CFO, The Magazine for Senior Financial Executives articles from August 2004

CFO, The Magazine for Senior Financial Executives archives from August 2004

The flight of the sell-side analyst.(Featured In August)
August 1, 2004... Analysts who work for the sell-side research units of large brokers and investment banks are migrating to the economic shelter of large-cap companies. For smaller issuers, decreasing coverage means a dwindling exposure to investors--a situation...

Suspicious minds.(from the editor)(Brief Article)
August 1, 2004... JUST AS KEN LAY FACES TRIAL AND LEAH FASTOW, WIFE OF Andy, heads to prison, Enron has entered the lexicon as a verb--as in "to go Enron," meaning to collapse because of one's illegal activity. One thing is sure: Enron still casts a sizable...

Shame--and honor--at NASA.(letters to the editor)(Letter to the Editor)
August 1, 2004... GWEN BROWN HAS BEEN CFO OF THE National Aeronautics and Space Administration for only six months, but as a taxpayer, I was greatly disappointed to read about her recent congressional testimony in your article "System Failure" (Grapevine, July)....

The legal Linux.(letters to the editor)(Letter to the Editor)
August 1, 2004... IN YOUR RECENT ARTICLE ON LINUX insurance ("Penguin Suits," Techwatch, June), you reported on the ongoing efforts of vendor SCO Group to get Linux users to pay the company a licensing fee. You also noted that SCO's assertion that Linux is...

Measure for measure.(letters to the editor)(Letter to the Editor)
August 1, 2004... THE PRACTICES AND PRESCRIPTIONS for setting executive incentive compensation mentioned in "New Carrots, Old Yardsticks?" (June) rested largely on traditional, enterprisewide accounting metrics: ROI, growth rates of revenues, cash flow, free...

Opinions on offshoring.(letters to the editor)(Letter to the Editor)
August 1, 2004... YOUR COVER PACKAGE "OFF SHORE" (June) was right on the mark. Americans don't care whether their jobs are "offshored" to India or "outsourced" to Indiana. Regardless of the term or place, it is a disease that destroys employee morale and...

Toxic cycle.(letters to the editor)(Letter to the Editor)
August 1, 2004... YOUR ARTICLE "THE BACKLASH" (JUNE) was great. I work in corporate PR for the largest call-center outsourcer in the world. Routinely, the company passes up the opportunity to speak to the press--BusinessWeek, Fortune, Forbes, you name it--on any...

Correction.(letters to the editor)(Correction Notice)
August 1, 2004... In "Office Politics" (July), a table of political donations on page 56 was incorrectly described as "What the largest companies and their CFOs have given...this election cycle." The donations were made by the individual CFOs; companies, as the...

Get over it.(newswatch)
August 1, 2004... To all the executives who have been griping about the negative effects of the Sarbanes-Oxley Act, its sponsors have two words: quit whining. In separate interviews with the Financial times in June, both lawmakers lashed out at executives...

Tax reform hold up.(Legislative Update)
August 1, 2004... IN AN ELECTION YEAR, CONGRESSIONAL TAX BILLS TEND TO be padded with lawmakers' pet interests, otherwise known as pork. This year is no different--except that this year, the sheer extent and diversity of the larding may actually sink the...

Offshore R&D.(newswatch)(Brief Article)
August 1, 2004... OFFSHORE R&D: A McKinsey survey found that 31% of executives in large companies are investing in R&D in Indian; 27% in China.

Safety net or deal breaker?(M&A)
August 1, 2004... WITH EXORBITANT SEVERANCE packages coming under fire, the golden parachute has become more lightning rod than safety net. Twice in recent months, the acquisition-triggered severance-pay packages for top managers have come close to breaking...

Charitable misgivings.(Tax)
August 1, 2004... Add charities to the roster of organizations on the hot seat. In June, the Senate Finance Committee held a wide-ranging hearing into the abuses of tax-exempt status. (Some 3 million U.S. organizations are tax-exempt, including 1 million...

Fewer chapters.(newswatch)(Brief Article)
August 1, 2004... FEWER CHAPTERS: PricewaterhouseCoopers predicts that 110 companies will file for bankruptcy in 2004, the fewest in six years.

California dreamin'?(Workers' Compensation)
August 1, 2004... CALIFORNIA IS CLAMPING DOWN ON skyrocketing workers' compensation costs. An estimated $17.9 billion in claims was paid in 2003, compared with just $6.4 billion in 1997. In response, the Golden State recently passed a law, championed by Gov....

No need to sweat these PIPEs.(Equity)(private investment in public equity )
August 1, 2004... Once a finance option of last resort, private investment in public equity (PIPE) deals are going mainstream. The financing instrument, which involves selling equity securities in public companies to accredited private investors, has become...

Expensing options.(newswatch)(Brief Article)
August 1, 2004... EXPENSING OPTIONS could lead to an average earnings reduction of 45% at tech companies, says a study by Susquehanna Financial.

The materiality of health.(Disclosure)
August 1, 2004... WHEN DO SHAREHOLDERS HAVE A right to know that a key executive has a life-threatening illness? In recent months, the serious health problems of key executives have plagued such companies as McDonald's, Clear Channel Communications, Enesco...

Unfair opinions?(Valuation)
August 1, 2004... The latest move to clean up perceived conflicts of interest on Wall Street is coming from the Street itself, as NASD contemplates new rules for fairness opinions. Formal opinions about whether a merger or acquisition price falls within a...

Tokyo and London.(newswatch)(Brief Article)
August 1, 2004... TOKYO AND LONDON are the world's most expensive cities, says a survey by Mercer, Asuncion, Paraguay, is the cheapest.

The newest associate: Jeff Clarke has weathered corporate turmoil before, but at CA he faces his biggest challenge yet.(techwatch)
August 1, 2004... THIRTY-FIVE DAYS HATH SEPTEMBER, APRIL, JUNE, and November. That, at least, was how Computer Associates International Inc. (CA), the world's fourth-largest independent software manufacturer, used to view its sales calendar. And a rosy view it...

Sector-bender: more and more nonprofits have for-profit subsidiaries. Now one CFO wants to turn that model upside down.(new deals)
August 1, 2004... IT'S A QUESTION MANY SUCCESSFUL PRIVATE COMPAnies face: how to finance the next stage of growth. Initial public offering? More private equity? John W. Gillespie, CFO of The Mentor Network, a residential-care provider, has another idea: find a...

Picking up the pieces: a company's reputation may be intangible, but when it's damaged, the losses are real. Can insurance bridge the gap?(insurance)
August 1, 2004... WHEN MARTHA STEWART WAS DENIED A NEW TRIal last month, shares of Martha Stewart Living Omnimedia Inc. took another dip, further illustrating the particular peril faced by companies closely identified with a "brand name." As many have learned...

Too much cash: companies are awash in cash. When will they start spending it?
August 1, 2004... Having fortified their balance sheets with cash over the past two years, one would think that CFOs would have little to worry about from investors. At the end of 2003, cash and marketable securities constituted roughly 15 percent of the...

Money to burn: CFO's Cash Management Scorecard shows the companies in 16 industries with the least and most excess cash per sales.(Illustration)
August 1, 2004... MONEY TO BURN CFO's Cash Management Scorecard shows the companies in 16 industries with the least and most excess cash per sales. IMPACT OF PAYING ...

The enforcer: if audit firms don't voluntarily improve their processes, PCAOB chairman William McDonough promises he'll make them.(A CFO Interview)(Interview)
August 1, 2004... WILLIAM J. MCDONOUGH HAS A PARTICULARLY tough job: as chairman of the Public Company Accounting Oversight Board (PCAOB), he is charged with policing an industry unused to outside regulation and under fire as never before. But judging from...

Corporate performance management: what finance must do to move the needle.
August 1, 2004... With moderate economic growth in the forecast, profit acceleration will come only from disciplined capital investment, improved productivity, and sound cost management. At a recent CFO magazine conference, we learned that's why CFOs are, once...

Investment insight: is corporate America adequately managing employee pension funds?
August 1, 2004... BY MANY ACCOUNTS, IT HAS BEEN A GOOD YEAR FOR corporate pension funds. For the first time since 1999, assets for most pension portfolios showed positive investment returns, reducing deficits by more than $50 billion. Meanwhile, discount-rate...

Watch your back: as companies map their growth strategies, they should pay more attention to the hazards they entail.(planning)
August 1, 2004... WHEN YOU CONSIDER ALL THE bad things that happen to good plans, it's not surprising how often CEOs blame poor performance on poor luck. Product launches flop when customer demand is weaker than expected. A brilliantly conceived merger becomes a...

what works, what doesn't? News report from CFO research services.(Read What Your Peers Are Saying ...)
August 1, 2004... (New) Budgeting and Planning at Midsize Companies When Are Spreadsheets Alone Not Enough? Growing business complexity and company size are driving many midsize companies to adopt more sophisticated planning and budgeting tools. ...

Switching industries.(Job Search)
August 1, 2004... AFTER THE LONG, HARD SLOG OF THE PAST FEW years, you can't blame senior executives for wanting to jump ship. What's surprising is how many want to transfer to another fleet altogether. According to a study by the New York-based Association of...

Everlast Worldwide Inc.(CFOs On The Move)(Brief Article)
August 1, 2004... Sports-equipment maker Everlast Worldwide Inc. names Greg J. Dailey as CFO....

Hollinger Inc.(CFOs On The Move)(Brief Article)
August 1, 2004... Embattled Toronto-based media conglomerate Hollinger Inc. appoints Adrian White as interim CFO, replacing Fred Creasey while he is on medical leave....

Flowserve Corp.(CFOs On The Move)(Brief Article)
August 1, 2004... Flow-control product maker Flowserve Corp. announces that treasurer David F. Chavenson and controller/CAO Richard J. Guiltinan will become co-CFOs to replace Renee J. Hornbaker, who has resigned....

Heidrick & Struggles International Inc.(CFOs On The Move)(Brief Article)
August 1, 2004... Heidrick & Struggles International Inc. names Eileen Kamerick as CFO. She succeeds Kevin Smith, who becomes CFO at R.R. Donnelley & Sons Co. For more on CFO careers, visit www.cfo.com.

Loose lips.(grapevine)
August 1, 2004... JUST TWO YEARS AFTER getting whacked by the Securities and Exchange Commission for violations of Regulation Fair Disclosure (Reg FD), Siebel Systems Inc. has been hit again. This time, the people accused of violating the rule, which prohibits...

More fallout from tax shelters.(grapevine)(Brief Article)
August 1, 2004... Who knew that corporate tax shelters could turn into such traps, especially for the organizations that created and sold them? In July, Richard Rosenthal, KPMG LLP's CFO, resigned. A KPMG spokesman refused to comment on the reasons for the...