CFO, The Magazine for Senior Financial Executives articles from March 2005

CFO, The Magazine for Senior Financial Executives archives from March 2005

Time and change.(Chief Financial Officers)(Brief Article)(Editorial)
March 1, 2005... THERE'S NOTHING LIKE AN ANNIVERSARY TO BRING HOME how hard it is to predict the future. Today, CFO Publishing (an Economist Group business) encompasses CFO, CFO Europe, CFO Asia, CFO China, CFO IT, CFO Human Capital, and CFO.com. In 1985, CFO...

Europe weighs in.(unemployment rises in Europe)(Brief Article)(Editorial)
March 1, 2005... SUMMER, 1985. THE MEETING OF THE EUROPEAN Union's heads of state was fraught with tension--uncertainty over the integration of new members, rampant speculation about the future of state subsidies to ailing industries, and unresolved arguments...

The view from Asia.(economical aspects)(Brief Article)(Editorial)
March 1, 2005... WHEN CFO MAGAZINE LAUNCHED ITS ASIAN edition 13 years after it began publication in the United States, Asian finance executives, we thought, were ready for the ideas that were altering the job in America. The venture was well timed. That...

Daily financial malpractice?(Letter to the Editor)
March 1, 2005... You HAVE DONE AN ADMIRABLE JOB discussing a widely misunderstood area of the securities laws ("Finders Keepers," February). I have worked with Hugh Makens's ABA task force on unlicensed financial intermediaries, and am an attorney as well as a...

Get off the bandwagon.(Letter to the Editor)
March 1, 2005... I WAS DISAPPOINTED IN "THE LONG Haul" (February) for several reasons, but mostly because I expected more than just another ride on the low-cost-carrier "rah-rah" bandwagon. How hard is it to be a low-cost carrier today? There are no labor...

Get off the boards.(Letter to the Editor)
March 1, 2005... ROY HARRIS WRITES IN "ACROSS THE Board" (January) that talent scouts are targeting public-company CFOs to be directors of other firms, "usually for audit-committee members." The same article notes that most CFOs have the common sense to say no....

Clarifying calculations.(Letter to the Editor)
March 1, 2005... I AM A BUY-SIDE INDUSTRIALS ANALYST at ING and enjoyed your excellent article on capital spending ("Capital Choices," December 2004). But how exactly is ROGFA calculated? I read the box on page 44 ("Measuring Capex"), so I understand it's...

Hard lessons learned.(Letter to the Editor)
March 1, 2005... MY COMMENTS ARE IN RESPONSE TO Work/Life (November 2004). I am not a CFO, but I have the drive to be as successful as any CFO. Young and with some college education, I was able to learn and to market myself, so that I could do the best for my...

Mulligans.(accounting errors are mainly due to Sarbanes-Oxley Act of 2002)(Brief Article)
March 1, 2005... For corporations, it's akin to a group "do-over? Last year, some 414 companies restated their financials, according to a study by Chicago-based Huron Consulting Group. That's an increase of 28 percent over 2003, when 323 companies restated...

Targeting executive pay.(Securities and Exchange Commission)
March 1, 2005... IT LOOKS LIKE 2005 COULD REALLY BE THE YEAR THAT regulators get tough on executive compensation. [paragraph] In recent months, Securities and Exchange Commission officials have issued strong words on the subject. For example, Stephen Cutler,...

Late fees, lost profits.(Blockbuster Inc.)(Brief Article)
March 1, 2005... AFTER BEING HAMMERED FOR YEARS by competitors' ads and late-night TV jokes, Blockbuster Video did away with its much-reviled late fees in December 2004. For the company, it was a welcome counterpunch against Netflix and video-on-demand...

Not the time for weakness.(stock markets)(Brief Article)
March 1, 2005... The mea culpas are coming fast and furious. In January, 27 companies, including Eastman Kodak Co., SunTrust Banks Inc., and Toys "R" Us Inc., warned that they wouldn't be getting a clean bill of health on their internal-controls audit,...

Bad debt and then some.(Preference Payments)
March 1, 2005... IT WAS BAD ENOUGH FOR WASTE MANagement Inc. when a delinquent customer--a hazardous-materials recycler--declared bankruptcy in the midst of payment negotiations. With the customer facing $10 million in state and federal environmental claims,...

Protecting employee identity.(identity theft, the most done crime)(Brief Article)
March 1, 2005... Each year about 10 million people in the United States have their identities stolen, according to the Federal Trade Commission. In 2004, the number of complaints jumped 15 percent, making it the top-reported fraud for the fifth year in a row....

Sentencing with discretion.(Brief Article)
March 1, 2005... WHEN KENNETH LAY, RICHARD Scrushy, and Bernard Ebbers go to trial this year, could they have more to fear from judges than juries? That's an open question now that the U.S. Supreme Court has determined that mandatory sentencing guidelines...

Equity's siren song.(total asset value decreasing)(Brief Article)
March 1, 2005... Note to CFOs of companies with substantial debt: continue to resist shareholder demands for equity buybacks or increased dividends. That seems to be the message of a recent study of Federal Reserve data by London investment firm Smithers &...

This is progress? Twenty years of IT coverage proves one thing: technology gains also bring technology pains.
March 1, 2005... A FEW MONTHS BACK, AN EXECUTIVE IN THE SOFTware industry received an unexpected E-mail--a message from a former classmate whom he hadn't heard from in years. It was easy for the ex-classmate to track him down: a Google search on almost any...

A question of value: over 20 years, technology and technique have greatly improved the ability to price targets accurately.
March 1, 2005... ALL TOO OFTEN SINCE THE 1980S GAVE BIRTH to America's historic "merger mania," the story has been the same. The initial champagne celebration gives way to a major hangover once the final cost of the deal is tallied. In fact, taken as a whole,...

A love-hate relationship: banks and their customer grown closer to--and more wary of--each other.(SPOTLIGHT: banking)
March 1, 2005... It's 3 A.M. in Detroit. Having treated five of his most important bankers to dinner and a day at the North American International Auto Show, a finance executive invites them to a poker game in his hotel room where he takes them for $220. ...

Paradigm shifts: twenty changes that rocked your world.(changes in finance sector)(Brief Article)
March 1, 2005... WHEN THOMAS KUHN FIRST COINED THE PHRASE "paradigm shift" in The Structure of Scientific Revolutions, he used it to describe the effect of fundamental changes in scientific assumptions. But such radical deviations have shaped other disciplines,...

A world transformed.(World Trade Center and Pentagon Attacks, 2001 changed the world of Americans)(Brief Article)
March 1, 2005... The tragic events of September 11, 2001, forced companies to reckon with the now-imaginable risk that a terrorist act could affect their employees and operations. CFOs rewrote their companies' disaster-recovery plans, while security chiefs...

Fox in sox.(Sarbanes-Oxley Act of 2002 to control chief financial officers and chief executive officers)(Brief Article)
March 1, 2005... [right arrow] Working in haste to appease voters appalled by corporate fraud, lawmakers raced to enact the Sarbanes-Oxley Act of 2002. No law since the Securities Act of 1933 has had such a dramatic impact on Corporate America. CEOs and CFOs...

From here to there.(OFFSHORING)
March 1, 2005... [right arrow] Companies have been off shoring--loosely defined as relocating domestic jobs to lower-cost overseas locations--for decades. In the 1990s, U.S. manufacturers sent assembly work to Mexican maquiladoras. They also outsourced...

Flashbacks: 20 years of finance.(LOOK INSIDE)
March 1, 2005... REMEMBER WHEN COMPANIES WERE AUDITED BY THE BIG EIGHT? Disaster recovery was weather-related? And Ivan Boesky and Michael Milk en were synonymous with fraud? A pictorial history covering two tumultuous decades in finance unfolds here. One g...

Hu's on first?(China overtakes Japan in economy)(Brief Article)
March 1, 2005... [right arrow] Pop quiz: Which nation produces the lion's share of the world's cameras, televisions, and air conditioners? Twenty years ago, the answer would have been Japan. But a prolonged economic slump has reduced the Rising Sun to a...

Painful decisions.(premiums for health care insurance rises)(Brief Article)
March 1, 2005... Say this about health-care insurance costs: they're consistent--consistently rising, that is. Between 1988 and 2004, employers saw double-digit premium hikes in 9 of those 17 years. How bad is it? When industry watchers spoke of "modest"...

The magic.(General Electric Co. startted the concept of earnings management)(Brief Article)
March 1, 2005... [right arrow] Under the reign of CEO Jack Welch, General Electric raised the practice of earnings management to an art form. A notorious 1994 Wall Street Journal article laid out for the world how GE could defy the business cycle and maintain...

Looking back.(accounting and finance have a great impact on corporates)(Brief Article)
March 1, 2005... Before Enron, there was another Houston company known for fantastic growth: Compaq. Its CFO told us: "You have to know where you're spending the money."--APRIL 1985 COVER STORY, "JOHN GRIBI AT COMPAQ" What would you do if you were...

Engagement rules.(auditors in business)(Brief Article)
March 1, 2005... [right arrow] In 1985 the audit business experienced a midlife crisis. Ten years after deregulation, staid CPA firms started moving into sexy ventures like strategic consulting, and accounting firms began to cast themselves as...

Slicing and dicing.(reengineering comes to focus )(Brief Article)
March 1, 2005... [right arrow] On the page, the 13-letter word looked awkward and even pretentious. But in reality, reengineering was a gritty, in-the-trenches undertaking. Its premises were laid out in a best-selling book by consultants Michael Hammer and...

Mutual benefits.(retirement funds )(Brief Article)
March 1, 2005... The looming Social Security crisis may be great fodder for political debate, but it also illustrates the difficulties of managing worker-retirement funds. You don't have to tell finance executives--they have been wrestling with pension plans...

The price of free.(Congress limits tax deduction, chief executive officers to give tax)(Brief Article)
March 1, 2005... [right arrow] Talk about irony. In the early 1990s, critics complained that CEOs made too many bucks for the bang. In 1993, Congress limited the tax deduction for the top five executive salaries to $1 million apiece. About the same time,...

Nobodies to notoriety.(chief financial officers are loaded with more work)(Brief Article)
March 1, 2005... When CFO first started publishing, finance executives labored in obscurity: At the time, most CFOs were charged with managing back-office functions--sexy tasks like bill paying and budgeting. But with accounting software freeing up the finance...

The rise of investor activism.(shareholders take more interest in corporate affairs)(Brief Article)
March 1, 2005... [right arrow] In theory, corporate governance is simple. A company's board oversees big strategic decisions, while management handles daily operations. Stockholders weigh in with proxy votes, corporate resolutions, or calls to their brokers...

Analyze this.(corporate news shared by chief financial officers with their research analysts)(Brief Article)
March 1, 2005... [right arrow] During the 1980s and 1990s, CFOs and research analysts maintained a relationship that bordered on codependency. Many CFOs privately shared corporate news with favored analysts. In turn, tipped-off analysts often passed this...

Sam's way.(Sam M. Walton of Wal-Mart Stores Inc.)(Brief Article)
March 1, 2005... [arrow right] It's the quintessential American success story. In 1962, Sam Walton, working from an Arkansas backwater called Bentonville, launched the first link in what would become the largest retail chain in the world. Like other great...

Aging bull.(United States economy )(Brief Article)
March 1, 2005... As of last October, the U.S. economy had entered the third year of another bull market, the fourth in 20 years. Typically, say economists, up cycles last only 4.5 years. Research by Standard & Poor's has found that most turn flat or lower by...

Debt to equity to cash.(MERGERS & ACQUISITIONS)
March 1, 2005... [arrow right] It might surprise Seventh Avenue, but there are fashions in financings, too. In the 1980s, leveraged buyouts were all the rage. In 1988 alone, 388 LBOs were completed, averaging $458 million in value. The purchase of R JR Nabisco...

Journey without maps: this trio of current and former CFos took companies public in 1985. here's what they've learned since.(JOURNEY WITHOUT MAPS)
March 1, 2005... At first glance, one might think that the changes in a CFO's responsibilities during the past two decades have been radical. After all, the world of finance moves much faster now than it did in 1985, even as rules have tightened and stakes have...

Future shock: how can CFO's create value in uncertain times? Five experts offer fresh answers.(chief financial officers)
March 1, 2005... Five years into the new millennium, a cloud of uncertainty hangs over Corporate America. The lackluster economy, the war in Iraq, public and private fiscal imbalances, the Sarbanes-Oxley Act--Ml this obscures the financial landscape, inhibiting...

Compliance: finance's bridge to the enterprise; new survey of 256 senior finance executives shows a shift in thinking about the business value of regulatory compliance.(A new report from CFO Research Services)(Advertisement)
March 1, 2005... For many CFOs, the push for tighter regulatory compliance can lead to desirable change. Indeed, compliance issues now serve as a catalyst that can put finance closer to operating dynamics, where business risks reside and shareholder value is...

Are you ready for your close-up? As the CFO has increasingly had to meet the press, there have been tough adjustments--for both sides.(finance journalism)
March 1, 2005... AS MOTOROLA INC. CFO DAVID DEVONSHIRE PREpares for next month's first-quarter earnings report, he expects to pay special attention to media questions about a restatement of earnings for prior periods. While the revised numbers reflect a...

In the year 2025: which technologies will revolutionize commerce over the next 20 years?(technology application in financial sector)(Editorial)
March 1, 2005... WHEN CFO BEGAN PUBLISHING, back in the primordial ooze of 1985, each issue contained a sizable amount of technology coverage. The editorial slant made sense. The arrival of IBM'S original personal computer just a few years earlier, and the...

Where are they now?(grapevine)
March 1, 2005... THE FINANCE department has produced many memorable names over the past 20 years, and before the current rogues' gallery of Fastow, Sullivan, and Swartz ruled headlines, CFOs made news for their deal-making and turnaround skills. Where are these...

A security plan with teeth.(editor's note)
March 22, 2005... In the signature scene of the movie Marathon Man, the protagonist, Thomas "Babe" Levy, is asked a very simple question: "Is it safe?" Yes, yes, absolutely, very safe, he assures his interlocutor, who happens to be both a Nazi and a dentist...

Finance vs. it: who runs the numbers?(readers write)(Letter to the Editor)
March 22, 2005... Your article "One Way, or Another?" (Winter 2004) struck home. Having been in finance the first 10 years of my career and marketing the last 10, I've dealt with many of the same issues. In particular, I was interested in the results from your...

In praise of fuzzy advantages.(readers write)(Letter to the Editor)
March 22, 2005... Imust confess to being perpetually perplexed that so many CFOs insist that major IT projects show a positive ROI. After all, these are fairly smart people by and large; surely they cannot think that all that is involved is directly measurable....

How to measure IT's contribution.(readers write)(Letter to the Editor)
March 22, 2005... Regarding the notion of estimating how much revenue to allocate to every kind of corporate resource in proportion to each respective resource's contribution ("Revenue Is What Matters," Letters, Fall 2004), I have to wonder what purpose there is...

Linux and the law.(readers write)(Letter to the Editor)
March 22, 2005... Thank you for your excellent and very informative article on Linux and open-source software (Winter 2004). As a longtime "Linux zealot" I've been dismayed at the quantity of disinformation and empty rhetoric thrown around by the various camps...

On travel coverage, no reservations.(readers write)(Letter to the Editor)
March 22, 2005... I was quite impressed by your article on the choice between online and traditional travel management companies (Bookmark, Winter 2004). You outlined the issues in a straightforward and concise way yet without oversimplifying matters. You...

Island of (no) automation.(readers write)(Letter to the Editor)
March 22, 2005... Your "Saving Gracefully" (Fall 2004) article was very interesting. Information life-cycle management is a subject that should be taught in school, or better still, a graduate requirement for students in business management, computer science, or...

From tags to riches?(Securities and Exchange Commission adapts Extensible Business Reporting Language code)
March 22, 2005... It's been a bit of a slog for XBRL, the computer code that "tags" a wide range of financial data so that it can be more easily shared and analyzed. Although proponents of the technology have been banging the drum for years, not much has...

Budgets brighten.(browser: NEWS TRENDS, AND RESEARCH THAT DRIVE IT STRATEGY)
March 22, 2005... Several surveys suggest better days ahead for IT budgets, with results ranging from cautious optimism to very cautious optimism. A recent survey of 225 large--company CIOs conducted by Morgan Stanley found them holding fast to their...

All together now.(banking sector mergers)(Brief Article)
March 22, 2005... With M&A activity surging, many CFOs will once again grapple with the issue of how (or whether) to integrate disparate IT systems. Horror stories abound and generally fall into two camps: we moved too fast, or we moved too slowly. For guidance,...

Giving (some of) it away.(MALWARE)
March 22, 2005... " It's a challenging area, and new threats seem to be emerging all the time... but I'm optimistic... that we'll be able to mitigate the security problems and... allow for fantastic things to happen." George Bush on Iraq? No, Bill Gates on...

Finders weepers.(survey of end users of mobile technology equipments)(Brief Article)
March 22, 2005... Because IT plays such a central role at both the macro and micro level of American business, it is perhaps the most heavily scrutinized, analyzed, and surveyed sector of the economy. Everyone from research scientists to vendors to end users is...

Getting the goods on the goods.(counterfeiting monitoring services)(Brief Article)
March 22, 2005... Counterfeiting is hardly a new or high-tech crime. In fact, only three years passed from the time the United States created a national currency in 1862 until it created the Secret Service for the express purpose of stamping out counterfeiting....

Spammer lands in can, but flood continues.(LEGISLATION)
March 22, 2005... The U.S. trade deficit may have hit an all-time high last year, but don't blame spammers: U.S. computers were responsible for more than 42% of all spam worldwide, more than triple the amount produced by second-place South Korea, according to...

A world of pain points: originally pitched at finance, BPM software is proving useful across the organization.(business performance management software, Grand and Toy Ltd.)
March 22, 2005... When Grand & toy, Canada's largest supplier of office products, saw some of its customers defecting to American big-box invaders like Staples and Office Depot, the Toronto-based company brought in a secret weapon: Defector Detector. The...

The new face of identity theft.
March 22, 2005... IN JANUARY 2004, THE the MyDoom computer virus proved so malicious that Microsoft and other companies offered hundreds of thousands of dollars in reward money for information leading to the arrest and conviction of the virus author. Is it...

A touchy subject: fingerprint technology and other forms of biometrics have improved. But problems remain.
March 22, 2005... WITH ISSUES OF SECURITY, identity, and privacy preoccupying government officials, corporate executives, employees, and consumers, it's hard to imagine a technology more in tune with its times than biometrics. Because it can confirm an...

Making waves: tiny RFID chips generate lots of data, but will they help companies move more merchandise?(radio-frequency identification device)
March 22, 2005... HAS ANY TECHNOLOGY IN recent memory been so hyped and, at the same time, so controversial as radio-frequency identification (RFID)? One moment it's a miracle cure that will streamline the supply chain, eliminate theft and waste, and essentially...

The ultimate calling plan: as phone service moves to the internet, CFOs face a tricky cost/benefit calculation.(AT&T Corp. merges with SBC Communications Inc.)
March 22, 2005... WHILE SBC'S $16 BILLION acquisition of AT&T guarantees that 2005 will be a landmark year in telecom history, the more momentous development may prove to be the broad acceptance of Internet-based phone service. M&A activity has reached the point...

Where does the money go? Spend-management software helps companies get a leg up on their procurement strategies.(procurement softwares from various companies)(Buyers Guide)
March 22, 2005... IT'S BEEN A BUMPY RIDE FOR THE SOFTWARE CATEGORY KNOWN VARIOUSLY as spend management, supply management, sourcing management, supplier-relationship management, total-cost management, spend analysis, and, from way back (circa 2000),...

Power steering: IT governance combines technology with discipline--but not in equal measure.(IT management)(Company Profile)
March 22, 2005... A balance of powers, clear accountability, a framework for decision-making: these are some of the fundamental building blocks of good governance. They apply just as much to the boardroom as they do to the halls of Congress, and thanks to...

HP reinvents, slowly: with Carly Fiorina gone, HP looks within for some new directions.(Hewlett-Packard Co. develops a procurement system and to launch a consulting service)
March 22, 2005... When Carly Fiorina unexpectedly resigned as CEO of Hewlett-Packard Co. last month, the question was raised yet again as to whether HP is caught in a no-man's land between the vast product and services offerings of IBM and the ruthless...

Trouble from Atlanta to Paris: our accidental theme issue must be read as a distressing signal of the times.(take-away)
March 22, 2005... When last we wrote about Paris Hilton... actually, we've never written about Ms. Hilton and were quite prepared to remain the only magazine in America never to do so. But when her name suddenly cropped up in a number of newspaper stories that...