Today In Finance

The Wait for Worth

2010-03-16T17:00:00Z

Investors have shown little appetite for IPOs so far this year, driving down pricing on new issues and delaying others. CFOs hoping for a revival of the market for initial public offerings may have to bide their time for another quarter — or two. So far this year, many IPOs have underperformed on the first day of trading or priced below announced expectations, evidence of weak appetite for new equity issues. And the market may not warm up again until the summer. In 11 of the 18 IPOs that have...(read more)

Lords of the Brass Ring

2010-03-16T11:00:00Z

The time may be right for financial chiefs to ascend to the CEO post. Your phone may be about to ring, and you may want to answer it. Executive turnover, which usually proceeds at a brisk pace, ground to a near-halt last year as many CFOs and CEOs chose to stay put rather than risk moving to a new and possibly worse-off company. Boards also hesitated to replace top management in the midst of the crisis. Now, however, with the worst seemingly behind them, executives — and the boards that hire...(read more)

Testing, Testing: The New Innovation Game

2010-03-15T14:00:00Z

Harrah's Entertainment exemplifies the burgeoning use of broad, IT-enabled experimentation to improve businesses. Business innovation, once the province of teams in white lab coats doing research and development, is moving into the front lines. Increasingly it derives from continual tiny experiments in areas like business processes and customer relationships, rather than a single, company-transforming idea. Internet-based companies, which can alter their "storefront" at will —...(read more)

Looking at Historic Businesses Through an NOL Lens

2010-03-15T09:00:00Z

As companies emerge from the financial crisis and begin to consider applying NOLs against taxable income, two older court rulings seem more relevant than ever. When a corporation with net losses undergoes an ownership change, within the meaning of tax code's Section 382(g), limits are imposed on the amount of taxable income 1 which may be offset by company's pre-change losses. This limit is known as the "Section 382 limitation" and it is calculated by multiplying the fair market...(read more)

Finance Chiefs Look Warily Ahead

2010-03-12T17:00:00Z

A new survey of finance executives finds them preparing for a slow recovery. According to more than 100 finance chiefs who responded to a survey by CFO at this week's CFO Rising conference in Orlando, Florida, the worst of the economic downturn is over, but the economy won't fully turn around anytime soon. Only 6% expect the economy to decline further over the next year, but just 4% say growth will return in the next several months. Finance chiefs are concerned about the uncertainty...(read more)

Good to the Last Drop

2010-03-12T16:00:00Z

Even though revenues are scant, plenty of cash remains to be squeezed from supply chains, says a new study. Despite the overall lack of top-line growth during the economic downturn, many companies have stayed afloat by downsizing staff and eking out supply-chain efficiencies. In the face of continuing unemployment and the attendant lag in consumer demand, however, how long can companies maintain respectable margins merely by growing leaner? Maybe longer than you might think. Opportunities still abound...(read more)

CFOs on the Move: Week Ending March 12

2010-03-12T12:00:00Z

Dow Chemical, Providence Equity Partners, DF King Worldwide, Human Genome Sciences, CB Richard Ellis Group, Active Network, Healthcare Solutions, BigBand Networks, Strategic Hotels & Resorts, DaVita. The Dow Chemical Co. has tapped William Weideman for the top finance spot. Weideman, who has been interim CFO since November, has spent more than 30 years at the company, most recently as corporate controller. He replaces Geoffery Merszei, who is now chairman of Dow Europe and president of Dow Europe...(read more)

Who Should Be in the Boardroom?

2010-03-12T11:00:00Z

Directors want to see more faces at board meetings, but not necessarily more data. With board members more concerned about risk management and succession planning these days, CFOs should make sure they — and their staffs — have a strong presence in the boardroom, a group of retired CFOs-turned-board members told financial executives attending the CFO Rising conference in Orlando on Wednesday. "The board wants to make sure they hear all opinions," said Ellen Richstone, former...(read more)

Goodwill Impairment: Open to Interpretation, Again

2010-03-11T15:00:00Z

Companies and auditors are clamoring for clarification about measuring goodwill impairment. A relatively new goodwill accounting rule got its first real test drive last year when the ripple effect from the 2008 recession hit company balance sheets. More than two-thirds (68%) of public companies in the United States recognized a goodwill impairment under the rule known as Topic 350 (formerly FAS 142), writing down an aggregate $260 billion, according to a report issued by financial advisory firm...(read more)

Your Loss Is Your Gain

2010-03-11T11:00:00Z

Uncle Sam has extended the time frame for loss carrybacks. Should you take advantage? When companies closed their books on 2008, the financial crisis made itself very apparent: 3,700 publicly held corporations reported losses, a 9% increase over the previous year. Enter Congress, which offered a corporate tax break on a scale not seen since the aftermath of the terrorist attacks of September 11, 2001. Last November, lawmakers ordered the Internal Revenue Service to temporarily amend the tax code...(read more)

Do-It-Yourself M&A

2010-03-10T18:00:00Z

Companies should limit their reliance on consultants when executing mergers, says the CFO of Thomson Reuters. Consolidating two companies after a merger may require liberal use of consultants for integrating systems, evaluating human capital, and other crucial tasks. But finance chiefs shouldn't let consultants do too much, even if the companies in question are multibillion-dollar businesses. That's the advice of Robert Daleo, CFO of Thomson Reuters, the $13 billion financial information...(read more)

Instead of Best Practice, Next Practice

2010-03-10T14:00:00Z

A strategy expert encourages finance chiefs to cut back on benchmarking and focus on the future. For the most part, CFOs have forgotten an oft-repeated lesson learned in grade school: keep your eyes on your own work and don't pay attention to what your peers are doing. Of course, companies can't afford not to keep tabs on their competitors. However, they may be spending too much time benchmarking their current performance against other companies rather than working on the future viability...(read more)

A Prescription for Cutting Health-Care Costs

2010-03-10T12:00:00Z

The finance chief of Cardinal Health says there is plenty that the private sector can do to bring health-care spending under control. Jeff Henderson, CFO of Cardinal Health, may not know the future of health-care reform in the United States, but he is sure about what is needed. "The really big issue that will dictate whether health-care reform happens or not is ... whether it helps get health-care costs under control," the finance chief of the $96 billion health-care supply chain management...(read more)

Low Rates, Huge Deficits to Continue

2010-03-09T15:00:00Z

Economist David Levy says the U.S. government will have to continue to finance the economic recovery with its balance sheet. Don't worry about higher interest rates or inflation, said one economist today. But also don't expect huge government budget deficits to shrink anytime soon. The Federal Reserve won't be able to tighten interest rates for several years, and the U.S. government will have to continue easy-money policies and deficit spending for a lengthy period, said David Levy, economist...(read more)

No Excuses, No Surprises

2010-03-09T11:00:00Z

How the discovery of major lapses in its internal controls helped Siemens become a better company. Painful and costly as a major corporate financial scandal can be, it can ultimately help a company grow stronger if executives can unearth the problems that spurred the crisis and fix them. That was the end result of a process that began when 250 Munich police officers raided the corporate offices of Siemens, the Germany-based multinational conglomerate, on November 15, 2006, according to Joe Kaeser...(read more)

"Because It's the Right Thing to Do."

2010-03-08T13:00:00Z

A veteran CFO discusses the finer points of bottle design and why paying higher wages makes sense. An interview with Richard Galanti, EVP and CFO of Costco Wholesale Corp. In 1984, Richard Galanti was a young investment banker at Donaldson, Lufkin & Jenrette when a Seattle-area start-up retailer invited him to become its vice president of finance. He is now starting his 27 th year as finance chief of Costco Wholesale Corp., which has become the nation's third-largest retailer, with fiscal...(read more)

Homebuilder Loss Claim Crumbles

2010-03-08T08:00:00Z

A homebuilder's assertion that its losses are related to "product liability" had no foundation in existing law, says IRS. Homebuilders recently scored a major tax victory by securing the ability to carry back certain losses — referred to as "applicable net operating losses (NOLs)" — for five years. Ordinarily, under the Internal Revenue Code, specifically, Section 172(b)(1)(A)(i), an NOL can only be carried back two years preceding the taxable year...(read more)

A Cash Machine in the Stock Market

2010-03-05T16:00:00Z

Lured by low costs and flexibility, many big companies are issuing shares "at the market." When times are good, there's nothing like a big, standard-issue equity offering to raise large amounts of cash speedily. After filing the necessary paperwork, a company can walk away with enough capital for an acquisition or a hefty debt repayment in a matter of days. But these are not good times. The high cost of a one-shot stock issuance makes it less than appealing to companies more likely...(read more)

Give 'Em Credit

2010-03-05T13:00:00Z

Numerous regulatory proposals aim to reverse the ebb in small-business lending. But will any of them actually work? How can access to capital be improved for small businesses so they can create jobs and accelerate the economic recovery? There is no silver bullet, but President Obama and Congress are floating multiple policy and legislative options to spur small-business lending. At a House Financial Services Committee hearing last week, bankers and business owners testified that access to credit...(read more)

CFOs on the Move: Week Ending March 5

2010-03-05T11:00:00Z

ICF International, TradeBeam, S&T Bancorp, Agilent Technologies, Pacific Biosciences, Yankee Candle, Zogenix, Openwave Systems, PharmaNet Development Group, Hutchinson Technology. Consultancy ICF International Inc. has appointed Ronald Vargo to head finance, effective April 1. He succeeds Alan Stewart, who had announced his intention to retire at the end of March. Vargo comes to the firm from EDS, where he was also CFO. TradeBeam Inc. has promoted Doug Harrison to finance chief. He joined the...(read more)

A Snapshot of the Image Business

2010-03-04T17:00:00Z

The CFO of Shutterstock tells how the digital-image company pursues growth amid a crowded competitive field. If imitation is indeed flattery, then Shutterstock, which offers a vast library of downloadable digital images, should have a healthy ego. But because the six-year-old company's business model has spawned a number of imitators, its CFO and president, Adam Riggs, is focused largely on how to grow the business amid all the competition. Shutterstock gets its content through crowdsourcing...(read more)

Restatements on the Decline

2010-03-04T14:00:00Z

Sarbox and a more tolerant SEC may be why companies are restating financial results less frequently, says a new report. The number of financial restatements fell in 2009 for the third year in a row, according to a new report. The report, by research firm Audit Analytics, posits that the Sarbanes-Oxley Act and the Securities and Exchange Commission are behind the decline. Overall, 630 companies filed 674 restatements last year, says the report, representing a 27% decline from 2008. The number...(read more)

Cracking Down on Independent Contractors

2010-03-03T17:00:00Z

Federal and state regulators increasingly want to know whether companies' independent contractors are truly independent. Employers may want to reexamine how they label their workers this year, as federal and state officials vow to clamp down on the misclassification of employees as independent contractors. The IRS plans to look at the issue in audits of 6,000 randomly chosen companies over the next three years, starting this month. Meanwhile, proposals on Capitol Hill would give the Department...(read more)

On the Mend

2010-03-03T11:00:00Z

Finance chiefs in the latest Duke/CFO survey see signs of a strengthening recovery, but employment continues to lag. At last, some good news. For the first time in more than a year, finance chiefs expect double-digit growth in earnings and significant growth in capital spending over the next 12 months, according to the Duke University/CFO Magazine Global Business Outlook Survey for the first quarter of 2010. Finance chiefs are also loosening the reins on technology spending, research and development...(read more)

The Shape of Things to Come

2010-03-02T17:00:00Z

L, V, or W? Perhaps a check mark, or something with a wiggly tail? Top economists debate what the recovery will look like. Much of the recent talk about an economic recovery concerns what shape it will take — literally. Will the plunge and rebound conform to the "V" shape that described the 1973–74 recession, be akin to the "U"-shaped recovery seen after the 1981–82 recession, or sputter into the dreaded "W" — twin recessions (the much-discussed...(read more)