CFO, The Magazine for Senior Financial Executives articles from June 2003

CFO, The Magazine for Senior Financial Executives archives from June 2003

Encore performances. (From the Editor).(Editorial)
June 1, 2003... THE WRITER F. SCOTT FITZGERALD ONCE SAID THAT THERE are no second acts in American lives. But of course that was before the Bankruptcy Reform Act of 1978. Thanks to Chapter 11 of that law, companies and individuals in the United States have a...

Finding the right VC partner. (Letters to the Editor).(Letter to the Editor)
June 1, 2003... YOUR ARTICLE "THE DRY SEASON" (April) paints a grim, albeit accurate, picture of the current venture-capital landscape and the current economic conditions. However, what the article failed to elaborate on were the opportunities for...

The ultimate payoff. (Letters to the Editor).(Letter to the Editor)
June 1, 2003... DOES THE BLACK-SCHOLES OPTION-pricing model accurately forecast how much an option will be worth ("The Holes in Black-Scholes," Newswatch, March)? Does the cost of the fire insurance on my house accurately forecast how much the insurance will...

Keep talking--and listening. (Letters to the Editor).(Letter to the Editor)
June 1, 2003... I READ WITH GREAT INTEREST YOUR article describing how the best companies manage their financial staffs ("What Works," November 2002). What struck me particularly was that successful companies like these tend to have a genuine desire to engage...

Correction.(Correction Notice)
June 1, 2003... In the May Newswatch story "Malpractice Insurance Rift' the author stated: "Physicians in West Virginia, Pennsylvania, and Idaho have recently pushed for and won tort reform legislation that caps what courts can award for noneconomic damages...

D-school. (Newswatch).(students in the Master of Science in Financial Engineering program at Kent State University traded derivatives on a simulated trading floor)(Brief Article)
June 1, 2003... Call them "Masters of the University." In April, students enrolled in the Master of Science in Financial Engineering (MSFE) program at Kent State University began trading derivatives on a simulated trading floor, using, real-time information....

Picking up pieces. (Accounting Firms).(second-tier accounting firms may not create real alternative for most large companies)
June 1, 2003... NOW THAT THE BIG EIGHT have dwindled to four, are viable alternatives emerging from the horde of smaller accounting firms? The second-tier firms would like you to think so. [paragraph] Sensing an opportunity to lure unhappy clients of the Big...

Feds fail again. (The CFO Act).(United States Government sets bad example with its Financial Report)
June 1, 2003... CAN YOU GUESS which recently released annual report warns readers that "amounts reported in the consolidated financial statements and related notes may not be reliable"? Hint: it isn't Tyco's. Once again, the Financial Report of the United...

The director's cut. (Corporate Governance).(survey finds board members are getting paid more as they take on more responsibility)
June 1, 2003... Board members, especially those serving on audit committees, have taken on new risks and responsibilities. Now they're getting paid more, too. That's the conclusion of a recent survey by Sibson Consulting. Of the 69 companies that took...

Error and trial. (Scandal Update).(prosecutors continue to build cases against the former CFOs of WorldCom and Enron)
June 1, 2003... IN APRIL AND MAY, new charges were brought against Scott Sullivan and Andrew Fastow, as prosecutors continued to build cases against the former CFOs of WorldCom and Enron for their alleged roles in massive accounting scandals. Sullivan was...

Boning up on benefits communication. (Employee Benefits).(Brief Article)
June 1, 2003... When it comes to creating loyal employees, could communication about benefits be as important as offering them? A new study by Aon Consulting Inc. says it is. According to Aon's Workforce Commitment Index, which measures a company's...

Cash-balance barriers. (Pension).(new rules could make it more difficult to convert to cash-balance plans)
June 1, 2003... WHEN THE TREASURY DEPARTMENT and the Internal Revenue Service released proposed regulations last year that would make it easier to convert to cash-balance plans, pension plan sponsors breathed a sigh of relief-until they read the fine print....

Tapping retail creditors. (Bonds).(Brief Article)
June 1, 2003... Companies are finding a new outlet for bond issues: retail investors. Programs that sell bonds directly to individual investors through brokers are gaining momentum, with participants that include IBM, Caterpillar, and GE Capital. The...

Economy: reloaded? (Global Confidence Survey).(findings of the Global Confidence Survey of finance executives)
June 1, 2003... NOW THAT THE WAR in Iraq is over, will the economy bounce back soon? Plenty of finance chiefs think so. In fact, CFOs are generally more hopeful about the short-term prospects for the U.S. economy than they have been in a year. According...

The summer of our content: most workers are drowning in documents, but is "content management" the answer? (Tech Watch).
June 1, 2003... "CONTENT IS KING," or so went one of the most common cliches of the dot-corn era. But as companies generated ever more "content," all that Web-site verbiage, not to mention reams of internal reports and other documents, started to seem less...

JV on the rocks: without plenty of attention and TLC, a joint venture may well run aground. (New Deals).
June 1, 2003... TRITE AS IT MAY SOUND, a joint venture really is like a marriage. For both, good communication between partners is essential. Goals should be mutually agreed on. And a little passion helps. As for the darker side of the matrimonial comparison,...

Natural performers: companies are increasingly relying on natural hedges to juggle currency risks. (Spotlight Hedging).
June 1, 2003... WHEN IT COMES TO CURRENCY risk, Companies are going natural. [paragraph] No, that doesn't mean they're exposing themselves completely to risk. They are forsaking derivatives for natural hedges--matching revenues and Costs for the same currency...

Second acts: after bankruptcy, companies often teeter between encore and final curtain call. (Bankruptcy 2003).
June 1, 2003... JUST AYEAR AGO, EXECUTIVES at Pillowtex Corp. thought they could finally look forward to a good night's sleep. Following an arduous bankruptcy process, lenders to the $1 billion maker of Fielderest towels and sheets had agreed to slice its $1.1...

From the bench: Tina Brozman explains why cooperation and rehabilitation are key to better bankruptcies. (A CFO Interview).(interview of Bingham McCutchen LLP attorney)(Interview)
June 1, 2003... TINA BROZMAN has strong opinions on bankruptcy. The former chief judge of the U.S. Bankruptcy Court for the Southern District of New York thinks the American practice of 'rescuing" failed enterprises, rather than liquidating them, is one that...

False security? Corporate insolvencies are testing whether securitization is a stable structure or a flimsy facade. (Bankruptcy 2003).
June 1, 2003... AT THE BOND MARKET ASSOCIATION'S annual meeting in New York in April, the moderator of a panel on asset-backed Securitization (ABS) joked that this enormously popular form of structured financing has "proven to be bankruptcy remote--except...

Fear factor: Sarbanes-Oxley offers one more reason to tackle enterprise risk management. (Special Report erm).
June 1, 2003... Rick Navarre wanted the audit committee at Peabody Energy to know exactly how he is managing risk at the company. As Peabody's CFO, Navarre developed a comprehensive methodology for analyzing and quantifying risk, in large part to educate the...

Split personality: an ESOP is a retirement plan. No, it's an ownership investment. Wait--it's neither one. (Benefits).
June 1, 2003... IN THE WAKE OF THE SPECTACULAR BANKRUPTCies of Enron, United Airlines, and Polaroid, employee stock ownership plans have come under intense media scrutiny during the past year. The staggering losses of employees' retirement savings have...

Trash-talk: what to say about your rivals. (Your Move).(balancing corporate diplomacy with frankness)
June 1, 2003... "THERE CAN BE NO QUESTION THAT WE ARE AT WAR," Home Depot CFO and executive vice president Carol Tome told a recent conference of finance executives. The combat, of course, is with Lowe's--the fastest-growing company in the home-improvement...

Cisco Systems Inc. (CFOs On the Move).(Dennis Powell to replace Larry Carter as CFO)(Brief Article)
June 1, 2003... Larry Carter has stepped down as Cisco Systems Inc.'s CFO. He will be replaced by Dennis Powell.

CSX Corp. (CFOs On the Move).(named Oscar Munoz its CFO)(Brief Article)
June 1, 2003... Railroad holding company CSX Corp. named Oscar Munoz as its new CFO. He succeeds Paul R. Goodwin, who is retiring after 38 years with the company. Munoz had been CFO of AT&T's Consumer Services unit.

Weyerhaeuser Co. (CFOs On the Move).(Richard J. Taggart appointed CFO)(Brief Article)
June 1, 2003... Richard J. Taggart is the new CFO of Weyerhaeuser Co. He steps in for William C. Stivers, who is retiring.

Cendant Corp. (CFOs On the Move).(has appointed Ronald L. Nelson its CFO)(Brief Article)
June 1, 2003... Cendant Corp. has appointed Ronald L. Nelson as its CFO, succeeding Kevin M. Sheehan, who continues as chief of Cendant's vehicle-services division.

Frying pan to fire. (Grapevine).(controversy is following Andrew Natsios in his new position as administrator of the U.S. Agency for International Development)
June 1, 2003... ANDREW NATSIOS walked into a fiscal nightmare when he left his job as Secretary for Administration and Finance for the Commonwealth of Massachusetts to take the helm at the Central Artery/Tunnel Project, aka the Big Dig. But the Big Dig now...

Taxing eloquent. (Grapevine).(Larry R. Langdon, commissioner of the IRS's Large and Mid-Size Business, has worked to target abuse tax shelters, managed overhaul to make agency industry-based)(Brief Article)
June 1, 2003... "I've had one of the most interesting jobs in Washington," says outgoing Internal Revenue Service official Larry R. Langdon. And Langdon, commissioner of the IRS's Large and Mid-Size Business (LMSB) Division, can support that claim. Since...

A mighty wind. (Editor's Note).
June 22, 2003... Contrary to popular belief, IT is not in the doldrums. With spending down and no emerging technology being heralded for its transformative power, IT appears calm but is in fact roiling just beneath the surface. Issues such as ROI, performance...

Readers write.
June 22, 2003... Quantum leap I'd like to state for the record that the comments attributed to me and to CIO Ron Cuevas regarding CPM ("Quantum Loop," Spring) were forward-looking statements of a strategic and visionary nature. They have not been...

Who gets what? (Customer Relationships).
June 22, 2003... Many companies invest in technology in order to "know their customers," but then what? When Dallas Teachers Credit Union (DTCU) wanted to grow its assets two years ago, it invested in customer-segmentation software to analyze its customers--all...

A piece plan for ERP. (Browser).(Integrate of disparate "instances" of ERP software scattered throughout an organization are discussed)(Brief Article)
June 22, 2003... One of the most vexing IT issues facing large companies is deciding when and how to integrate the disparate "instances" of ERP software scattered throughout the organization. AMR Research suggests that companies begin by asking why. In studying...

HP splits the difference. (Browser).(Hewlett-Packard Co. marketing to be third option to corporate market)
June 22, 2003... One year after its merger with Compaq, Hewlett-Packard is positioning itself to corporate customers as the sensible third option to IBM and Dell. "IBM is high-tech, high-cost, and Dell is low-tech, low-cost," claims Jeff Clarke, formerly CFO at...

FAS 133: time to mobilize. (Browser).(Financial Accounting Standards Board)(Brief Article)
June 22, 2003... The dust may finally be settling regarding FAS 133. True, as recently as April 30 the Financial Accounting Standards Board was issuing a statement that, once again, "amends and clarifies" the 700-plus-page accounting standard for hedging and...

Can I be the race car? (Training & Development).(consulting organization uses board games model to train employees)(Brief Article)
June 22, 2003... In this post-Enron world, corporate gamesmanship may be passe but game-playing is alive and well, thanks to a company called Root Learning. Originally a consulting organization specializing in strategic planning, the company became disheartened...

4 + 2 = 0 (IT)? (Browser).(What (Really) Works)(Book Review)
June 22, 2003... If information technology has lost some allure, at least it has plenty of company. A new book, What (Really) Works, tosses "IT investment" onto a vast scrap heap of 200 management practices that fail to drive value. In studying 160 companies...

Levers for success. (IT Strategy).(strategizing information technology investments)(Brief Article)
June 22, 2003... Given all the pressure on IT budgets, does anyone still think technology can produce competitive differentiation? A team of McKinsey consultants spent two years studying that question and found that IT investments can still separate the leaders...

Down but not out: there may be a second act for ASPs, who say they've figured out how to make software services work. (Bookmark).
June 22, 2003... Of all the Big Ideas spawned during the Internet boom, perhaps none blossomed so promisingly yet wilted so quickly as that of renting enterprise software over the Web. By some accounts, upward of 1,000 self-proclaimed application service...

Grinding away on ROI: recipes for IT success from three companies that go beyond mere number-crunching.(return on information technology investment)
June 22, 2003... As the economy resists any sustained bout of good news, most discussions of information technology continue to center on how to get the biggest return for the least investment. As a result, the ROI business is booming, with consultants...

Everything must go: companies often feel boxed in by the complexities of their supply chains. Business-intelligence software may open them up to new possibilities.
June 22, 2003... THE MILLENNIUM STARTED POORLY FOR NORTH FACE CORP. THE company's logo was ubiquitous on college campuses, yet the manufacturer, distributor, and retailer of outdoor apparel was nearly bankrupt, largely because of problems with its supply chain....

Precious resources? Technology is already reshaping the human-resources function, mostly through cost-cutting. Some say it can do more.(human-capital management trends)(What are Your People Worth?)
June 22, 2003... ""PEOPLE ARE OUR MOST IMPORTANT ASSET." How many times have you heard that? More important, how many times, upon hearing it, have you nodded politely and then changed the subject to something more, ah, important? But a new generation of HR...

Nothing to hide: eager to be more transparent, companies are using a range of technologies to communicate with shareholders.(methods of investor relations' communication)
June 22, 2003... GROUSE ALL YOU WANT ABOUT THE COSTS AND HEADACHES OF Sarbanes-Oxley compliance, but the new regulations are having a major and largely positive impact on the way many publicly traded companies view their investor relations (IR) function. CFOs...

Out with the old, somehow: think buying new PCs is complicated? Try getting rid of the old ones. (IT Assets).(environmental and financial factors of used computer disposal)
June 22, 2003... When Huntington Bancshares bought 4,000 new personal computers last year, it held out some hope that the 2,000 old PCs and several hundred servers it was replacing would fetch something on the used-computer market. As it turned out, the bank...

The matter at hand: should companies underwrite personal digital assistants? (Wireless).
June 22, 2003... From medical schools to law firms to animal-feed companies to the halls of Congress, personal digital assistants (PDAs) are proliferating. The handheld' computers that were once no more than gimmicky phone books are evolving into important...

File under 'nightmare': information overload has acquired a regulatory dimension, forcing senior executives to take notice. (Management).
June 22, 2003... Not long ago, the topics of data retention and records management elicited yawns from senior executives. After all, the storing of old documents and E-mails hardly seemed like a strategic imperative. But if those executives are yawning now,...

An exercise in utility: we may be wired, but we're a long way from simply flipping a switch. (Take-Away).(Notion of the information utility is discussed)
June 22, 2003... "All analogies are false." So intoned a history professor of mine, usually just before or after making an analogy. Analogies are extremely useful, even when, as creative-thinking expert Edward de Bono has noted, they don't quite fit, because...