Net Worth Net Income

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 12
You are Your Assets, All of Them!

Physical Customer

Tangible Intangible
Organization
Assets Assets

Employee
Financial & Supplier

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 13
Business Models Drive Success
New Economy

Old Economy

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 14
Business
Not as Usual

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 15
Leaders asking Same Questions

nPeople, People everywhere, but not a…!

nWill Increasing Return Models Dominate?

nHow will Risk be calculated & Managed?

nWill the Sources of Capital Recalibrate?

nWhat will be the NEXT NEW, NEW thing

nHow will Measurement & Reporting change?


ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 16
How Will You Create Value?

D - Markets
Value

Transformation

P - Markets
Time
ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 17
Implications For You
nWhich New Assets?

nWhat New Technologies?

nWhat New Partners?

ValueDynamics
© 2000 Arthur Andersen. All rights reserved. 18
BUT, Don’t Forget all the Issues

Business Model Design

Measurement & Total Risk


Reporting Management

Systems & Processes


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© 2000 Arthur Andersen. All rights reserved. 19
Value
Dynamics