Cross Border blogs

Thinning ranks

At our recent New York Think Tank, IROs commiserated over the lack of focus of the analysts covering them. They understood completely why; analysts are part of the growing pool of Wall Street-types losing their jobs.

Yes, it’s true. Goldman Sachs, Citigroup and Bank of America have dismissed dozens of analysts in the past weeks. At most danger of extinction are the specific breed of analysts who cover the investment banks themselves. Some of the highest profile among them are out, including William Tanona, Prashant Bhatia and Michael Hecht, as the New York Times’ Louise Story reports.

Even while IROs love to hate analysts, they will be missed. And there is the thinking that their firing is a false economy. ‘Analysts can be extremely high-priced, so when you’re looking to cut costs, that’s a place to look,’ William Fitzpatrick, an analyst at Optique Capital, tells Story. ‘But at the end of the day, given the amount of headlines that these companies attract, it’s not clear to me why you wouldn’t want the coverage there.’

 

COMMENT: Does the SEC have the cooties?

It’s a childish thing to posit, but it’s also justified. Earlier this year the SEC became momentarily devoid of Democrats, following the departure of Roel Campos and Annette Nazareth from the five-strong Commission. Walter Ricciardi also bowed out as deputy director of the division of enforcement to become partner at Paul, Weiss, Rifkind, Wharton & Garrison.

This month has seen its ranks thin yet again: John White, director of division of corporation finance, will leave at year-end, and Brian Cartwright, general counsel, is looking to return to the private sector. The good thing about having worked at the SEC: it’s pretty easy to score a great position no matter what the markets are doing. And when the markets are down, a little SEC insight could be just what firms will be looking to catch.

By Janine Armin
Corporate Secretary magazine

Waiting for XBRL

The nation’s filers have been waiting (and waiting) for a final rule from the SEC on making XBRL mandatory. In a webcast Thursday, Business Wire’s vice president of global disclosure and financial reporting services Michael Becker posed THE question to the interactive disclosure czar himself, David Blaszkowsky.

‘I’m going to have to ask you this… when does it happen?’ said Becker.

The reply? ‘Our commitment is to bring this before the commission in the fall, recognizing we are deep in to the fall,’ said Blaszkowsky. ‘This is an important issue to the chairman and this will be reviewed. You’ll see some news shortly, I expect. No, I’m not ready to give a particular date.’

SEC downplays IFRS

The SEC has been accused of soft pedaling IFRS adoption in an article written yesterday for CFO.com. The piece criticizes Chairman Cox for failing to give the issue more than a fleeting mention to the roadmap for mandatory IFRS reporting at the Financial Executives International conference in New York on Tuesday. ‘Christopher Cox referred mainly to the proposal's cautionary language making it clear that mandatory adoption of IFRS is not a done deal,’ warned reporter David McCann.

The SEC is blamed from making as little fuss as possible over its subtle posting of the roadmap for mandatory IFRS reporting. CFO.com points out that the Friday evening announcement was published in the 'proposed rules' section of the SEC's website but wasn't accompanied by a press release or even a link on the SEC's home page.

According to the article, attendees were concerned about the little attention given to IFRS in the States. Cox was targeted for seeming like he wanted to escape to avoid questioning on the conversion.

Wanted: Sovereign Wealth Funds

Sovereign Wealth Funds (SWFs) have probably never felt so in demand. Firms are falling over themselves to get them on board using any means possible, often much to the annoyance of other shareholders.

General Electric is the latest said to be lining up for SWF backing. According to reports, GE has been speaking to Singapore’s Temasek and GIC, as well as China’s CIC and Safe on the back of dramatic falls in its share price. Shares in GE have reportedly fallen over 60 percent over the past year.

Forecasting the forecast

Most of the time, that paper of record (The New York Times) shunts earnings stories into small news holes on pages B4 or B6. Have you noticed in this horrible market climate that more and more of them are getting better placement? 

Just today, the quarterly conference calls of Hewlett-Packard, Saks and Home Depot got some major play. What does that mean? More attention than ever on the IRO. 

The pressure is on companies whether it is their day to report or not. Dell got drawn, somewhat unfavorably, into the HP coverage. Even before release of its third-quarter results tomorrow, the reviews are already harsh. ‘It’s going to be a very depressing, sloppy earnings call,’ Needham analyst Richard Kugele told the paper.

Best Buy’s shocking earnings language

Best Buy made a brave attempt to tell the story of the bear market and its effect on the company in a quarterly earnings release this week.

It didn’t mince words: ‘Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen,’ said Brad Anderson, its vice chairman and CEO. ‘Best Buy simply can’t adjust fast enough to maintain our earnings momentum for this year.’

With the use of the word ‘seismic’, news-driven algorithmic traders must have had a field day, and so did the press. ‘Its bit of honesty was taken to the extreme by the business media,’ said ‘Market Maven’ Marek Fuchs, in a video on TheStreet.com TV called ‘They just don’t get Best Buy.’

Fuchs, who delivers commentary to his wife from the breakfast table and films it for TheStreet.com, said he applauds the use of ‘direct’ and ‘declarative’ language.

‘Best Buy is hitting a different turn, but it’s a quality company,’ Fuchs said. ‘Best Buy is not on its knees like Circuit City, in bankruptcy court begging its creditors for relief. You have to make a distinction.’

 

Stock photos

Every time you open a newspaper during these bear market days, it is filled with photos of despairing traders, head in hands or shouting into a phone. It is pretty good theater. This week, the Montreal Gazette has a nice series of them in ‘An evolution of stock market photos’ essay online.

The best have always come from the floor of Bovespa, the Sao Paulo exchange. Check this one out. 

COMMENT: It didn’t take long for investors to forget the good news

After the cheer that initially greeted news of China's $586 bn government-led bailout, Asian stocks wasted little time in losing their recently recouped gains.

The solution to the crisis clearly involves large sums of money. The conundrum for governments is the best way to chuck money at the problem – the US situation has shown us that promising to chuck money alone is not sufficient to quell the widespread unease.

The problem, it seems, is that policymakers seem to have about as much of a clue about the way forward as the rest of us.

Even some of the world's top economists disagree about the best way forward. In an FT article published this week, a gaggle of economists argued the toss about the best way to deal with the situation. Monetary or fiscal, monetary and fiscal, fiscal – the absolute total last result, and so on.

But where does this leave companies? They are left in a situation where they have to explain how their firm's performance will be affected by an array of potential policy options whether fiscal or monetary, or a variety of combinations of both.

This problem for companies becomes even worse in a close period as they don't even have the opportunity to talk through how changes in the wider economy could and would affect their business.

As one IRO pointed out at last week's IR Magazine UK Think Tank, close periods in bear markets are even tougher as investors and analysts tend to over-rely on macroeconomic indicators to assess companies in the absence of any data from companies.

By Clare Harrison
IR magazine

COMMENT: IR therapy session

Getting out of the office (or in this freelance journalist’s case, my flat) and actually meeting IROs face to face is not something I do enough of. That happened last Friday at the IR Magazine Think Tank at the City Presentation Centre in London. Due to deadlines, I could make only the two morning sessions. But it was fascinating to be among 30-plus IROs all in the same room speaking freely - and off the record! - about their roles and concerns.

A senior IRO from a well-known German car company gave an amusing, wry account of the firm's sudden (albeit temporary) escalation to the World’s Most Valuable Company following its raid by a certain corporate last week.

Another IRO from a FTSE 100 listed travel company had the room rocking with laughter about package holiday woes and the bizarre complaints a tiny minority of its customers can make. Others revealed candidly their own worries and concerns. At times it felt more like group therapy than a think tank, but all the more valuable for that, given the current environment.

I came away reinvigorated and energized about the professionals I write about. If you were there I hope you felt the day was worth the effort. If you weren’t, make sure you get to the next one. They’re free, too.

Adrian Holliday
Freelancer, IR magazine