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| COURSE CONNECTOR |
| ARTICLE SUMMARIES AND QUESTIONS |
| "AOL: The Relaunch," pp. 78-84: America Online was as good as dead. Once a technology leader in the early days of the Internet, by 2004, AOL was scarred by a costly financial scandal, strategic missteps, and a reputation among the technorati as "Internet for Dummies." So why is it now being courted by tech titans like Google and Microsoft as an important potential partner? Flashback to July 2004: at an assembly of a couple dozen top managers of Time Warner's AOL unit, vice chairman Ted Leonsis and president of the media networks group Mike Kelly delivered a sobering assessment of the state of the company. Customers were defecting in droves from AOL dial-up accounts to broadband, and competitors like Yahoo and MSN were only getting stronger. To stay relevant — and to stay in business — AOL would need to build a Yahoo-like Internet portal. And to make that portal attractive to users and advertisers, AOL would have to offer up its rich content for free. Despite some strong opposition to the redefinition of the company, AOL moved forward with the plan. So far, the results have been promising. The question now is, how long until Wall Street is willing to forget AOL's tarnished past? Students will see how AOL executives breathed new life into a company that was quickly going the way of the dinosaurs. Discussion Questions:
"Remodeling Martha," pp. 100-122: Whether you love her or hate her, you have to admit that Martha Stewart is one powerful businesswoman. The ubiquitous lifestyle maven is #21 on FORTUNE's 2005 ranking of the 50 most powerful women in business, and rightfully so. Her flagship magazine, Martha Stewart Living, has seen ad pages jump 48% this year; her new advice book, The Martha Rules, is on the New York Times bestseller list; and she's landed a syndicated daytime TV show, a $30 million satellite radio deal with Sirius, a DVD deal with Warner Home Video, and a music deal with Sony BMG. All this after a year in which she served five months in prison and five months on house arrest for lying to government investigators about a suspicious stock trade. No wonder little things like a weak stock price for the company she founded, Martha Stewart Living Omnimedia (MSLO), don't get her down. But while Stewart has worked hard to revamp her board, assemble an all-star team of managers and consultants, and restore her public image, what she really wants back is the chairmanship of MSLO, which she freely gave up while mired in legal battles. With her intense drive and ability to get her way, don't be surprised to see Stewart on top again someday. This article shows how Martha Stewart rebounded from major personal and professional setbacks to swiftly regain her status as a multimedia phenom. Discussion Questions:
"Damaged Goods," pp. 177-184: Hedge funds are notoriously hypercompetitive — snagging strategies and talent from rivals, "paying the Street" for scraps of information or a sliver of a stock offering, and cheating the next guy are all business as usual. But even in this high-stakes world, Millennium Partners and its enigmatic leader, Israel "Izzy" Englander, may have gone a bit further than your typical hedgie. Englander's distinctive operating philosophy has fed the firm's record of outperformance — averaging 17% a year since it started in 1989 — but has also attracted the scrutiny of regulators. In 2003, the SEC and the New York attorney general launched an investigation into the way Millennium traded mutual fund shares over a three-year period. Seems a huge swath of the fund was allegedly dedicated to oft-forbidden market timing and outright illegal late trading. The problem extends far beyond a lone trader behaving badly. The government has accused the firm and Englander himself of "systematic, organized, pervasive wrongdoing." Behind-the-door settlement negotiations are ongoing. So what does this mean for Millennium's investors, who've long turned a blind eye to Millennium's operating procedures in exchange for stellar returns? It's possible some will stay and weather a scandal, but it's highly probable that others will bolt, if not sue, potentially destroying Englander's fund. In this article, students will look at how one of the most successful hedge funds around is beginning to crack. Discussion Questions:
"The Little Aircraft Company That Could," pp. 201-208: A decade ago, Brazilian airplane manufacturer Embraer was in serious trouble. Effectively bankrupt and in disarray, it had been sold to private investors by the government the previous year. Enter Mauricio Botelho. Described by colleagues as a "normal guy" for his modest, congenial business style, Botelho is also a Latin American business legend. Smart, determined, and enthusiastic, he listens well and makes tough decisions. In 10 years as CEO of Embraer, Botelho has transformed the company into one of the aerospace industry's strongest performers. Sales last year rose 61%, to $3.4 billion, while profits nearly doubled, to $380 million. How has he done it? He staked the company's future on the Embraer 145, a 50-seat regional jet. It was a risk — rival planemaker Bombardier was ahead by several years with its 50-seater — but the timing was right. The regional jet market took off, and Bombardier didn't have the capacity to meet demand. Bingo! Today, Bombardier remains Embraer's chief competitor, but Botelho's dedication to serving customer needs by making his planes more comfortable and ergonomically correct has defined Embraer's place in the regional jet market. And by taking a Third World failure and engineering it into an unqualified global success story, Botelho has ensured his own legacy as well. Students will analyze how Mauricio Botelho combined effective management, design, and marketing strategies to make Embraer a high-flying hit. Discussion Questions:
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