By Alix Stuart
CFO.com
For legislators, the long process of reforming the nation's health-care system has finally come to an end. On Thursday Congress passed the reconciliation bill containing the final changes to the landmark Patient Protection and Affordable Care Act, which President Obama signed into law on Tuesday. But for finance chiefs, the process of determining what health reform means for their companies is only beginning.
Joel Quall, corporate controller at publicly traded Knight Capital Group, a New Jersey–based electronic trading services firm, says he has been talking with employees about how health-care reform is going to affect them. Some of the firm's 800 U.S. employees are positive about the change. "People are relieved about being able to cover children up to age 26 on their plan," says Quall. And the lifting of lifetime caps on insurance coverage resonates personally with Quall, who says he saw his late father worry about that issue through a wrenching series of cancer treatments.
For rest of article please visit www.cfo.com
Monday, March 29, 2010
Friday, March 26, 2010
Bank Of America Business Capital CFO Survey
2010 CFO Outlook: A Survey of What Manufacturing Chief Financial Officers Expect
Download the entire report
The following article explores the results of the 12th annual survey of mid-size and large U.S. manufacturing company CFOs commissioned by Bank of America Business Capital. Phone interviews were conducted from mid-August to mid-October 2009.
The key message from this year’s survey results is that while CFOs gave the current state of the U.S. economy its lowest score in the survey’s history, they are optimistic about the outlook for the economy. Two-thirds of manufacturing company CFOs surveyed said they expect the economy to expand in 2010, and almost 60 percent said they expect the manufacturing sector to grow. Both of those responses were much higher than in last year’s survey. Despite that optimism, a slight majority said their companies have delayed or canceled expansion plans.
Many CFOs may just have a wait-and-see attitude. They see positive signs for the economy and for manufacturing, but they may need to see more concrete results before committing to expansion themselves.
Sixty-two percent of the manufacturing company CFOs surveyed report that they have no plans to change the size of their labor force in 2010. Of the remaining CFOs surveyed, 28 percent will be making additions to staff and 9 percent will be laying off employees. For the first time in three years, most U.S. manufacturing company CFOs are predicting that their labor costs and product pricing will remain constant in 2010 (45% and 51% respectively). Only 37 percent of CFOs predict their labor costs will increase in 2010, significantly lower than the 56 percent reported last year.
In the survey, CFOs reported little change in their borrowing needs for 2010. About half of the CFOs surveyed expect their cost of capital to increase, compared with about one-quarter two years ago. Even so, there was an increase in CFOs who said they are considering financing in 2010, and more than half said that credit availability over the past year has stayed the same.
The Economy
Despite giving the current economy low marks, chief financial executives at U.S. manufacturing companies are more optimistic than in recent years about the nation’s economic outlook.
Sixty-six percent of CFOs believe the national economy will expand in 2010, more than double (31%) who cited expansion in last year’s survey. There are no significant differences in the economic outlook by region or type of company, however, in terms of sales size, manufacturing companies with revenues between $200 million and $499 million are significantly more likely (76%) to predict economic expansion than smaller manufacturers with revenues between $25 million and $74 million (64%).
For the second consecutive year, manufacturing company CFOs have a negative view of the U.S. economy, giving it an average score of “44” on a scale ranging from 0 (extremely weak) to 100 (extremely strong). This represents a decline compared to last year’s score of “46” and is the lowest score recorded for this measure since the survey began.
Only 29 percent of CFOs rate the current state of the U.S. economy above the “50” midpoint, significantly lower than the 35 percent rating reported in the 2009 CFO Outlook. This negative view is consistent across all companies regardless of census region, revenue size and whether the company is publicly- or privately-owned.
CFOs are equally critical of the world economy giving it an average score of “46”. This represents a significant decline from last year’s score of “53” and marks the first time ever in the history of the survey that U.S. manufacturers have a negative view of the world’s economic affairs.
Manufacturing Sector
Manufacturing company CFOs are the most critical of their own industry at this point in time. They give the manufacturing sector an average score of “40”, which is a 10-point drop from 2008 and the lowest level ever in the history of the CFO Outlook.
Yet 59 percent expect the manufacturing sector to expand in 2010 – more than double the 25 percent a year ago. After six years of waning optimism, this marks a return to 2004 levels when manufacturers held positive views about their industry. Of the remaining companies, 30 percent believe the industry will remain the same in 2010 and 11 percent think it will contract. Companies in the Midwest are more optimistic (63%) about industry expansion than manufacturers in all other regions.
In addition, 61 percent of CFOs expect revenue growth in 2010, up from 50 percent last year. Regionally, CFOs in the Northeast (64%) and Midwest (63%) are directionally more likely than those in the South and West (57%) to be projecting revenue growth. Likewise, revenue expectations are the most optimistic among large companies (66% for companies with revenues between $200 million and $499 million and 69 percent for companies with revenues between $500 million and $2 billion). Finally, companies expecting sales to foreign markets to increase (72%) and businesses expecting M&A activity (68%) are both expecting above-average revenue growth in 2010.
Fed Actions
While the global recession has tested many companies, the survey responses show that most CFOs now anticipate growth in 2010. Conditions may still be challenging for some businesses, but the broader view is much more optimistic than a year ago.
In December 2008, the Federal Reserve Board lowered the overnight federal funds rate to near zero and has kept it there since. Given that interest rates have remained unusually low for this extended period of time, it is not surprising that 88 percent of manufacturing company CFOs believe the actions taken by the Fed over the past year have helped the U.S. economy. This represents a significant increase for this measure since last year’s survey (64%).
Large manufacturing companies with revenues between $500 million and $2 billion are more likely to say that the Fed’s actions hurt the economy than small manufacturers with revenues between $25 million and $74 million (17% and 7% respectively).
Expansion Plans
Unlike last year when more than half (52%) of all manufacturing company CFOs reported that the economy had no impact on their growth plans, the length and severity of the recession have certainly changed all that. Currently, more than half of all CFOs surveyed report that current economic conditions have caused them to delay or cancel their plans for growth or expansion (46% delay, 10% cancel). This represents a significant jump from 38 percent in the 2009 CFO Outlook and is the highest ever recorded for this measure.
The percentage of CFOs who intend to accelerate their growth plans as a result of economic conditions dropped again this year and is currently only 8 percent. The only subgroup reporting above-average growth plans (16%) are those that are expecting M&A activity in 2010.
Among those CFOs who are delaying their expansion plans, the primary reason is financial market conditions (88%), a category which includes factors such as poor sales performance (66%), uncertainty of future (19%) and the weak economy (17%). The credit market (26%) is a secondary reason for altering growth plans.
Cost Concerns
For the first time in many years, the cost of materials and energy costs are not the primary financial concerns of manufacturing company CFOs. Instead, CFOs report that revenue growth (49%), cash flow (45%) and healthcare costs (41%) are their biggest financial concerns in 2010.
The financial concerns of U.S. manufacturing company CFOs do vary by geographic region. For instance, companies in the South are significantly more concerned about the cost of materials (43%) and energy costs (33%) than businesses in the West (30% and 20% respectively). Healthcare costs are a significantly greater concern to CFOs in the Midwest (46%) than in the West (32%). Finally, credit availability concerns companies in the Midwest (38%) significantly more than those in the Northeast (27%).
Small companies with revenues between $25 million and $74 million report much higher levels of concern over revenue growth (55%) than all other companies. In addition, these small companies are significantly more concerned about cash flow (49%) and healthcare costs (46%) than large companies with revenues between $500 million and $2 billion (31% and 28% respectively).
Finally, private companies are significantly more likely than public companies to be concerned about healthcare costs (46% vs. 27%), equipment costs (41% vs. 30%), credit availability (37% vs. 25%) and corporate taxes (22% vs. 14%).
Nearly half of CFOs expect a higher cost of capital, yet almost 70 percent are considering financing, with working capital and capital expenditures listed as the top reasons. This is up significantly from the 59 percent reported in last year’s survey. Private companies are significantly more likely than public companies to be considering financing for working capital (48% vs. 25%) and capital expenditure (41% vs. 28%). In contrast, public companies are significantly more likely than private companies to not be considering financing at this time (47% vs. 27%).
For the first time in three years, most U.S. manufacturing company CFOs are predicting that their labor costs and product pricing will remain constant in 2010 (45% and 51% respectively). Only 37 percent of CFOs predict their labor costs will increase in 2010, significantly lower than the 56 percent reported last year. Likewise, only 36 percent of manufacturers think prices for their products will increase in 2010 (down significantly from the 69 percent reported in the 2009 CFO Outlook).
The subgroups expecting above-average increases in labor costs or product pricing next year are:
Labor Costs
■ Companies in the West (43%) and Northeast (42%)
■ Manufacturers expecting their sales to foreign markets to increase in 2010 (40%)
Product Pricing
■ Companies expecting to participate in M&A activity in 2010 (48%)
■ Manufacturing companies in the South (41%)
■ Companies with revenues between $500 million and $2 billion (41%)
The results of the Bank of America Business Capital 2010 CFO Outlook illustrate that manufacturers are cautious and this is reflected in their business practices. Although manufacturers are clearly concerned about the future of the U.S. economy, this year’s survey shows that they continue to believe in the ability of the marketplace to weather the storm.
http://www.montgomery.com/public/public.portal?_pd_page_label=products/abf/capeyes/archive_index&dcCapEyes=indCE&id=435#
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General disclaimer for Bank of America Merrill Lynch
©2010 Bank of America Corporation. All rights reserved.
Download the entire report
The following article explores the results of the 12th annual survey of mid-size and large U.S. manufacturing company CFOs commissioned by Bank of America Business Capital. Phone interviews were conducted from mid-August to mid-October 2009.
The key message from this year’s survey results is that while CFOs gave the current state of the U.S. economy its lowest score in the survey’s history, they are optimistic about the outlook for the economy. Two-thirds of manufacturing company CFOs surveyed said they expect the economy to expand in 2010, and almost 60 percent said they expect the manufacturing sector to grow. Both of those responses were much higher than in last year’s survey. Despite that optimism, a slight majority said their companies have delayed or canceled expansion plans.
Many CFOs may just have a wait-and-see attitude. They see positive signs for the economy and for manufacturing, but they may need to see more concrete results before committing to expansion themselves.
Sixty-two percent of the manufacturing company CFOs surveyed report that they have no plans to change the size of their labor force in 2010. Of the remaining CFOs surveyed, 28 percent will be making additions to staff and 9 percent will be laying off employees. For the first time in three years, most U.S. manufacturing company CFOs are predicting that their labor costs and product pricing will remain constant in 2010 (45% and 51% respectively). Only 37 percent of CFOs predict their labor costs will increase in 2010, significantly lower than the 56 percent reported last year.
In the survey, CFOs reported little change in their borrowing needs for 2010. About half of the CFOs surveyed expect their cost of capital to increase, compared with about one-quarter two years ago. Even so, there was an increase in CFOs who said they are considering financing in 2010, and more than half said that credit availability over the past year has stayed the same.
The Economy
Despite giving the current economy low marks, chief financial executives at U.S. manufacturing companies are more optimistic than in recent years about the nation’s economic outlook.
Sixty-six percent of CFOs believe the national economy will expand in 2010, more than double (31%) who cited expansion in last year’s survey. There are no significant differences in the economic outlook by region or type of company, however, in terms of sales size, manufacturing companies with revenues between $200 million and $499 million are significantly more likely (76%) to predict economic expansion than smaller manufacturers with revenues between $25 million and $74 million (64%).
For the second consecutive year, manufacturing company CFOs have a negative view of the U.S. economy, giving it an average score of “44” on a scale ranging from 0 (extremely weak) to 100 (extremely strong). This represents a decline compared to last year’s score of “46” and is the lowest score recorded for this measure since the survey began.
Only 29 percent of CFOs rate the current state of the U.S. economy above the “50” midpoint, significantly lower than the 35 percent rating reported in the 2009 CFO Outlook. This negative view is consistent across all companies regardless of census region, revenue size and whether the company is publicly- or privately-owned.
CFOs are equally critical of the world economy giving it an average score of “46”. This represents a significant decline from last year’s score of “53” and marks the first time ever in the history of the survey that U.S. manufacturers have a negative view of the world’s economic affairs.
Manufacturing Sector
Manufacturing company CFOs are the most critical of their own industry at this point in time. They give the manufacturing sector an average score of “40”, which is a 10-point drop from 2008 and the lowest level ever in the history of the CFO Outlook.
Yet 59 percent expect the manufacturing sector to expand in 2010 – more than double the 25 percent a year ago. After six years of waning optimism, this marks a return to 2004 levels when manufacturers held positive views about their industry. Of the remaining companies, 30 percent believe the industry will remain the same in 2010 and 11 percent think it will contract. Companies in the Midwest are more optimistic (63%) about industry expansion than manufacturers in all other regions.
In addition, 61 percent of CFOs expect revenue growth in 2010, up from 50 percent last year. Regionally, CFOs in the Northeast (64%) and Midwest (63%) are directionally more likely than those in the South and West (57%) to be projecting revenue growth. Likewise, revenue expectations are the most optimistic among large companies (66% for companies with revenues between $200 million and $499 million and 69 percent for companies with revenues between $500 million and $2 billion). Finally, companies expecting sales to foreign markets to increase (72%) and businesses expecting M&A activity (68%) are both expecting above-average revenue growth in 2010.
Fed Actions
While the global recession has tested many companies, the survey responses show that most CFOs now anticipate growth in 2010. Conditions may still be challenging for some businesses, but the broader view is much more optimistic than a year ago.
In December 2008, the Federal Reserve Board lowered the overnight federal funds rate to near zero and has kept it there since. Given that interest rates have remained unusually low for this extended period of time, it is not surprising that 88 percent of manufacturing company CFOs believe the actions taken by the Fed over the past year have helped the U.S. economy. This represents a significant increase for this measure since last year’s survey (64%).
Large manufacturing companies with revenues between $500 million and $2 billion are more likely to say that the Fed’s actions hurt the economy than small manufacturers with revenues between $25 million and $74 million (17% and 7% respectively).
Expansion Plans
Unlike last year when more than half (52%) of all manufacturing company CFOs reported that the economy had no impact on their growth plans, the length and severity of the recession have certainly changed all that. Currently, more than half of all CFOs surveyed report that current economic conditions have caused them to delay or cancel their plans for growth or expansion (46% delay, 10% cancel). This represents a significant jump from 38 percent in the 2009 CFO Outlook and is the highest ever recorded for this measure.
The percentage of CFOs who intend to accelerate their growth plans as a result of economic conditions dropped again this year and is currently only 8 percent. The only subgroup reporting above-average growth plans (16%) are those that are expecting M&A activity in 2010.
Among those CFOs who are delaying their expansion plans, the primary reason is financial market conditions (88%), a category which includes factors such as poor sales performance (66%), uncertainty of future (19%) and the weak economy (17%). The credit market (26%) is a secondary reason for altering growth plans.
Cost Concerns
For the first time in many years, the cost of materials and energy costs are not the primary financial concerns of manufacturing company CFOs. Instead, CFOs report that revenue growth (49%), cash flow (45%) and healthcare costs (41%) are their biggest financial concerns in 2010.
The financial concerns of U.S. manufacturing company CFOs do vary by geographic region. For instance, companies in the South are significantly more concerned about the cost of materials (43%) and energy costs (33%) than businesses in the West (30% and 20% respectively). Healthcare costs are a significantly greater concern to CFOs in the Midwest (46%) than in the West (32%). Finally, credit availability concerns companies in the Midwest (38%) significantly more than those in the Northeast (27%).
Small companies with revenues between $25 million and $74 million report much higher levels of concern over revenue growth (55%) than all other companies. In addition, these small companies are significantly more concerned about cash flow (49%) and healthcare costs (46%) than large companies with revenues between $500 million and $2 billion (31% and 28% respectively).
Finally, private companies are significantly more likely than public companies to be concerned about healthcare costs (46% vs. 27%), equipment costs (41% vs. 30%), credit availability (37% vs. 25%) and corporate taxes (22% vs. 14%).
Nearly half of CFOs expect a higher cost of capital, yet almost 70 percent are considering financing, with working capital and capital expenditures listed as the top reasons. This is up significantly from the 59 percent reported in last year’s survey. Private companies are significantly more likely than public companies to be considering financing for working capital (48% vs. 25%) and capital expenditure (41% vs. 28%). In contrast, public companies are significantly more likely than private companies to not be considering financing at this time (47% vs. 27%).
For the first time in three years, most U.S. manufacturing company CFOs are predicting that their labor costs and product pricing will remain constant in 2010 (45% and 51% respectively). Only 37 percent of CFOs predict their labor costs will increase in 2010, significantly lower than the 56 percent reported last year. Likewise, only 36 percent of manufacturers think prices for their products will increase in 2010 (down significantly from the 69 percent reported in the 2009 CFO Outlook).
The subgroups expecting above-average increases in labor costs or product pricing next year are:
Labor Costs
■ Companies in the West (43%) and Northeast (42%)
■ Manufacturers expecting their sales to foreign markets to increase in 2010 (40%)
Product Pricing
■ Companies expecting to participate in M&A activity in 2010 (48%)
■ Manufacturing companies in the South (41%)
■ Companies with revenues between $500 million and $2 billion (41%)
The results of the Bank of America Business Capital 2010 CFO Outlook illustrate that manufacturers are cautious and this is reflected in their business practices. Although manufacturers are clearly concerned about the future of the U.S. economy, this year’s survey shows that they continue to believe in the ability of the marketplace to weather the storm.
http://www.montgomery.com/public/public.portal?_pd_page_label=products/abf/capeyes/archive_index&dcCapEyes=indCE&id=435#
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General disclaimer for Bank of America Merrill Lynch
©2010 Bank of America Corporation. All rights reserved.
RBC Bank Looking at Growth Strategies
Reporting by Scott Wolf News Observer
"Everything is on the table," CEO Gordon Nixon told Bloomberg News during an interview in New York on Wednesday. He said acquisitions or a merger with another bank are two ways to "maximize return." He said concerns about bank balance sheets and U.S. banking regulations make it difficult to value potential acquisition targets. Royal Bank's last U.S. purchase was the $1.6 billion takeover of Alabama National Bank in February 2008.
There will be opportunities "for years to come" to buy rival banks and expand the U.S. business, Nixon told Bloomberg."The first thing we're going to do is fix it," Nixon said. The biggest question is whether "that business is going to be as attractive as other opportunities for us to deploy capital."
Royal Bank last year reorganized RBC Bank after the subsidiary began losing money during the recession, hurt by its exposure to real estate and deteriorating commercial loans. That effort included cutting hundreds of jobs and replacing top managers.
RBC Bank is now led by CEO Jim Westlake, a Canadian who took over the top spot from Scott Custer last fall. Westlake didn't directly contradict anything his boss told Bloomberg News, but he said RBC Bank officials are not now discussing the possibility of a sale. "You wouldn't ever want a CEO who wouldn't consider all options," he said in a telephone interview Thursday. "Any conjecture about what we might do is exactly that. We are very focused on building a good bank here."
Westlake spoke from his car at Raleigh-Durham International Airport, where he was waiting to fly to Toronto to visit his bosses at Royal Bank.
To fix RBC Bank, officials have consolidated all the branding across its territories under the RBC Bank name and are working to improve the company's balance sheet and loan portfolio, Westlake said.
RBC Bank, with about 430 branches, now employs 500 people in the Triangle, mostly at its headquarters tower in downtown Raleigh. Company wide, RBC Bank has about 5,000 employees, down from 6,000 a year ago.
Royal Bank entered the U.S. market with its $2.1 billion purchase of Rocky Mount-based Centura Bank in 2001.The company's shares, which have nearly doubled in the past year, rose 53 cents Thursday to close at $58.96.
To read full article please click here
"Everything is on the table," CEO Gordon Nixon told Bloomberg News during an interview in New York on Wednesday. He said acquisitions or a merger with another bank are two ways to "maximize return." He said concerns about bank balance sheets and U.S. banking regulations make it difficult to value potential acquisition targets. Royal Bank's last U.S. purchase was the $1.6 billion takeover of Alabama National Bank in February 2008.
There will be opportunities "for years to come" to buy rival banks and expand the U.S. business, Nixon told Bloomberg."The first thing we're going to do is fix it," Nixon said. The biggest question is whether "that business is going to be as attractive as other opportunities for us to deploy capital."
Royal Bank last year reorganized RBC Bank after the subsidiary began losing money during the recession, hurt by its exposure to real estate and deteriorating commercial loans. That effort included cutting hundreds of jobs and replacing top managers.
RBC Bank is now led by CEO Jim Westlake, a Canadian who took over the top spot from Scott Custer last fall. Westlake didn't directly contradict anything his boss told Bloomberg News, but he said RBC Bank officials are not now discussing the possibility of a sale. "You wouldn't ever want a CEO who wouldn't consider all options," he said in a telephone interview Thursday. "Any conjecture about what we might do is exactly that. We are very focused on building a good bank here."
Westlake spoke from his car at Raleigh-Durham International Airport, where he was waiting to fly to Toronto to visit his bosses at Royal Bank.
To fix RBC Bank, officials have consolidated all the branding across its territories under the RBC Bank name and are working to improve the company's balance sheet and loan portfolio, Westlake said.
RBC Bank, with about 430 branches, now employs 500 people in the Triangle, mostly at its headquarters tower in downtown Raleigh. Company wide, RBC Bank has about 5,000 employees, down from 6,000 a year ago.
Royal Bank entered the U.S. market with its $2.1 billion purchase of Rocky Mount-based Centura Bank in 2001.The company's shares, which have nearly doubled in the past year, rose 53 cents Thursday to close at $58.96.
To read full article please click here
Wednesday, March 24, 2010
Accountants Look to Cloud Computing For Cost Cutting
Article from CFO.com
Unlike the development curve of many business trends, the use of cloud computing to lower accounting costs has gained an early foothold among smaller companies. There is practically limitless room for growth; what almost everyone regards as the most successful cloud software provider to date, salesforce.com, started out at the lower end but now continues to find a berth in larger and larger companies.
The American Institute of Certified Public Accountants is pushing to accelerate adoption of cloud solutions among its 350,000 members, focusing especially on small and midmarket companies as well as CPA firms. The AICPA's first official endorsement of a cloud vendor, payroll solutions provider Paychex, came several years ago. But the institute has rolled out more such partnerships with increasing frequency, including with bill.com for invoice management and payment in 2008, financial management and accounting software maker Intacct a year ago, and tax-automation supplier Copanion at year-end 2009.
Related Articles
Another cloud vendor will receive the institute's stamp of approval this spring, according to Erik Asgeirsson, chief executive of CPA2Biz, an AICPA subsidiary that provides the parent with technology and marketing services and advocates the use of accounting automation by small businesses.
The pitch is that the cloud offers a steep drop in information-technology costs, since applications are hosted by the vendors and provided on demand, rather than via physical installations or seat licenses. "It is extremely important for CFOs, controllers, and CPA firms to leverage this new way of doing business," says Asgeirsson. "Putting these solutions in place provides sustainable competitive advantages."
Please read rest of article at CFO.com
Unlike the development curve of many business trends, the use of cloud computing to lower accounting costs has gained an early foothold among smaller companies. There is practically limitless room for growth; what almost everyone regards as the most successful cloud software provider to date, salesforce.com, started out at the lower end but now continues to find a berth in larger and larger companies.
The American Institute of Certified Public Accountants is pushing to accelerate adoption of cloud solutions among its 350,000 members, focusing especially on small and midmarket companies as well as CPA firms. The AICPA's first official endorsement of a cloud vendor, payroll solutions provider Paychex, came several years ago. But the institute has rolled out more such partnerships with increasing frequency, including with bill.com for invoice management and payment in 2008, financial management and accounting software maker Intacct a year ago, and tax-automation supplier Copanion at year-end 2009.
Related Articles
Another cloud vendor will receive the institute's stamp of approval this spring, according to Erik Asgeirsson, chief executive of CPA2Biz, an AICPA subsidiary that provides the parent with technology and marketing services and advocates the use of accounting automation by small businesses.
The pitch is that the cloud offers a steep drop in information-technology costs, since applications are hosted by the vendors and provided on demand, rather than via physical installations or seat licenses. "It is extremely important for CFOs, controllers, and CPA firms to leverage this new way of doing business," says Asgeirsson. "Putting these solutions in place provides sustainable competitive advantages."
Please read rest of article at CFO.com
Hanover Insurance Appoints New CFO
The Hanover Insurance Group, Inc. (NYSE: THG), a leading provider of property and casualty insurance, today announced that Ellen M. Rizzo has been appointed chief financial officer of its property and casualty business. In this role, Rizzo is responsible for financial oversight of The Hanover’s personal lines, commercial lines and claims organizations.
Rizzo joins The Hanover from The Travelers Companies, where she served as senior vice president and chief financial officer of business insurance since 1999. With more than 25 years of service to Travelers, she has established a reputation as an accomplished and insightful financial executive.
“Among the many ways we deliver distinctive value as a company is by attracting and retaining talented and committed professionals,” said Marita Zuraitis, president of The Hanover’s property and casualty business. “Ellen is one of the most talented and committed financial professionals in our business, and we look forward to benefiting from her extensive experience as we continue our journey to be the best partner for winning independent agents.”
“Ellen has a very successful track record leading financial organizations for property and casualty businesses,” said Steven J. Bensinger, executive vice president and chief financial officer of The Hanover Insurance Group. “We are confident that her broad industry knowledge and insight will be great assets to our organization as we continue to deliver on our promises to our agent partners and their customers.”
Ellen holds a master’s degree in finance and a bachelor’s degree in accounting from the University of Connecticut.
Reorganization of Divisions at SunTrust Banks
SunTrust Banks Inc (STI.N) said on Tuesday it was creating a new unit to oversee all of its consumer banking operations, and reorganizing its corporate and investment banking operations.
The Atlanta-based bank's newly created consumer banking organization will have oversight of all consumer deposit and loan offerings, including mortgage and credit cards.
The change by one of the 10 largest U.S. banks mirrors shifts by other large U.S. consumer banks to streamline operations and give a few executives ultimate responsibility for basic consumer services, like deposits and loans.
C.T. Hill, 59, will run the new unit, SunTrust said. He previously ran the bank's Mid-Atlantic Banking Group and managed its retail business line.
Thomas Kuntz, 53, will oversee the bank's 1,700 branches spread through 16 divisions in the Southeast and Mid-Atlantic regions of the United States.
The bank is also moving some of its commercial executives.
Amy Medendorp, 48, will become business executive for SunTrust's commercial line of business. She previously worked as co-head of the corporate and investment bank with Hugh Cummins, who will take over full responsibility for the corporate and investment banking operations.
Tuesday, March 23, 2010
Jet Blue Subleases Space From Met Life
JetBlue Airways announced they have decided to keep its headquarters in New York City, and to combine the current Forest Hills, New York and Darien, Connecticut corporate offices,into one main support center to be located in Long Island City, Queens.JetBlue's Darien, CT support center will be combined with the current New York office sometime in 2011. Seventy jobs will be relocated to New York. The carrier's Darien office provides transactional financial support for the value airline since 2000 and has been a key ingredient of the airline's success in its first decade.
Subleasing Space From MetLife
JetBlue will be subleasing the space from MetLife, who will continue to maintain a significant presence at the location with approximately 800 associates.Subject to execution of a lease with Metropolitan Life Insurance Co. (MetLife), JetBlue expects to occupy approximately 200,000 square feet by mid-2012 in the historic Brewster Building in Long Island City Queens. The Brewster Building, owned by Brause Realty, a New York City-based real estate company, is just six miles down the road from JetBlue's current support center location in Forest Hills, and is situated at the foot of one of the main gateways to Manhattan -- the Queensborough Bridge.
David Brause, President of Brause Realty Inc. and Chairman of the Long Island City Business Improvement District (BID), said, "We are very pleased that JetBlue Airways has chosen to lease our family's building in Long Island City for its new headquarters location. In partnership with our tenant, MetLife, Brause Realty looks forward to many years together with JetBlue as we accommodate this vibrant company's present space needs and their growth into the future."
"We are pleased that JetBlue, has made their decision to join us and establish their headquarters at our class A Long Island City facility," said John M. Vazquez, Vice President, Chief Procurement Officer, Vendor Sourcing and Corporate Services for MetLife. "Our mutual commitment to Long Island City is evidence that the area continues to grow and prosper with significant residential and business development. We are confident that JetBlue crewmembers will feel right at home in our headquarters quality building and will enjoy the full array of amenities available. We value this partnership with JetBlue and appreciate having such a well regarded and customer focused organization complement MetLife."
Subleasing is Not Always the Answer
Many companies consider subleasing commercial real estate as their only option. It is not always the best strategy when you look at tax implications and the neutral impact on bottom line. Cambridge Consulting Group negotiates unique Lease Buyout programs that have saved Fortune 500 companies millions of dollars. For more information on their services please visit their new website- www.commercialleaseterminations.com
More Activity Predicted For Data Center Facilities
As the debt and equity markets begin to thaw, the initial public offering for the Telx Group is likely to be the first of many transactions to come in 2010 in the data center sector, according to analysts and industry insiders, who say the industry is poised for a flurry of deals – including IPOs, financings, and acquisitions of facilities and companies.
“There are lot of deals going on in the hosting and data center sector,” said Dan Golding, Managing Director of DH Capital, an investment bank that specializes in the hosting and telecom sectors. “The reason there will be so many deals is that many were already in the works in 2008 and early 2009. You’ve got all these deals that are lined up and waiting to go.”
“In the short term, we’re going to see a lot of equity come into this space,” said Jim Kerrigan, director of the national data center practice at Grubb & Ellis. “There will be a lot of new faces, and familiar faces in new roles. All these deals that got shelved in 2009 because the CFO said no … they’re going to happen. That’s going to be good for the business.”
Private Equity Firms Get Active
Telx filed papers Thursday for an IPO that could raise up to $100 million for the provider, which offers colocation and interconnection services. Telx is among the data center providers backed by private equity firms that continued to expand during the economic downturn, a group that also includes Corelink, Latisys, QTS, CyrusOne, Peak 10, Hosted Solutions, ViaWest and The Planet.
At the recent DataCenterDynamics New York and Data Center World conferences, there was chatter about potential “roll ups” in the colocation and managed hosting sectors, as emerging players seek to build a national footprint by acquiring providers and facilities with a track record of growth and solid management. The activity could provide exits for some investors, growth capital for some providers, and bring additional shifts to a competitive landscape bracing to absorb the pending merger of two major players, Equinix and Switch and Data.
The talk of a surge in transactions doesn’t signal a shift in sentiment, analysts and, but rather the ability to fund existing investor sentiments.
Strong Investor Interest
“The door hasn’t really been open because of the capital situation,” said Golding. “There’s tremendous interest in this sector from investors. Over the last two years most sectors have performed poorly. There really aren’t too many bright spots. But the data center and hosting sector has done well. I think there are a number of high-quality data center properties that investors find attractive.”
“There are lot of deals going on in the hosting and data center sector,” said Dan Golding, Managing Director of DH Capital, an investment bank that specializes in the hosting and telecom sectors. “The reason there will be so many deals is that many were already in the works in 2008 and early 2009. You’ve got all these deals that are lined up and waiting to go.”
“In the short term, we’re going to see a lot of equity come into this space,” said Jim Kerrigan, director of the national data center practice at Grubb & Ellis. “There will be a lot of new faces, and familiar faces in new roles. All these deals that got shelved in 2009 because the CFO said no … they’re going to happen. That’s going to be good for the business.”
Private Equity Firms Get Active
Telx filed papers Thursday for an IPO that could raise up to $100 million for the provider, which offers colocation and interconnection services. Telx is among the data center providers backed by private equity firms that continued to expand during the economic downturn, a group that also includes Corelink, Latisys, QTS, CyrusOne, Peak 10, Hosted Solutions, ViaWest and The Planet.
At the recent DataCenterDynamics New York and Data Center World conferences, there was chatter about potential “roll ups” in the colocation and managed hosting sectors, as emerging players seek to build a national footprint by acquiring providers and facilities with a track record of growth and solid management. The activity could provide exits for some investors, growth capital for some providers, and bring additional shifts to a competitive landscape bracing to absorb the pending merger of two major players, Equinix and Switch and Data.
The talk of a surge in transactions doesn’t signal a shift in sentiment, analysts and, but rather the ability to fund existing investor sentiments.
Strong Investor Interest
“The door hasn’t really been open because of the capital situation,” said Golding. “There’s tremendous interest in this sector from investors. Over the last two years most sectors have performed poorly. There really aren’t too many bright spots. But the data center and hosting sector has done well. I think there are a number of high-quality data center properties that investors find attractive.”
Monday, March 22, 2010
HSBC Opening New Bank Branches in US
Wall Street Journal Reports HSBC Branch banking Strategy
reporting by Sara Schaefer Muñoz at sara.schaefer-munoz@wsj.com
"...HSBC quietly opened 18 retail branches in the U.S. in 2009 and plans six additional locations this year, trying to use its widespread name recognition to win business from consumers with ties to Asia, Europe and Latin America.
In December, the London bank opened a branch in the Chinatown section of San Francisco. Redmond, Wash., the hometown of Microsoft Corp. and a slew of international employees, got a new HSBC branch in February. The bank's Koreatown office on Wilshire Boulevard in Los Angeles opened its doors March 4."
HSBC Currently Ranks 13th in Deposits
"...HSBC has long coveted the world's largest economy. The bank had $84.08 billion in U.S. deposits as of June 30, the latest date for which figures are available from the Federal Deposit Insurance Corp. But while deposits have grown more than 50% since 2004, HSBC ranks just 13th in deposits in the U.S., trailing U.S.-based rivals like Bank of America Corp. and J.P. Morgan Chase & Co., as well as the U.K.'s Royal Bank of Scotland Group PLC.
Since 2006, HSBC has opened nearly 100 branches in the U.S., most of them in major urban areas, expanding the company's presence beyond its roots in New York. HSBC's largest U.S. unit now has 382 offices scattered throughout the state, and an additional 102 branches in 11 other states and Washington, D.C., according to the FDIC."
HSBC Already has A Substantial Number of Local Branches in New York
"...In 2005, HSBC launched an online bank in the U.S., HSBC Direct, which has amassed $15.5 billion in savings deposits. The company also has lots of small-town brick-and-mortar branches, which some analysts worry aren't an ideal fit with HSBC's internationally focused push.
"The niche strategy itself is quite sensible," says Ronit Ghose, an analyst at Citigroup. "But they can't get rid of the fact they have all these legacy branches in New York state that don't seem to fit into their global strategy."
An HSBC spokeswoman says the presence in New York state helps provide scale and critical mass to compete in all segments of the market.
For full version of article please click here.
Cambridge Consulting Group specializes in helping financial institutions free up capital by eliminating real estate leasing obligations through negotiated lease buyout strategies. Financial institutions including Bank Of America and KeyCorp have saved millions of dollars by using this strategy to reduce their real estate costs. Foe more information on how Cambridge Consulting Group can help your bottom line please visit their website- www.commercialleaseterminations.com
Sunday, March 21, 2010
IBM CFO Study- Larger Role In C Suite for CFO
Leadership From Forbes.com
The Big New Role Of The CFO
William Fuessler,
Global Leader of IBM's financial management practice.
The global economic downturn has put a bright spotlight on chief financial officers and the finance organizations they preside over. Amid all the world's volatility and uncertainty they have been drawn ever more often into the boardroom discussions where decisions are made. Their bosses, chief executive officers, no longer want mere number crunchers; they want them to provide forecasts, manage risks and provide insight into issues ranging from pricing to production. As a result, CFOs are emerging with far greater clout and responsibilities than before.
IBM's new 2010 Global CFO Study, based on input from more than 1,900 CFOs and senior finance leaders worldwide, attests to this shift. Although the importance of core finance tasks hasn't diminished in any way, CFOs have had to sharply increase their focus on company-wide concerns. The IBM study indicates that they are seriously struggling to come to terms with the dramatically altered economic landscape, and only half of those surveyed said they feel they're effective in giving their CEOs adequate business insight. An overwhelming majority are planning big changes.
CEOs and boards of directors are counting on their CFOs to be fact-based voices of reason and insight, but those expectations are rising faster than the ability to deliver. However, the study identified one group of finance organizations that have a particular combination of capabilities that buck this trend. We call them the value integrators. Value integrators' businesses have outperformed their peers on every common financial measure we examined. These leaders have stepped up to their new roles helping their businesses make all manner of enterprise-wide decisions better, faster and with more certainty about end results.
How have they done it? First, through efficiency. They have reduced complexity by sticking with common processes, for example using the same definitions across the organization for financial terms like gross margin and revenue. That may sound like a small, obvious thing, but it's huge. Many organizations use multiple terms to describe a single financial function, making reconciliation across the business a nightmare. Common terms make it far easier to consolidate data from the local to the regional and global levels, allowing more time for analysis. Less efficient companies consider it a victory merely to reconcile all their information at all.
Value integrators also have far greater analytical capabilities, enabling them to generate business insights that can help them spot market opportunities, react faster and ultimately predict changes in the business environment. They've even figured out how to drive sustained business outcomes in times of market instability.
This has happened, for example, at Banco Bradesco, one of Brazil's largest private banks, which has total assets of $253.5 billion. Bradesco provides a wide range of banking and financial products and services both in Brazil and abroad. Its leaders recently recognized the importance of more effective financial management and went to work standardizing its accounting processes and revamping its governance model to ensure that all departments had clearly articulated responsibilities. It also built a performance management system that allows it to evaluate risks and view profitability in many different ways, for instance by geography, customer or branch. The system also allows managers to build forecasts into their planning processes. As a result Bradesco is now much faster at gathering, compiling and reconciling data. It has the time for sophisticated analysis and is better able to provide decision support for its undertakings.
That's the kind of commitment and vision it takes to become a value integrator. How can a CFO get started on the journey? There's no one-size-fits-all method; it varies from organization to organization. But you can start by asking these few key questions:
--Do I have all the information I need from all parts of the enterprise at all times?
--Is the company focused on the right business metrics, the ones that truly drive business performance?
--How accurate are our crucial forecasts, such as the ones for customer demand and unit costs?
--Does the organization have sufficient analytical skills?
The answers to these questions will start to point a CFO to gaps in his or her finance organization, and awareness of those gaps will guide the creation of an action plan--an absolutely crucial activity that must be undertaken with great care, as the decisions made for it will have great ramifications down the road.
One thing is certain: CFOs cannot return to the pre-crisis days when they were little more than information clearinghouses. The era of the CFO as a key influencer in the C-Suite has arrived, and those who are ready for it will reap the rewards for their organizations--increased competitiveness and greater profits.
Blog Sponsor: Cambridge Consulting helps CFO increase profits fro their firms by helping then review commercial real estate assets and creating negotiated lease buyouts for unused real estate. Many organizations are looking at their unused office space as an under utilized physical and financial asset. Millions of dollars of capital can be created by eliminating real estate obligations. Foe more information please visit www.commercialleaseterminations.com
The Big New Role Of The CFO
William Fuessler,
Global Leader of IBM's financial management practice.
The global economic downturn has put a bright spotlight on chief financial officers and the finance organizations they preside over. Amid all the world's volatility and uncertainty they have been drawn ever more often into the boardroom discussions where decisions are made. Their bosses, chief executive officers, no longer want mere number crunchers; they want them to provide forecasts, manage risks and provide insight into issues ranging from pricing to production. As a result, CFOs are emerging with far greater clout and responsibilities than before.
IBM's new 2010 Global CFO Study, based on input from more than 1,900 CFOs and senior finance leaders worldwide, attests to this shift. Although the importance of core finance tasks hasn't diminished in any way, CFOs have had to sharply increase their focus on company-wide concerns. The IBM study indicates that they are seriously struggling to come to terms with the dramatically altered economic landscape, and only half of those surveyed said they feel they're effective in giving their CEOs adequate business insight. An overwhelming majority are planning big changes.
CEOs and boards of directors are counting on their CFOs to be fact-based voices of reason and insight, but those expectations are rising faster than the ability to deliver. However, the study identified one group of finance organizations that have a particular combination of capabilities that buck this trend. We call them the value integrators. Value integrators' businesses have outperformed their peers on every common financial measure we examined. These leaders have stepped up to their new roles helping their businesses make all manner of enterprise-wide decisions better, faster and with more certainty about end results.
How have they done it? First, through efficiency. They have reduced complexity by sticking with common processes, for example using the same definitions across the organization for financial terms like gross margin and revenue. That may sound like a small, obvious thing, but it's huge. Many organizations use multiple terms to describe a single financial function, making reconciliation across the business a nightmare. Common terms make it far easier to consolidate data from the local to the regional and global levels, allowing more time for analysis. Less efficient companies consider it a victory merely to reconcile all their information at all.
Value integrators also have far greater analytical capabilities, enabling them to generate business insights that can help them spot market opportunities, react faster and ultimately predict changes in the business environment. They've even figured out how to drive sustained business outcomes in times of market instability.
This has happened, for example, at Banco Bradesco, one of Brazil's largest private banks, which has total assets of $253.5 billion. Bradesco provides a wide range of banking and financial products and services both in Brazil and abroad. Its leaders recently recognized the importance of more effective financial management and went to work standardizing its accounting processes and revamping its governance model to ensure that all departments had clearly articulated responsibilities. It also built a performance management system that allows it to evaluate risks and view profitability in many different ways, for instance by geography, customer or branch. The system also allows managers to build forecasts into their planning processes. As a result Bradesco is now much faster at gathering, compiling and reconciling data. It has the time for sophisticated analysis and is better able to provide decision support for its undertakings.
That's the kind of commitment and vision it takes to become a value integrator. How can a CFO get started on the journey? There's no one-size-fits-all method; it varies from organization to organization. But you can start by asking these few key questions:
--Do I have all the information I need from all parts of the enterprise at all times?
--Is the company focused on the right business metrics, the ones that truly drive business performance?
--How accurate are our crucial forecasts, such as the ones for customer demand and unit costs?
--Does the organization have sufficient analytical skills?
The answers to these questions will start to point a CFO to gaps in his or her finance organization, and awareness of those gaps will guide the creation of an action plan--an absolutely crucial activity that must be undertaken with great care, as the decisions made for it will have great ramifications down the road.
One thing is certain: CFOs cannot return to the pre-crisis days when they were little more than information clearinghouses. The era of the CFO as a key influencer in the C-Suite has arrived, and those who are ready for it will reap the rewards for their organizations--increased competitiveness and greater profits.
Blog Sponsor: Cambridge Consulting helps CFO increase profits fro their firms by helping then review commercial real estate assets and creating negotiated lease buyouts for unused real estate. Many organizations are looking at their unused office space as an under utilized physical and financial asset. Millions of dollars of capital can be created by eliminating real estate obligations. Foe more information please visit www.commercialleaseterminations.com
Linkedin Important CFO Strategy For Advancement
This was an excellent article on the importance of LinkedIn for CFOs. For more information please visit www.cfo-coach.com
As social media tools continue to be a critical piece of an overall corporate recruiting strategy, CFOs and senior finance executives will want to leverage powerful positioning on Linked In. How your profile is perceived by recruiters is paramount to getting a second look or, even better, a call on a first look.
Five key areas to pay attention to include ...
-- A Powerful Branded Summary
This is not your daddy’s boring bio either. This summary, limited by 2,000 characters, is your opportunity to showcase how you do what you do (your brand) that is different and unique from others who do the same or similar things.
This limited summary section forces you to concentrate on the value you offer and deliver it succinctly. The process of unearthing and condensing down your marketable value proposition into a clear and compelling accomplishment statement is one of “the” most valuable things you can do for yourself.
Ignoring the summary section relegates you, by omission, to commodity status. Do what others are NOT doing and get noticed!
-- Complete Experience Section
It is great to have your employers and job titles, past and present, listed as part of your profile. But that is not enough. In the world of key searches, more is better. The amount of information online acts as a pre–qualifier and gives both you and a prospect a framework to begin establishing a relationship.
-- Vanity URL
Grab your vanity URL to increase your Google rankings and add branded consistency to your online presence.
-- Join Groups
Within the 60 million Linked In ocean of users, you are a mere bait fish. By joining groups, the size of the pond shrinks and your presence grows exponentially. Joining groups allows you to mingle with like–minded folks, gain access to their contact information ... even if the person is not a 1st degree contact in your network, and become even more visible to recruiters.
-- Get Recommended
Third party recommendations are extremely important on Linked In. These are very powerful endorsements that add credibility to the statements in your profile and employment history, and are critical to your positioning.
What does your Linked In profile say about you? Do you stand out from the other Chief Financial Officers who have done the same or similar things as you ... or are have you relegated yourself to commodity status?
If you're a Chief Financial Officer and you're on Linked In, please consider connecting with me and joining our CFO Careers group.
Posted by Cindy Kraft, the CFO-Coach on March 18, 2010 at 09:21 AM | Permalink
As social media tools continue to be a critical piece of an overall corporate recruiting strategy, CFOs and senior finance executives will want to leverage powerful positioning on Linked In. How your profile is perceived by recruiters is paramount to getting a second look or, even better, a call on a first look.
Five key areas to pay attention to include ...
-- A Powerful Branded Summary
This is not your daddy’s boring bio either. This summary, limited by 2,000 characters, is your opportunity to showcase how you do what you do (your brand) that is different and unique from others who do the same or similar things.
This limited summary section forces you to concentrate on the value you offer and deliver it succinctly. The process of unearthing and condensing down your marketable value proposition into a clear and compelling accomplishment statement is one of “the” most valuable things you can do for yourself.
Ignoring the summary section relegates you, by omission, to commodity status. Do what others are NOT doing and get noticed!
-- Complete Experience Section
It is great to have your employers and job titles, past and present, listed as part of your profile. But that is not enough. In the world of key searches, more is better. The amount of information online acts as a pre–qualifier and gives both you and a prospect a framework to begin establishing a relationship.
-- Vanity URL
Grab your vanity URL to increase your Google rankings and add branded consistency to your online presence.
-- Join Groups
Within the 60 million Linked In ocean of users, you are a mere bait fish. By joining groups, the size of the pond shrinks and your presence grows exponentially. Joining groups allows you to mingle with like–minded folks, gain access to their contact information ... even if the person is not a 1st degree contact in your network, and become even more visible to recruiters.
-- Get Recommended
Third party recommendations are extremely important on Linked In. These are very powerful endorsements that add credibility to the statements in your profile and employment history, and are critical to your positioning.
What does your Linked In profile say about you? Do you stand out from the other Chief Financial Officers who have done the same or similar things as you ... or are have you relegated yourself to commodity status?
If you're a Chief Financial Officer and you're on Linked In, please consider connecting with me and joining our CFO Careers group.
Posted by Cindy Kraft, the CFO-Coach on March 18, 2010 at 09:21 AM | Permalink
Friday, March 19, 2010
Wall Street Journal-Retailers Seek Smaller Real Estate Footprint
Wall Street Journal reported that retailers need to reduce their leased real estate. Reporting byElizabeth Holmes at elizabeth.holmes@wsj.com
Retailers have a new strategy to increase profits: shrink to fit.
For two decades, mall-based apparel companies saturated the market, aggressively adding more stores and building them bigger. Chastened by the recession, however, retailers including Gap Inc. and AnnTaylor Stores Corp. are poring over their holdings, looking for stores they can cut down to size.
The effort marks a new phase in the industry's response to the weak economy. After consumers snapped shut their wallets in the fall of 2008, sending sales plummeting, retailers laid off waves of employees and slashed inventory.
Now, many of them see re-evaluating their real estate, one of retailing's biggest expenses, as a critical step on their path to recovery.
Gap expanded tremendously in the 1990s. But in the last decade, sales per square foot have fallen and now, Gap is looking to shrink its footprint."During the '90s era, everybody wanted a bigger box," says Kay Krill, AnnTaylor's chief executive. "Now, all of us are trying to get out of those bigger boxes."Ms. Krill says she is shrinking square footage at AnnTaylor's new namesake stores by a third. Her reasoning: "I like productivity."
Average sales per square foot at American malls, a closely watched measure of retailers' productivity, peaked in 2007 at $454, according to research firm Green Street Advisors Inc. By the end of 2009, the average had fallen to $401, wiping out five years of progress.
For many retailers, the decline has been even steeper. Between 1999 and 2009, sales per square foot at Gap, the country's largest apparel retailer, fell 40% to $329. Total square footage for the company, which also owns the Banana Republic and Old Navy chains, jumped 62% over that period, even though its number of stores increased just 2.6%.
Gap is dealing with "a hangover of yesteryear," says Chief Financial Officer Sabrina Simmons.
The company wants to shrink the size of its namesake stores to between 8,000 and 12,000 square feet, she says. That compares with a current average of about 18,000 square feet, excluding marquee locations, which are among its largest stores.
"Quite frankly, it's just not as positive of a shopping experience as a smaller box that's a more intimate experience," Ms. Simmons says.
In locations where Gap has multiple store formats, such as GapKids or Gap Body, in addition to a conventional Gap store, the company aims to consolidate them into a single store.
Lengthy lease terms can make it difficult to close stores outright. But mall landlords often can be persuaded to accept downsizing, because it keeps the retailer in place, avoiding a dark storefront.
For the rest of the article on reducing real estate leases click here
Cambridge Consulting has successfully negotiated lease buyouts for many Fortune 500 firms. They are independent of any conflicts with landlords because Cambridge does not represent real estate owners. Their sole mission is to help their clients save money by reducing or eliminating their real estate lease commitments. For more information please visit their website- www.commercialleaseterminations.com
Retailers have a new strategy to increase profits: shrink to fit.
For two decades, mall-based apparel companies saturated the market, aggressively adding more stores and building them bigger. Chastened by the recession, however, retailers including Gap Inc. and AnnTaylor Stores Corp. are poring over their holdings, looking for stores they can cut down to size.
The effort marks a new phase in the industry's response to the weak economy. After consumers snapped shut their wallets in the fall of 2008, sending sales plummeting, retailers laid off waves of employees and slashed inventory.
Now, many of them see re-evaluating their real estate, one of retailing's biggest expenses, as a critical step on their path to recovery.
Gap expanded tremendously in the 1990s. But in the last decade, sales per square foot have fallen and now, Gap is looking to shrink its footprint."During the '90s era, everybody wanted a bigger box," says Kay Krill, AnnTaylor's chief executive. "Now, all of us are trying to get out of those bigger boxes."Ms. Krill says she is shrinking square footage at AnnTaylor's new namesake stores by a third. Her reasoning: "I like productivity."
Average sales per square foot at American malls, a closely watched measure of retailers' productivity, peaked in 2007 at $454, according to research firm Green Street Advisors Inc. By the end of 2009, the average had fallen to $401, wiping out five years of progress.
For many retailers, the decline has been even steeper. Between 1999 and 2009, sales per square foot at Gap, the country's largest apparel retailer, fell 40% to $329. Total square footage for the company, which also owns the Banana Republic and Old Navy chains, jumped 62% over that period, even though its number of stores increased just 2.6%.
Gap is dealing with "a hangover of yesteryear," says Chief Financial Officer Sabrina Simmons.
The company wants to shrink the size of its namesake stores to between 8,000 and 12,000 square feet, she says. That compares with a current average of about 18,000 square feet, excluding marquee locations, which are among its largest stores.
"Quite frankly, it's just not as positive of a shopping experience as a smaller box that's a more intimate experience," Ms. Simmons says.
In locations where Gap has multiple store formats, such as GapKids or Gap Body, in addition to a conventional Gap store, the company aims to consolidate them into a single store.
Lengthy lease terms can make it difficult to close stores outright. But mall landlords often can be persuaded to accept downsizing, because it keeps the retailer in place, avoiding a dark storefront.
For the rest of the article on reducing real estate leases click here
Cambridge Consulting has successfully negotiated lease buyouts for many Fortune 500 firms. They are independent of any conflicts with landlords because Cambridge does not represent real estate owners. Their sole mission is to help their clients save money by reducing or eliminating their real estate lease commitments. For more information please visit their website- www.commercialleaseterminations.com
Thursday, March 18, 2010
Convenience Store Stripes Saving Money Through Lighting Program
Harlingen Texas-based convenience store chain Stripes has signed a 29-month contract with TXU Energy and agreed to retrofit T12 fluorescent fixtures with energy-efficient T8s as part of the initiative.In addition, the company said it would replace less efficient lighting fixtures with LED canopy fixtures and will install TXU Energy iThermostats in select stores.
“The rebate program not only provides strong incentives for our convenience stores to be more energy efficient, but it also helps us do our part to make a positive impact on the environment,” said Mary Sullivan, CFO for Stripes. “We look forward to seeing how this program and our efforts to switch out lighting in our stores and upgrading to more energy efficient air conditioners throughout West and South Texas impacts the bottom line.”
Under the Energy Efficiency Rebate Program, Stripes has received rebates for retrofitting T12 fluorescent fixtures with more efficient T8s and replacing less efficient lighting fixtures with LED canopy fixtures, and installing TXU Energy exclusive internet accessible iThermostats® in a few test stores.
Business customers interested in the Energy Efficiency Rebate Program must sign a minimum 12 month contract with TXU Energy and install proven energy-efficiency technologies, including fluorescent fixture retrofits, LED exit signs, programmable thermostats and high-efficiency HVACs. TXU Energy is the only retail electricity provider in the state to provide this type of energy rebate program to businesses looking to help the environment.
“Our rebate program was designed to help our business customers be more environmentally conscious,” said Tom Leverton, COO for TXU Energy. “Businesses are not only looking to improve their bottom line, but also help the environment. Our rebate program helps them accomplish both.”
As a TXU Energy customer, you can receive energy efficiency rebates by retrofitting to accepted and proven energy efficient technologies, including compact fluorescent lamps, T5 and T8 fluorescent lamps, LED exit signs, programmable thermostats, high-efficiency HVAC* and vending machine controls. Installing energy-efficient equipment is a sustainable way to conserve energy with equipment that lasts a long time and begins producing savings right away.
Redbird LED based in Atlanta is a designer, manufacturer and distributor of high quality energy efficient LED Tube Lights. They recently launched a new website for grocery store owners and facility managers- www.groceryledlighting.com
“The rebate program not only provides strong incentives for our convenience stores to be more energy efficient, but it also helps us do our part to make a positive impact on the environment,” said Mary Sullivan, CFO for Stripes. “We look forward to seeing how this program and our efforts to switch out lighting in our stores and upgrading to more energy efficient air conditioners throughout West and South Texas impacts the bottom line.”
Under the Energy Efficiency Rebate Program, Stripes has received rebates for retrofitting T12 fluorescent fixtures with more efficient T8s and replacing less efficient lighting fixtures with LED canopy fixtures, and installing TXU Energy exclusive internet accessible iThermostats® in a few test stores.
Business customers interested in the Energy Efficiency Rebate Program must sign a minimum 12 month contract with TXU Energy and install proven energy-efficiency technologies, including fluorescent fixture retrofits, LED exit signs, programmable thermostats and high-efficiency HVACs. TXU Energy is the only retail electricity provider in the state to provide this type of energy rebate program to businesses looking to help the environment.
“Our rebate program was designed to help our business customers be more environmentally conscious,” said Tom Leverton, COO for TXU Energy. “Businesses are not only looking to improve their bottom line, but also help the environment. Our rebate program helps them accomplish both.”
As a TXU Energy customer, you can receive energy efficiency rebates by retrofitting to accepted and proven energy efficient technologies, including compact fluorescent lamps, T5 and T8 fluorescent lamps, LED exit signs, programmable thermostats, high-efficiency HVAC* and vending machine controls. Installing energy-efficient equipment is a sustainable way to conserve energy with equipment that lasts a long time and begins producing savings right away.
Redbird LED based in Atlanta is a designer, manufacturer and distributor of high quality energy efficient LED Tube Lights. They recently launched a new website for grocery store owners and facility managers- www.groceryledlighting.com
Bank of West Hires New CFO
Bank of the West announced today that Duke Dayal has joined the bank as Chief Financial Officer. Dayal has more than 20 years of experience in international finance and was most recently a Managing Director of Brysam Global Partners, a New York-based private equity firm focused on investing in financial services. “Bank of the West’s history of sound financial management and its strong reputation in the market for outstanding service position it well to capitalize on growth opportunities,” Dayal said.
“Duke Dayal joins our team with a an impressive record of leadership in growing organizations, which, together with his strong finance and strategic skills, makes him a great addition to our executive management team,” Bank of the West Chairman and CEO Michael Shepherd said.
Prior to Brysam, Dayal was an executive with Citigroup serving in finance roles in the U.S., Europe and Asia. Among those roles was CFO of Citibank West, where he led the integration of Golden State Bancorp. Dayal also held senior finance roles in North America, Europe and Africa at Diageo, a leading consumer products company.
Dayal received a degree in Accounting and Finance from Nottingham Trent University, England and is a member of the Chartered Institute of Management Accountants in England.
Sponsor: Cambridge Consulting Group specializes in providing cost containment strategies to Financial Institutions. They have specific expertise in tax, finance and commercial real estate issues. For more information please visit their website- www.commercialleaseterminations.com
“Duke Dayal joins our team with a an impressive record of leadership in growing organizations, which, together with his strong finance and strategic skills, makes him a great addition to our executive management team,” Bank of the West Chairman and CEO Michael Shepherd said.
Prior to Brysam, Dayal was an executive with Citigroup serving in finance roles in the U.S., Europe and Asia. Among those roles was CFO of Citibank West, where he led the integration of Golden State Bancorp. Dayal also held senior finance roles in North America, Europe and Africa at Diageo, a leading consumer products company.
Dayal received a degree in Accounting and Finance from Nottingham Trent University, England and is a member of the Chartered Institute of Management Accountants in England.
Sponsor: Cambridge Consulting Group specializes in providing cost containment strategies to Financial Institutions. They have specific expertise in tax, finance and commercial real estate issues. For more information please visit their website- www.commercialleaseterminations.com
Tuesday, March 16, 2010
Wells Fargo CFO Played Important Role During Economic Downturn
The cover story of the current issue of CFO Magazine features the Role of Bank CFOs in the recent economic downturn. The excerpt below features Howard Atkins from Wells Fargo:
Wells Fargo knows a thing or two about how to survive a crisis; after all, it had to endure the California Panic of 1855, when the company's mission was to carry gold and freight between the mining regions of the West and the financial centers of the East. Thanks in part to a wagon-load of TARP funding, it appears ready to emerge from this most recent crisis, having reported revenue of $88.7 billion for 2009 and net income of $12.3 billion.
CFO Howard Atkins is a survivor as well, having outlasted the finance chiefs at the nation's other largest banks. Atkins attributes both his and the bank's success to the fact that Wells Fargo stuck to its business model and stayed out of activities that entangled other large banks. It was also helped by the capital position it enjoyed as the crisis began two years ago. Early last decade, many banks issued hybrid securities — instruments that combine elements of debt and equity — to buy back their common stock. "We never really thought that was a smart thing to do," Atkins says. "It may have helped earnings per share in the near term, but it weakened the banks' capital structures." The Basel Committee on Banking Supervision has come around to that view and plans to phase out the acceptance of hybrids in banks' Tier 1 capital calculations and make retained earnings and common equity more prominent.
Sponsor: Cambridge Consulting Group has provided cost containment and branch real estate strategies for major financial institutions such as Bank Of America and Key Corp. These programs have saved these firms millions of dollars in underutilized capital and real estate. For more information please visit their website at www.commercialleaseterminations.com.
Wells Fargo Assets
Wells Fargo hardly stayed above the fray, however, largely due to its all-stock acquisition of Wachovia Corp. for $12.5 billion. The move caused many experts to scratch their heads, given Wachovia's high-risk loan book. But Atkins is unwavering in claiming it was the right decision. Despite Wachovia's weaknesses (which were compounded by its acquisition of a large California mortgage lender right before the housing market peaked), "we looked through its problems and found an affluent customer base that represented a huge cross-selling opportunity," Atkins says.
Fixing the Hole
Nonetheless, as it struggled to absorb the acquisition, Wells Fargo saw its Tier 1 capital ratio fall 75 basis points, to 7.9%. After stress tests conducted by the Federal Reserve last May, Wells was told to raise $13.7 billion, despite already having received $25 billion through the TARP program. The bank launched a series of massive follow-on stock offerings, raising $33.5 billion in 13 months. "We got it done in a short period of time with a lot of pressure in the marketplace," Atkins said. As a result, the bank was able to repay its TARP infusion, with interest. "TARP served its purpose, and we returned a billion and a half dollars to the taxpayer," Atkins says.
Atkins is glad to have thrown off the TARP, in part because he can now turn to other matters, such as how a rise in interest rates will affect Wells Fargo's investment portfolio. To match its assets to liabilities, Wells typically buys long-duration mortgage-backed securities, but term interest rates are still at historic lows. "Even though we have a growing base of deposits, we are intentionally underinvesting to avoid the risk that rates go up and we have to take a loss," Atkins says.
The bank may face new regulatory pressure as well: it boasts a 10.8% deposit market share nationally (about the highest in the United States) and above the 10% limit created by the Riegle-Neal Interstate Banking and Branch Efficiency Act of 1994. If regulators decide to address the "too big" aspect of "too big to fail," Wells Fargo will definitely appear on their radar screen.
However, in a community-banking climate in which there are fewer competitors and credit pricing is more rational, Wells Fargo's customer focus will serve it well, says Atkins. "A lot of banks got into trouble when they drifted away from focusing on doing the right thing for customers," he says. "We never drifted."
For the complete article please click here
Wells Fargo knows a thing or two about how to survive a crisis; after all, it had to endure the California Panic of 1855, when the company's mission was to carry gold and freight between the mining regions of the West and the financial centers of the East. Thanks in part to a wagon-load of TARP funding, it appears ready to emerge from this most recent crisis, having reported revenue of $88.7 billion for 2009 and net income of $12.3 billion.
CFO Howard Atkins is a survivor as well, having outlasted the finance chiefs at the nation's other largest banks. Atkins attributes both his and the bank's success to the fact that Wells Fargo stuck to its business model and stayed out of activities that entangled other large banks. It was also helped by the capital position it enjoyed as the crisis began two years ago. Early last decade, many banks issued hybrid securities — instruments that combine elements of debt and equity — to buy back their common stock. "We never really thought that was a smart thing to do," Atkins says. "It may have helped earnings per share in the near term, but it weakened the banks' capital structures." The Basel Committee on Banking Supervision has come around to that view and plans to phase out the acceptance of hybrids in banks' Tier 1 capital calculations and make retained earnings and common equity more prominent.
Sponsor: Cambridge Consulting Group has provided cost containment and branch real estate strategies for major financial institutions such as Bank Of America and Key Corp. These programs have saved these firms millions of dollars in underutilized capital and real estate. For more information please visit their website at www.commercialleaseterminations.com.
Wells Fargo Assets
Wells Fargo hardly stayed above the fray, however, largely due to its all-stock acquisition of Wachovia Corp. for $12.5 billion. The move caused many experts to scratch their heads, given Wachovia's high-risk loan book. But Atkins is unwavering in claiming it was the right decision. Despite Wachovia's weaknesses (which were compounded by its acquisition of a large California mortgage lender right before the housing market peaked), "we looked through its problems and found an affluent customer base that represented a huge cross-selling opportunity," Atkins says.
Fixing the Hole
Nonetheless, as it struggled to absorb the acquisition, Wells Fargo saw its Tier 1 capital ratio fall 75 basis points, to 7.9%. After stress tests conducted by the Federal Reserve last May, Wells was told to raise $13.7 billion, despite already having received $25 billion through the TARP program. The bank launched a series of massive follow-on stock offerings, raising $33.5 billion in 13 months. "We got it done in a short period of time with a lot of pressure in the marketplace," Atkins said. As a result, the bank was able to repay its TARP infusion, with interest. "TARP served its purpose, and we returned a billion and a half dollars to the taxpayer," Atkins says.
Atkins is glad to have thrown off the TARP, in part because he can now turn to other matters, such as how a rise in interest rates will affect Wells Fargo's investment portfolio. To match its assets to liabilities, Wells typically buys long-duration mortgage-backed securities, but term interest rates are still at historic lows. "Even though we have a growing base of deposits, we are intentionally underinvesting to avoid the risk that rates go up and we have to take a loss," Atkins says.
The bank may face new regulatory pressure as well: it boasts a 10.8% deposit market share nationally (about the highest in the United States) and above the 10% limit created by the Riegle-Neal Interstate Banking and Branch Efficiency Act of 1994. If regulators decide to address the "too big" aspect of "too big to fail," Wells Fargo will definitely appear on their radar screen.
However, in a community-banking climate in which there are fewer competitors and credit pricing is more rational, Wells Fargo's customer focus will serve it well, says Atkins. "A lot of banks got into trouble when they drifted away from focusing on doing the right thing for customers," he says. "We never drifted."
For the complete article please click here
Industrial Production Rose in February
As reported by Bloomberg;
Industrial production unexpectedly rose in February, due in part to gains in demand for computers and semiconductors that signal the pickup in U.S. business investment is being sustained.Output climbed 0.1 percent, the eighth consecutive increase, as utility use and mining increased, figures from the Federal Reserve showed today in Washington. Businesses are stabilizing inventories and buying equipment in a bid to meet growing global demand.
Capacity utilization, or the proportion of plants in use, climbed to 72.7 percent from 72.5 percent, today’s Fed production report showed. The gauge averaged 80 percent over the past two decades and suggests inflation will remain low.Manufacturing output declined 0.2 percent after increasing 0.9 percent in January, the report showed. “Production was likely held down somewhat by winter storms in the Northeast,” the Fed said in the release.
Production of business equipment increased 0.4 percent, a third consecutive gain, as demand for computers, communications gear and semiconductors climbed, a sign business investment is picking up. Spending on equipment and software climbed at an 18 percent annual rate in the fourth quarter, the most since 2000, the Commerce Department said Feb. 26. Some companies are upgrading their sales forecasts.
Industrial production unexpectedly rose in February, due in part to gains in demand for computers and semiconductors that signal the pickup in U.S. business investment is being sustained.Output climbed 0.1 percent, the eighth consecutive increase, as utility use and mining increased, figures from the Federal Reserve showed today in Washington. Businesses are stabilizing inventories and buying equipment in a bid to meet growing global demand.
Capacity utilization, or the proportion of plants in use, climbed to 72.7 percent from 72.5 percent, today’s Fed production report showed. The gauge averaged 80 percent over the past two decades and suggests inflation will remain low.Manufacturing output declined 0.2 percent after increasing 0.9 percent in January, the report showed. “Production was likely held down somewhat by winter storms in the Northeast,” the Fed said in the release.
Production of business equipment increased 0.4 percent, a third consecutive gain, as demand for computers, communications gear and semiconductors climbed, a sign business investment is picking up. Spending on equipment and software climbed at an 18 percent annual rate in the fourth quarter, the most since 2000, the Commerce Department said Feb. 26. Some companies are upgrading their sales forecasts.
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