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

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

Mixed messages.(from the editor)(Brief Article)(Editorial)
September 1, 2004... IF CFOs EVER PERFORMED STAND-UP COMEDY, ONE could imagine a routine starting with something like, "Take my shareholders,... please!" Two decades of rhetoric have enshrined shareholders as the owners of the corporation. Their portfolio...

Pro forma par.(letters to the editor)(Letter to the Editor)
September 1, 2004... THE ARTICLE "A MATTER OF EMPHASIS" (July), which discussed the prevalence of reporting "pro forma" and "adjusted" earnings numbers and the questionable effect Regulation G has had on curbing these practices, confirmed the disturbing trend that...

Only converse.(letters to the editor)(Letter to the Editor)
September 1, 2004... YOUR ARTICLE CONCERNING LIVE-presentation skills ("You're On!" July) was spot-on concerning the threat of "disastrous trips to the microphone." We err, however, in concluding that the universal answer to this problem is communications training....

Knowledge, not gizmos.(letters to the editor)(Letter to the Editor)
September 1, 2004... I READ "DIRECTOR'S CUT" (TECHWATCH, July) with amazement. The last thing board members need to fulfill their job is another gizmo. What they do need is training and a better understanding of what their roles and responsibilities are. Ask any...

Testing is tested.(letters to the editor)(Letter to the Editor)
September 1, 2004... THE AUTHOR OF "CASTING TO TYPE" (July) seems quite impressed with the Myers-Briggs Type Indicator (MBTI), Rorschach inkblots, and handwriting analyses as employment selection tools. MBTI divides everyone into 16 personality-type...

Conniving canary.(letters to the editor)(Letter to the Editor)
September 1, 2004... PERHAPS WE SHOULD BE MORE skeptical of information provided by "canaries" ("Canary Chorus," Grapevine, July). In a case involving a family member of mine, a canary lied to the prosecutor in exchange for judicial leniency. My family member is...

Falling and rising.(letters to the editor)(Letter to the Editor)
September 1, 2004... YOUR COVER STORY ON THE FALL AND rise of MCI ("Extreme Makeover," July) is the best I've ever read on the subject. It should be required reading at every business school and publication. And by the way, Scott Sullivan should get life...

Lost in space.(letters to the editor)(Letter to the Editor)
September 1, 2004... I READ "NASA, WE HAVE A PROBLEM" (May) with great interest. I am the retired chief of the Resources Analysis and Management Office of the Lewis Research Center (now the Glenn Research Center). I was involved with at least three attempts to...

One size fits all?(newswatch)(accounting practices watch)(Brief Article)
September 1, 2004... Should there be a "little GAAP"? That's a question the American Institute of Certified Public Accountants is currently tackling. Last winter, the New York-based professional organization formed a Private Company Financial Accounting Task...

Too much of a good thing.(Contingent Convertible Bonds)
September 1, 2004... "THIS CAME TOTALLY OUT OF THE BLUE FOR US," IS HOW John Devine, CFO of General Motors Corp., speaking during the company's second-quarter earnings call, summed up what many CFOs must be thinking about a recent rule change proposed by the...

Just looking?(newswatch)(Brief Article)
September 1, 2004... Executive search firms conducted 80% more CV searches between May and July, says umbrella group AESC.

Spurning the CFO Act.(Homeland Security)
September 1, 2004... SOME THINK IT WAS JUST AN OVERSIGHT that the Department of Homeland Security, created two years ago, became the only cabinet-level agency not subject to the CFO Act of 1990. Indeed, bills in both houses of Congress now seek to apply the act to...

Does fraud equal loss?(Litigation Reform)
September 1, 2004... It's as predictable as anything about the stock market: when a company's share price plunges, shareholders sue. But launching a successful shareholder suit--that is, one that gets settled--may soon become harder. The U.S. Supreme Court has...

Instant CEO.(newswatch)(Brief Article)
September 1, 2004... INSTANT CEO: If faced with an unexpected top-management vacancy, 19% of CEOs believe they could fill it in 24 hours, says SIFE.

Going with the (free-cash) flow.(Compensation)
September 1, 2004... MORE COMPANIES ARE TYING INCENTIVE pay to performance in an up-and-coming metric: free-cash flow (FCF). Bausch & Lomb, Motorola, Kraft Foods, and American Standard are among those that are linking pay to cash available after operating...

Benefits on the fast track.(Insurance industry)
September 1, 2004... Companies finally have a regulatory blueprint for how to use their captive insurer to fund benefits programs. Now the question is, how many will take advantage of it? Last November, International Paper became the first company to receive...

Disappearing benefits.(newswatch)(Brief Article)
September 1, 2004... DISAPPEARING BENEFITS: Only 622 of the Fortune 1,000 now offer a defined benefit plan, according to a Watson Wyatt survey.

Real-time headaches.(Section 409)
September 1, 2004... FINANCE HAS ALWAYS BEEN CAUTIOUS--now maybe more than ever. As of August 23, companies have 4 business days to report events that could have a "material effect" on their financials rather than the previous 5 business days or 15 calendar days,...

What employees want.(newswatch)(Brief Article)
September 1, 2004... WHAT EMPLOYEES WANT: Flexible hours are the benefit most valued by workers, say CFOs in an Accountemps study.

Happy, but hesitant.(Global Confidence Survey)(business enterprises)
September 1, 2004... NOT MUCH HAS CHANGED SINCE last quarter's CFO Global Confidence Survey. Finance executives are still fairly bullish on the economy, and they even expect that raises may be on the horizon. The evidence on this latter point can be found in...

How do they know?(newswatch)(Brief Article)
September 1, 2004... HOW DO THEY KNOW? While 69% of private firms rate their audit committees effective, only 14% actually measure, says the FERF.

The farthest shore: when it comes to outsourcing locations, no place is too exotic--not even Cleveland.(techwatch)
September 1, 2004... LAST YEAR, WHEN MANAGEMENT AT CALL-CENTER services specialist LiveBridge Inc. was searching for a place to house the company's Spanish-language operation, it looked south of the border--way south of the border. After considering the more...

Risks and rewards: one of this year's most controversial business and political topics is outsourcing to low-cost labor markets. At a recent CFO magazine conference in New York, we learned how companies are framing this complex decision--with a look at the long-term risks as well as the rewards. Here's a summary.(Offshore Outsourcing)
September 1, 2004... Moderate economic growth and high expectations from Wall Street have placed continued pressure on companies to reduce costs. Against this tense economic background, outsourcing knowledge-worker jobs to a tech-savvy, highly skilled workforce...

Revenge of the Nerds' Bosses.(Hiring)(tips)
September 1, 2004... ACCORDING TO SOURCES, GOD NEVER intended for Java programmers to pull down six-figure incomes. But in the late 1990s, that's just what happened. Panicked by a shortage of skilled IT workers--a shortage mostly caused by the dot-com...

Doubling down: in a gaming industry where CFOs are big players, two acquisitions reflect very different strategies.(new deals)
September 1, 2004... FORGET THE WORLD SERIES OF POKER. THE BIG GAME in Las Vegas these days is casino-industry consolidation. In mid-June, Mandalay Resort Group signed a $7.9 billion merger agreement with MGM Mirage--itself the result of a 2000 combination of two...

It's the deficit, ... neither Bush nor Kerry would close the federal budget gap. But that's where the policy resemblance ends.(Spotlight: election 2004)
September 1, 2004... How WOULD FOUR YEARS OF A JOHN KERRY ADMINISTRATION differ from a second term under George W. Bush? With the November election only two months away, finance executives must soon wrestle with that question, and they must do so as corporate...

Who's the boss: shareholder activists want more say in how American companies are run.(Institutional Shareholder Services)
September 1, 2004... IN THE OLD DAYS, back before Sir James Goldsmith and greenmail and merger mania, shareholders were a quiet, unobtrusive lot. They followed the ups and downs of the market, rarely attended annual meetings, and dutifully filed company...

Hockey fight: a brawl over accounting could give the National Hockey League a black eye.(dispute over salary)
September 1, 2004... THE SPORTS PAGES SAY THAT THE ONGOING DISPUTE between players and owners in the National Hockey League, which threatens to put the 2004-2005 season on ice, is about the owners' desire to install a salary cap. It's really about accounting. ...

Off the shelf: low inventories drove down working capital last year. But will that continue as the economy improves?(days inventory outstanding)(days payables outstanding)
September 1, 2004... THE 2004 WORKING CAPITAL SURVEY For those who rejoiced when the New York Yankees faltered at the start of this season or thought 2003 surely had to be Lance Armstrong's last Tour de France win, here's some exciting news: Deli Computer's...

The 2004 working capital survey **.(Illustration)
September 1, 2004... THE 2004 WORKING CAPITAL SURVEY ** DSO CHANGE CHANGE COMPANY 2003 '03-'02 '02-'01 AEROSPACE & DEFENSE L-3...

Dude, where's my printer? RFID Technology may well revolutionize how companies track their products.(Special report: supply chain)(radio frequency identification)
September 1, 2004... SIMON ELLIS CAN SEE THE FUTURE. INDEED, that's a large part of his job description. As the inventory and logistics guru at Dutch consumer-products giant Unilever, Ellis carries the peculiar title of Supply-chain Futurist. Thus, he spends a...

All in the family: FIN 46 made companies admit paternity of special purpose entities. But it also resulted in some surprise adoptions.(accounting)(Financial Accounting Standards Board Interpretation No. 46)
September 1, 2004... EARLY IN HIS TENURE AS CHAIRMAN OF THE Financial Accounting Standards Board, while the Enron scandal was raging, Robert Herz was confronted on Capitol Hill by a senator from the South. As Herz tells it, imitating the lawmaker's distinctive...

Raising red flags: as they identify control weaknesses, companies find a common one: inadequate finance staffs.(regulation)
September 1, 2004... IT'S GETTING MUCH HARDER FOR PUBLIC COMPANIES TO keep skeletons in their closets. As they ready internal controls for the harsh light of Section 404-compliance testing, the pressure to disclose problems uncovered in the process has become...

School days: continuing professional education.(your move)
September 1, 2004... IT'S BEEN YEARS SINCE MOST SENIOR EXECUTIVES earned their last diploma, but for many finance professionals, education is an ongoing commitment. Whether they are required to log hours of continuing education every year to maintain a public...

Accenture Ltd.(CFOs On The Move)(Brief Article)
September 1, 2004... Michael McGrath begins his second stint as CFO of management and technology consultancy Accenture Ltd., filling the role after Harry You resigned to become finance chief at Oracle Corp....

MCG Capital Corp.(CFOs On The Move)(Brief Article)
September 1, 2004... Michael McDonnell will leave his post as finance chief at EchoStar Communications Corp. to become the new CFO at MCG Capital Corp., an investment firm in Arlington, Va....

Siemens AG.(CFOs On The Move)(Brief Article)
September 1, 2004... Joe Kaeser, formerly at Siemens's IC Mobile Group, will become the new head of Siemens AG's corporate-strategies department on October 1....For more on CFO careers, visit www.cfo.com.

A baseball odyssey.(grapevine)
September 1, 2004... THE END OF THE ATHENS Games also marked the end of a peculiar six-year-long Olympic dream for former CFO and now restaurateur Bill Galatis: to play for the Greek baseball team. But another dream lives on. "I want to make sure the game stays...

Don't blame Cheney.(grapevine)(Cheney, Dick)(financial documents filing)(Brief Article)
September 1, 2004... Finance employees are facing off in a newly filed complaint against Halliburton Co. Although the embattled energy and construction company recently paid $7.5 million to settle an SEC charge that it had failed to disclose a 1998 accounting...

Popping the China question: will the bubble burst or gently deflate?
September 1, 2004... Financial markets are worried about a hard landing in China. Should they be? China's government has tightened credit policy and restricted land supply to cool investment--this is the right policy. Speculative capital poured into China for...

Music of the peers.(editor's note)(Editorial)
September 22, 2004... For a glimpse into the future of IT management, consider Irving H. "Bubba" Tyler. A few facts about him: * He is a CPA who once worked for a Big Eight accounting firm. * He was international controller at ICI PLC's aerospace and...

Spreadsheets: love 'em ...(readers write)(Letter to the Editor)
September 22, 2004... Your article "Spreadsheet Hell?" (Summer) overlooked the most important question: flexibility. The specialized financial-software vendors can yap all they want about how easy it is to change things in their system, but it comes at the cost of...

... Or leave 'em?(readers write)(Letter to the Editor)
September 22, 2004... I read your article concerning spreadsheets and thought that it is truly a dark day when CFOs are reluctant to implement time-saving technology due to concerns over Sarbanes-Oxley. If anything, CFOs need to press forward at breakneck speed to...

Revenue is what matters.(readers write)(Letter to the Editor)
September 22, 2004... Regarding Nick Carr's continuing rant on the questionable value-add of IT ("The Tract of the Matter; Summer), if he were really cold-eyed and clearheaded, he would actually calculate the amount of revenue to allocate to IT along with all the...

Deja vu all over again.(readers write)(Letter to the Editor)
September 22, 2004... Congratulations to American enterprise. According to your cover story ("The Meter System, Summer), they have rediscovered the remote service bureau and time-share computers. Think Infonet at Computer Sciences Corp. in the '60s. >>Andrew H....

Utility computing is a numbers game.(readers write)(Letter to the Editor)
September 22, 2004... Norm Alster's excellent cover story sets the right tone for a review of utility computing with examples from the venerable history of the IT hype machine. In these volatile economic times, converting IT costs from fixed to variable sounds like...

Safety, in numbers.(information technology expenditure-security spending)(Brief Article)
September 22, 2004... What price security? Somewhere between 110 and $334 per employee, depending on the size of your company. Economies of scale allow larger companies to spend less per employee, while companies in certain industries (transportation, high...

Look who's talking.(information technology asset management)
September 22, 2004... When Bobby Lie, now a senior vice president for enterprise architecture at Fidelity Investments, was in charge of usage-based billing, he had the largely thankless task of hitting up the financial-services company's many business units for...

Time to unload old gear?(asset disposition)(information technology management)(Brief Article)
September 22, 2004... "Out with the old, in with the new" is never an easy decision in the IT world, particularly if companies hope to get some residual value from obsolete PCs, laptops, PDAs, and other kinds of hardware. Environmental regulations and concerns about...

Rethinking Sarbox and IT.(corporate governance-information technology)(Brief Article)
September 22, 2004... A number of surveys, including our own (see "IT Directions 2.0," Fall 2003), have found clear evidence that CFOs have not seen a huge role for IT in meeting Sarbanes-Oxley requirements. But that view may be changing. As the deadline for...

Not sold on themselves.(e-Business)
September 22, 2004... With the holidays just... well, lets not start counting own yet. But when they do arrive, they will no doubt extend what has become a new tradition: gauging the impact of online sales. Web shopping has many virtues and has shown strong...

Money for (almost) nothing.(internet micropayment transactions)(Brief Article)
September 22, 2004... Who remembers Flooz? Or Beenz? At the height of the dot-com craze, they were among the alternative currencies proposed as a way to facilitate low-value (typically $5 or less) electronic transactions. Early efforts failed, but the idea of an...

Trough is beauty.(Emerging Technology)(Brief Article)
September 22, 2004... Even casual followers of the information technology industry may be aware of the so-called hype cycle, a thesis that holds that most technologies go through distinct phases en route to widespread adoption. Consulting firm Gartner defines these...

CIOs predict climatic shift.(IT Budgets)(Brief Article)
September 22, 2004... Last month, Forrester Research released the results of its latest quarterly CIO Confidence poll, and the numbers suggest widespread optimism about the economy and a concomitant rise in IT spending. For the first time in three quarters, more...

A touchy election issue.(e-Voting)(Brief Article)
September 22, 2004... As the Presidential election approaches, one of the hottest debates has nothing to do with the candidates. Instead, the controversy centers on the reliability of E-voting, which takes two forms: direct recording electronic (DRE) voting machines...

The real customers for CRM.(Management)(Brief Article)
September 22, 2004... Customer relationship management (CRM) software has been criticized for failing to deliver, but McKinsey consultants Anupam Agarwal, David P. Harding, and Jeffrey R. Schumacher suggest that one key problem lies with how companies implement it....

The ABC's of ERP: to maximize the return on this massive software investment, plenty of planning is needed--even if you've been using ERP for years.(Enterprise Resource Planning)
September 22, 2004... Even as Y2K ushered in boom times for ERP vendors, they were beset by a string of negative press reports regarding their complexity and cost of getting their software to run effectively--assuming it could be made to run at all. ERP horror...

Stand by me: with finance in the spotlight, how far apart are CFOs and CIOs?(Chief Financial Officer)(Chief Information Officer)(Cover Story)
September 22, 2004... Two years ago, at a panel discussion on the sometimes contentious relationship between CFOs and CIOs, one finance executive drew a hearty laugh from the crowd when he said, "My relationship with our CIO poses no problem at all--because the...

Ripe for the picking? As wireless technology matures, companies should take several steps now to ensure they reap the bounty.(Wired Equivalent Privacy)
September 22, 2004... If you're wondering whether it's time for your company to join the wireless revolution, we have some news for you: it already has, for better and worse. During the past few years, thousands of cell phones, BlackBerry devices, pagers, wireless...

When it rains ... Amid a host of troubles, will Microsoft's enterprise-applications unit manage to shine?
September 22, 2004... FOR AN OPERATION THAT HAS FALLEN SHORT OF EXPECTATIONS AND BEEN A consistent money-loser, Microsoft's business-applications unit certainly gets a lot of attention. As part of its seemingly endless effort to acquire PeopleSoft Inc., Oracle...

Coping with complexity: as systems proliferate, it's hard to know which way is up. But new thinking about IT architecture may provide a sense of direction.
September 22, 2004... While Moore's Law and fierce competition among vendors virtually guarantee that your IT dollar will continuously gain in purchasing power, don't let the good deals blind you to an underlying truth: the complexity of what you're buying may be no...

You make me feel young again: new software can put a fresh face on legacy applications.
September 22, 2004... Will legacy applications ever die? By now, you might think that most companies would have replaced software programs written in such musty languages as COBOL and Fortran. After all, many spent millions during the Y2K hysteria pulling out...

Saving gracefully: companies need to store and retrieve data more efficiently than ever. Is information life-cycle management the answer?(information management)
September 22, 2004... Remember those virtual pets that were all the rage a few holiday seasons back? Inanimate though they may be, the still-popular toys require proper care and feeding. Fail to provide those essentials, and you soon find yourself looking for a...

More map, less quest: new ways to visualize data help companies close the "fact gap.".
September 22, 2004... Maps are back. More than a decade ago, geographic information systems took population and demographic data from the Census Bureau and other sources and gave businesses new ways to see opportunities, literally. Consumers could be segmented by...

The shape of things to come: don't let the latest finance/IT go-round lead nowhere.
September 22, 2004... "We're going around in circles." "The vultures are beginning to circle." "Ladies and gentlemen, we'll be circling LaGuardia for another 45 minutes." Circularity, so often synonymous with futility (or worse--didn't Dante propose an...