Protiviti Responds to Tough Financial Crisis, Now More Bullish
Protiviti, as many will recall, was principally Andersen’s internal audit service line, and these professionals joined the multi-billion dollar organization Robert Half International ($RHI) in 2002 to form their own division, separate from the staffing units for which RHI is better known for – Accountemps, Office Team and Management Resources. Starting with just over 700 employees in 25 locations, Protiviti has certainly grown in size and scope, and now is a global business consulting and internal audit firm providing risk, advisory, and transaction services; with 2,500 professionals in 62 locations in 17 countries worldwide. The Protiviti division accounts for 13% of total parent company RHI revenues; and within Protiviti itself, international operations were 30% of total Protiviti revenues.
All the senior management at Protiviti continue to be Andersen alumni:
Joseph A. Tarantino, President and Chief Executive Officer, ex-head of Arthur Andersen’s Financial Services Assurance practice for metropolitan New York
Carol M. Beaumier, Executive Vice President, Global Industry Programs, ex-partner in Arthur Andersen’s Regulatory Risk Services practice
Robert B. Hirth Jr., Executive Vice President, Global Internal Audit, ex-partner with Arthur Andersen
James Pajakowski, Executive Vice President, Global Risk Solutions, ex-partner with Arthur Andersen
Gary Peterson, Executive Vice President, International Operations, ex-partner at Arthur Andersen
We haven’t focused on Protiviti for the longest time, but our attention was brought back after seeing RHI’s full year 2009 results. We were quite surprised to see that despite its size, Protiviti had a full year 2009 loss. Yes, a loss of $30 million for the entire year on revenues of $384 million.
To dig deeper into this situation, we had to go back all the way to 2007, analyze a whole series of quarterly earnings and read through multiple earnings transcripts (courtesy: SeekingAlpha.com).
An interesting picture emerges from our analysis, vividly demonstrating the intensity and rapidity of the global slowdown, and consequent management efforts to cope with business shrinkage.
In 2007, Protiviti had revenues of $552 million, gross margin of $175 million (32% of revenues), and operating income of $21 million (4% of revenues). In 2008, revenues held reasonably flat at $547 million, but gross margin had decreased by $20 million to $155 million (28% of revenues), and operating income fell by $14 million, a full 66% to $7 million (1% of revenues). In 2009, the situation had rapidly deteriorated, with revenues falling 30% to $384 million, gross margin plunging by $75 million to $80 million (21% of revenues), and operating income declining precipitously by $38 million to a net loss figure of $(31) million (negative 8% of revenues). In a matter of just 24 months, Protiviti’s top line had eroded by 30% and its operations had gone from a healthy profit to a huge loss.
A deeper look at the quarterly earnings for two full years, 2008 and 2009, reveals the full extent of the situation.
In 2007, Protiviti had good operating results, with 3,300 employees, up a whopping 16% from 2006, as management hired talent in sync with increased demand for its services.
From Q1-2008 to Q3-2008, in the first three quarters of 2008, revenues continued at the 2007 quarterly run-rate of about $140 million, but total costs, principally direct compensation costs from all the increased staff levels were up 4%, increasing from 68% of revenues in 2007 to 72% of revenues in the first three quarters of 2008. Things were still on a decent footing at that time, operating income was a few million dollars profit on the average each quarter, not at 2007 levels, but certainly not at losses either. The expected increase in 2008 revenues had not been seen, and the increased cost line continued to pressure Protiviti’s profits. A review of the Q3-2008 quarterly earnings call shows that management was cautiously optimistic about Protiviti’s performance and prospects, and there were initial efforts to bring costs in line with flat revenues. Given that RHI had not ever managed Protiviti through a downturn, senior management could not provide decent guidance on revenues for the upcoming fourth quarter.
Then, with the collapse of Lehman Brothers in September 2008, the financial crisis became really severe in Q4-2008.
In Q4-2008, Protiviti’s revenues fell to $125 million, $15 million below the run rate seen in the last three quarters, but Protiviti had already started moving to reducing its cost base. Both direct costs and SG&A costs were quickly reined in, and the cost base in Q4-2008 was reduced by $12 million in comparison to Q3-2008, to almost offset the $15 million loss in revenue. Overall, operating income for Q4-2008 decreased to $1 million from $4 million in Q3-2009.
At the end of 2008, Protiviti had seen flat revenues to 2007, but a sharp drop in profits. The firm had 3,200 employees, 100 lower than the 3,300 at the end of 2007, through some initial layoffs. Its likely no-one imagined how 2009 would turn out.
In Q1-2009, Protiviti’s revenue fell to $100 million, $25 million below Q4-2008 (some of this was attributed to seasonally slow first quarters), but this is when Protiviti really started to manage its employee base. It took an $8 million extraordinary charge in the quarter for severance costs, with an intent to manage its employee compensation costs in line with falling revenues. There was also a contemporaneous reduction in SG&A, but the quarter still ended with a $11 million operating loss, as total costs in the quarter could not come down far enough with the rapid decline in revenue.
In Q2-2009, quarterly revenues had fallen another $10 million to $90 million, however, the cost base also fell by $10 million from the previous quarter and the operating loss position of $11 million held steady from the prior quarter. Protiviti took an additional $2 million employee severance restructuring charge in the quarter. By this time, management had recognized the severity of the issue and were taking active steps to manage costs in line with declining revenues. Management said that US operations had better profitability than international operations, which were being scrutinized in detail. Also, the division was taking steps to diversify away purely from Internal Audit and Sarbox type work into IT audit and co-sourcing to create a larger set of non-correlated service lines.
By Q3-2009, the positive cost impact of the reductions in staff were showing on the bottom line. Q3-2009 revenues were $96 million, a good $6 million better than the $90 million in Q2-2009 in terms of revenue, with the third quarter being sequentially generally better than the second quarter. Costs in Q3-2009 were also $7 million better than Q2-2009, with the net result that operating profit increased by $12 million from Q2-2009 to Q3-2009. Q3-2009 turned in a small operating income of $1 million. Q3-2009 gross margin% matched what were historical levels in the first half of 2008.
In Q4-2009, the operating situation was quite similar to Q3-2009, as revenues and costs generally held steady and flat. Revenue was $96 million, staff utilization improved and operating income was essentially zero.
Protiviti ended 2009 with $384 million in revenue, 30% lower than 2008, and with an operating loss of $21 million (net of restructuring charges) compared with $7 million of operating profit in 2008. The big change in 2009 was the employee base, the year ended with 2,500 employees, 700 employees lower than the end of the previous year. This was a gut-wrenching 22% reduction in staff, in that 1 out of every 5 professionals with Protiviti who was working at the end of 2008 was no longer at the firm in 2009.
As we turn into 2010, management appears much more bullish about Protiviti’s 2010 prospects and indicated generally that the division will aim to generate positive operating profit for this year. The problem seems to lie in Protiviti’s operations outside the US, which are offsetting a higher level of US profitability, and there seems to be serious effort to turn that around. It indicates that operating costs levels have now been sized to a $400 million revenue business; and anecdotal evidence at Protiviti consultants indicates there is growing confidence that there will higher levels of business in this year.
Anyone who has passed through this crisis will recall with clarity how difficult the last quarter of 2008 and the first half of 2009 really was. This is a case study on Protiviti, but likely representative of all consulting and accounting firms, who faced and continue to face a crisis unprecedented in modern times. The decline in Protiviti (a Big 4 firm spin off) is in line with the decreases in Advisory service lines at the Big Four firms, however the magnitude of the fall is much higher at Protiviti, much to its smaller size and smaller footprint in higher-growth emerging countries of the world.
While we have been able only to tell the story from the public financials, we do recognize there is a deep human cost, in terms of lost jobs, continued unemployment, potentially poor morale, and tough disengagement and working conditions. We invite Protiviti alumni to join the Big4 LinkedIn group, which has a robust discussion and job board to extend their network and keep abreast of developments. And if any of our readers have first-hand or deeper knowledge of this situation, we welcome your comments.
Monday, February 08, 2010
Thursday, February 04, 2010
PricewaterhouseCoopers And Satyam: Recent Twists and Turns
We have blogged earlier about PricewaterhouseCoopers, the official auditors of Satyam, the Indian IT firm, scalded by the scam perpetrated by its Chairman Ramalinga Raju. Since then, Satyam has been bought by Tech Mahindra and Deloitte has been hired as the new statutory auditors. All this has happened in a space of one year, with Ramalinga Raju being arrested on January 9, 2009, he is reportedly in the hospital now, though his brother and the Satyam CFO and other key officials are still imprisoned.
This case continues to twist and turn, and here are some very recent developments from the Indian press (mainly The Economic Times (www.economictimes.com) and CNBC-TV18 (www.moneycontrol.com):
First and most recent, the Supreme Court of India today granted bail to the PricewaterhouseCoopers partner Mr. T Srinivas, on the basis that the bulky charges (over 55,000 pages) could lead to a long-drawn trial in the case and the accused was already lodged in jail for over a year. The judges decided it would be of no use to keep the accused in jail, where he had been since his arrest on January 24 2009. Mr. Srinivas has been asked to post bail of about US$40,000 and two sureties. The court also directed Mr. Srinivas to appear before the police in the first week of every second month and not to tamper with the evidence or influence witnesses in the case.
Second, the scam has had larger impact on the PwC Indian firm, with about 200 professionals leaving PwC India for other firms, mainly due to adverse reputational impact. This is considered one of the highest and quickest attritions in Indian professional services. These 200 employees include the 19 partners who left along with Dinesh Kanabar, the widely-regarded head of PwC’s tax practice, who joined rival firm KPMG as deputy CEO in December 2009. These employees, across all level of professional services, have apparently moved onto other Big Four firms in India - KPMG, Ernst & Young and Deloitte. Reportedly, PwC has been trying to control attrition by attractive bonuses and larger professional roles. Note that PwC India has 6,500 employees, so this 3% by itself is not an unusual attrition level, but the rapid outflow in a short amount of time following a reputational event makes it all the more critical.
Third, recall that PwC India had made serious changes to the top management of the Indian firm, also bringing in Gautam Banerjee as the new Chairman from PwC Singapore in December 2009.
Fourth, in a recent interview with Dennis Nally PwC Chairman with CNBC-TV18 India TV, he acknowledged that the Satyam scam had hurt the PwC brand, saying, “Without question the firm has had real challenges in India but that has not changed my outlook and view on the importance of India economy to global economic picture….It is going to take sustained performance and nothing short of that. Everything we do is a matter of focus. …If we do that and we do that consistently over a period of time the PwC brand in India will be as strong and as good as it has been in the past and where we want it to be into the future.”
So this case moves on, leaving behind tons of collateral damage for all concerned. We can all ask how the auditors could have missed lining up company statements against bank statements to see whether the cash reported was really in the bank. Relying upon company management, however convincing they may be, should not have precluded independent investigation. That’s true auditing, isn’t it - an unbiased, critical and dispassionate view coupled with focus on the truth and unstinting efforts to show accurate financial information. Till the entire story comes out, we’ll never know what really happened, but deep inquiry at the right time could have prevented this crisis and taken it out at the bud.
We have blogged earlier about PricewaterhouseCoopers, the official auditors of Satyam, the Indian IT firm, scalded by the scam perpetrated by its Chairman Ramalinga Raju. Since then, Satyam has been bought by Tech Mahindra and Deloitte has been hired as the new statutory auditors. All this has happened in a space of one year, with Ramalinga Raju being arrested on January 9, 2009, he is reportedly in the hospital now, though his brother and the Satyam CFO and other key officials are still imprisoned.
This case continues to twist and turn, and here are some very recent developments from the Indian press (mainly The Economic Times (www.economictimes.com) and CNBC-TV18 (www.moneycontrol.com):
First and most recent, the Supreme Court of India today granted bail to the PricewaterhouseCoopers partner Mr. T Srinivas, on the basis that the bulky charges (over 55,000 pages) could lead to a long-drawn trial in the case and the accused was already lodged in jail for over a year. The judges decided it would be of no use to keep the accused in jail, where he had been since his arrest on January 24 2009. Mr. Srinivas has been asked to post bail of about US$40,000 and two sureties. The court also directed Mr. Srinivas to appear before the police in the first week of every second month and not to tamper with the evidence or influence witnesses in the case.
Second, the scam has had larger impact on the PwC Indian firm, with about 200 professionals leaving PwC India for other firms, mainly due to adverse reputational impact. This is considered one of the highest and quickest attritions in Indian professional services. These 200 employees include the 19 partners who left along with Dinesh Kanabar, the widely-regarded head of PwC’s tax practice, who joined rival firm KPMG as deputy CEO in December 2009. These employees, across all level of professional services, have apparently moved onto other Big Four firms in India - KPMG, Ernst & Young and Deloitte. Reportedly, PwC has been trying to control attrition by attractive bonuses and larger professional roles. Note that PwC India has 6,500 employees, so this 3% by itself is not an unusual attrition level, but the rapid outflow in a short amount of time following a reputational event makes it all the more critical.
Third, recall that PwC India had made serious changes to the top management of the Indian firm, also bringing in Gautam Banerjee as the new Chairman from PwC Singapore in December 2009.
Fourth, in a recent interview with Dennis Nally PwC Chairman with CNBC-TV18 India TV, he acknowledged that the Satyam scam had hurt the PwC brand, saying, “Without question the firm has had real challenges in India but that has not changed my outlook and view on the importance of India economy to global economic picture….It is going to take sustained performance and nothing short of that. Everything we do is a matter of focus. …If we do that and we do that consistently over a period of time the PwC brand in India will be as strong and as good as it has been in the past and where we want it to be into the future.”
So this case moves on, leaving behind tons of collateral damage for all concerned. We can all ask how the auditors could have missed lining up company statements against bank statements to see whether the cash reported was really in the bank. Relying upon company management, however convincing they may be, should not have precluded independent investigation. That’s true auditing, isn’t it - an unbiased, critical and dispassionate view coupled with focus on the truth and unstinting efforts to show accurate financial information. Till the entire story comes out, we’ll never know what really happened, but deep inquiry at the right time could have prevented this crisis and taken it out at the bud.
The Next Four: BDO, RSM, Grant Thornton and Baker Tilly. And A Surprise
We recently published our extensive financial analysis on the Big Four Firms (read here, download here), and with some recent revenue announcements by the next set of firms, here is a brief overview of The Next Four, the second set of international but smaller accounting firms.
As you can see below, these are large complex organizations in their own right, and likely to place in the global Fortune 500 as independent entities. They are multi-billion dollar, multi-firm, transnational enterprises, with presence in 100+ countries, and providing a wide variety of accounting, tax and advisory services. In another industry, they would be good contenders for top positions, but the sheer size of each of the Big Four firms totally dwarfs their presence in the accounting & tax firm sector. Consider that the combined revenue of these four firms (~$16 billion) is less than the revenue of the smallest of the Big Four firms (KPMG at $20 billion).
To recap:
First, PricewaterhouseCoopers, still the largest firm in the industry
Second, Deloitte, just a bit behind PwC
Third, Ernst & Young
Fourth, KPMG, the smallest of the Big Four firms
Fifth, and a distant follower to KPMG is BDO International, which had total combined fee income for all BDO Member Firms of US$ 5.026 billion for the year ended 30 September 2009, a creditable year over year increase of 1.7 % in euro terms but a decrease of 2.3 % in US dollars terms. In local currency terms, excluding the effect of all currency movements, revenues actually increased 4.5%, with the appreciating US dollar reducing this by about 7% when results were reported in US dollars from 2008 to 2009.
Europe and North America both decreased combined fee income, but Asia Pacific, Middle East and Sub Saharan Africa regions each had an increase of some 20% in Euro terms. Latin America grew by almost 10% in Euro terms.
Audit & Accounting grew by 4.5%, Tax fell by 3.9% and Advisory services fell by 10%. The total number of people increased from 44,002 in 2008 to 46,035 in 2009, while the network’s offices grew from 1,095 to 1,138 over the same period.
In recent news BDO Seidman, the US member firm, simply became BDO.
Sixth, and jumping over Grant Thornton to take that sixth spot is RSM International with 2009 worldwide revenues of US$3.87 billion, up a solid 8% from 2008. Of this global revenue, Americas have US$2.65 billion, Europe has US$837 million, Asia Pacific has US$349 million; and Africa & Middle East with a small figure of US$36.8 million. RSM International has 32,492 people, comprised of 3,150 partners, 23,262 professional and 6,080 administrative staff in 736 offices in 76 countries.
There were some bright spots for RSMI which led to this increase. In 2009, Singapore and China revenues rose 31% and 17% respectively, with good showings from Philippines, New Zealand, Indonesia and Malaysia. Revenues in Belgium shot up 69% due to a local merger while member firms in Malta and Portugal also grew by over 25 percent each. RSM Tenon, the newly merged UK member firm, increased the UK firm revenues to US$406 million.
RSMI’s 8% increase in revenue was a key factor in displacing Grant Thornton from sixth place, as Grant Thornton’s revenue went the other way, dropping by 9%.
Seventh, and just behind RSM International is Grant Thornton International (losing that sixth spot), with combined global revenues of $3.6 billion from its 96 member firms for the year ended 30 September 2009. Revenues for 2009 were flat in local currency terms from 2008, but declined 9% in US dollar terms from 2008.
Assurance revenues at $1.6 billion (46% of total revenues) increased 5% in local currency terms but dropped 4% in US dollar terms against 2008. Tax revenues of $763 million (~25% of total) were flat to 2008 in local currency terms but were down 9% in US dollar terms. Specialist advisory services revenues were $884 million (25% of global dollar revenues), down 5% in local currency but down 16% in US dollar terms
Latin America and the Caribbean had solid local currency growth of 13%. Europe, Middle East & Africa revenues were flat at local currency terms. Greece (up 11%), Poland (12%) and Belgium (19%) were top performers. 2009 North American revenues were down 1% from 2008. Asia Pacific revenues were up by 14% at constant exchange rates, helped by a 23% increase in revenues by the India member firm.
Grant Thornton’s 9% drop in revenue led to its displacement as the sixth largest accounting firm in the world. An unexpected surprise indeed.
In Eighth place is Baker Tilly International with 145 member firms in 110 countries and 2,800+ partners and 25,000 people. Baker Tilly’s revenues for fiscal year 2008 were US$2.95 billion, up 18% from 2007. We could not find Baker Tilly’s 2009 revenues, but presume they were higher than 2008.
According to the recently published rankings of 40 accounting organizations from the International Accounting Bulletin's annual world survey, average network revenues dropped 6% to $122 billion and average association revenues increased only 3% to $20.8 billion. The Bulletin says that this is a nearly a 20% revenue turnaround for networks with some of the largest firms affected, corroborating our earlier analysis of the Big 4 firms. Only two firms in the top 10 - RSM International and Baker Tilly were able to increase their revenues from 2008 to 2009.
The Bulletin further noted that Audit demand was affected by severe fee reductions, as high as 40% in come cases. Tax demand suffered as clients generally paid less tax, affecting the appetite for tax planning advice. But the most impacted was corporate finance with 2009 being the worst year for M&A deals since 2004. Restructuring services were in good demand. Most firms noted heavy investment in Asia-Pacific, with Asia Pacific, the Middle East and Latin America reporting solid growth.
The IAB predicts, as we did in our analysis, “If the networks’ recent growth trends continue, Deloitte will overtake PwC this year.”
Note that the revenues for the Big Four firms fell 7% from $101 billion in 2008 to $94 billion in 2009. In 2009, it is interesting to note that the total global revenues of all the other 36+ large accounting firms combined were only $26 billion ($122 billion minus $94 billion). And the 6% drop in the industry is largely defined by the 7% drop in the mega Big Four firms (PricewaterhouseCoopers, Deloitte, Ernst & Young and KPMG).
The IAB’s analyis is in sync with our findings, and the big surprise is clearly RSMI’s move to the sixth spot, swapping places with Grant Thornton. We shall look out to next year where there are two close races: Deloitte versus PricewaterhouseCoopers to be the largest accounting firm on the planet and RSMI versus Grant Thornton for sixth and seventh spots.
We recently published our extensive financial analysis on the Big Four Firms (read here, download here), and with some recent revenue announcements by the next set of firms, here is a brief overview of The Next Four, the second set of international but smaller accounting firms.
As you can see below, these are large complex organizations in their own right, and likely to place in the global Fortune 500 as independent entities. They are multi-billion dollar, multi-firm, transnational enterprises, with presence in 100+ countries, and providing a wide variety of accounting, tax and advisory services. In another industry, they would be good contenders for top positions, but the sheer size of each of the Big Four firms totally dwarfs their presence in the accounting & tax firm sector. Consider that the combined revenue of these four firms (~$16 billion) is less than the revenue of the smallest of the Big Four firms (KPMG at $20 billion).
To recap:
First, PricewaterhouseCoopers, still the largest firm in the industry
Second, Deloitte, just a bit behind PwC
Third, Ernst & Young
Fourth, KPMG, the smallest of the Big Four firms
Fifth, and a distant follower to KPMG is BDO International, which had total combined fee income for all BDO Member Firms of US$ 5.026 billion for the year ended 30 September 2009, a creditable year over year increase of 1.7 % in euro terms but a decrease of 2.3 % in US dollars terms. In local currency terms, excluding the effect of all currency movements, revenues actually increased 4.5%, with the appreciating US dollar reducing this by about 7% when results were reported in US dollars from 2008 to 2009.
Europe and North America both decreased combined fee income, but Asia Pacific, Middle East and Sub Saharan Africa regions each had an increase of some 20% in Euro terms. Latin America grew by almost 10% in Euro terms.
Audit & Accounting grew by 4.5%, Tax fell by 3.9% and Advisory services fell by 10%. The total number of people increased from 44,002 in 2008 to 46,035 in 2009, while the network’s offices grew from 1,095 to 1,138 over the same period.
In recent news BDO Seidman, the US member firm, simply became BDO.
Sixth, and jumping over Grant Thornton to take that sixth spot is RSM International with 2009 worldwide revenues of US$3.87 billion, up a solid 8% from 2008. Of this global revenue, Americas have US$2.65 billion, Europe has US$837 million, Asia Pacific has US$349 million; and Africa & Middle East with a small figure of US$36.8 million. RSM International has 32,492 people, comprised of 3,150 partners, 23,262 professional and 6,080 administrative staff in 736 offices in 76 countries.
There were some bright spots for RSMI which led to this increase. In 2009, Singapore and China revenues rose 31% and 17% respectively, with good showings from Philippines, New Zealand, Indonesia and Malaysia. Revenues in Belgium shot up 69% due to a local merger while member firms in Malta and Portugal also grew by over 25 percent each. RSM Tenon, the newly merged UK member firm, increased the UK firm revenues to US$406 million.
RSMI’s 8% increase in revenue was a key factor in displacing Grant Thornton from sixth place, as Grant Thornton’s revenue went the other way, dropping by 9%.
Seventh, and just behind RSM International is Grant Thornton International (losing that sixth spot), with combined global revenues of $3.6 billion from its 96 member firms for the year ended 30 September 2009. Revenues for 2009 were flat in local currency terms from 2008, but declined 9% in US dollar terms from 2008.
Assurance revenues at $1.6 billion (46% of total revenues) increased 5% in local currency terms but dropped 4% in US dollar terms against 2008. Tax revenues of $763 million (~25% of total) were flat to 2008 in local currency terms but were down 9% in US dollar terms. Specialist advisory services revenues were $884 million (25% of global dollar revenues), down 5% in local currency but down 16% in US dollar terms
Latin America and the Caribbean had solid local currency growth of 13%. Europe, Middle East & Africa revenues were flat at local currency terms. Greece (up 11%), Poland (12%) and Belgium (19%) were top performers. 2009 North American revenues were down 1% from 2008. Asia Pacific revenues were up by 14% at constant exchange rates, helped by a 23% increase in revenues by the India member firm.
Grant Thornton’s 9% drop in revenue led to its displacement as the sixth largest accounting firm in the world. An unexpected surprise indeed.
In Eighth place is Baker Tilly International with 145 member firms in 110 countries and 2,800+ partners and 25,000 people. Baker Tilly’s revenues for fiscal year 2008 were US$2.95 billion, up 18% from 2007. We could not find Baker Tilly’s 2009 revenues, but presume they were higher than 2008.
According to the recently published rankings of 40 accounting organizations from the International Accounting Bulletin's annual world survey, average network revenues dropped 6% to $122 billion and average association revenues increased only 3% to $20.8 billion. The Bulletin says that this is a nearly a 20% revenue turnaround for networks with some of the largest firms affected, corroborating our earlier analysis of the Big 4 firms. Only two firms in the top 10 - RSM International and Baker Tilly were able to increase their revenues from 2008 to 2009.
The Bulletin further noted that Audit demand was affected by severe fee reductions, as high as 40% in come cases. Tax demand suffered as clients generally paid less tax, affecting the appetite for tax planning advice. But the most impacted was corporate finance with 2009 being the worst year for M&A deals since 2004. Restructuring services were in good demand. Most firms noted heavy investment in Asia-Pacific, with Asia Pacific, the Middle East and Latin America reporting solid growth.
The IAB predicts, as we did in our analysis, “If the networks’ recent growth trends continue, Deloitte will overtake PwC this year.”
Note that the revenues for the Big Four firms fell 7% from $101 billion in 2008 to $94 billion in 2009. In 2009, it is interesting to note that the total global revenues of all the other 36+ large accounting firms combined were only $26 billion ($122 billion minus $94 billion). And the 6% drop in the industry is largely defined by the 7% drop in the mega Big Four firms (PricewaterhouseCoopers, Deloitte, Ernst & Young and KPMG).
The IAB’s analyis is in sync with our findings, and the big surprise is clearly RSMI’s move to the sixth spot, swapping places with Grant Thornton. We shall look out to next year where there are two close races: Deloitte versus PricewaterhouseCoopers to be the largest accounting firm on the planet and RSMI versus Grant Thornton for sixth and seventh spots.
Tuesday, February 02, 2010
Ernst and Young Says Companies Tiptoeing Into 2010, Still Nervous
Ernst and Young just came out with some survey results which suggest that the overwhelmingly positive outcomes we have seen from recent PricewaterhouseCoopers and KPMG global surveys needs to be tempered with a bit of caution.
While the firm finds that the situation is drastically different in December 2009 as compared to December 2008, there is some element of hesitation on part of executives to declare that all is bright again on the horizon. Leaders still seem to be a bit nervous about the recovery and companies are tiptoeing cautiously into 2010.
In January 2009, 75% of companies were focused on their own survival and only 19% were trying to leverage the recession to pursue new market opportunities. But by end of that year December 2009, 34% were considering pursuing new opportunities; but get this – over half (53%) of companies still agreed that surviving 2010 would still remain a challenge.
John Murphy, Global Managing Partner - Markets, Ernst & Young aptly said, "The spirit of optimism has increased, but it is essentially fragile in nature. A pick up in confidence is not surprising, given the massive global government stimulus working its way through the economy and the larger developing and emerging economies beginning to rebound. Companies may be less worried about survival over the next 12 months, but the return to a healthy operating environment is still some way off."
But all was not bad, 33% of companies increased their EBITDA by over 5% in the last 12 months. And further, 7% of all businesses had seen a more than 20% increase in earnings. This trend seems to be more prevalent in mid-sized companies in the relatively robust Asia-Pacific region, with 45% reporting a 5% EBITDA increase, in Latin America (26%), Western Europe (28%) and Eastern Europe (29%) the proportion was lower. 40% of pharmaceutical, aerospace and defense and banking companies exceeded the 5% growth threshold. Companies in the oil and gas, manufacturing and automotive sectors were far more likely to report flat or declining earnings.
While the worst of the crisis is over, a good 33% saw revenue growth returning within six months, one-third said by the start of 2011 and the final third not for at least two years. After all the cost cutting is done, the path to value clearly lies through revenue growth, what Ernst and Young calls the “growth crisis”. 64% thought optimizing the markets they serve via new market entry, new products or new channels, and through revitalizing the business model with new thinking around organizational structure, core competencies and new business collaborations.
In typical consultingese, Ernst and Young reveals its 9-sided “performance wheel” which includes all the actions organizations can take to enhance stakeholder value. According to E and Y, high performance companies (taking a page from Accenture’s book) are distinguished from lower performance companies by the emphasis they place on these following parameters AND their capability to execute on the goals they set for these strategies. The four key delineating areas are:
Optimize market reach
Strengthen management talent
Accelerate decision making and execution
Strengthen stakeholder confidence
So this study is partly result reporting and partly prescriptive. The urgency of the current moment creates the imperative to change, change whatever you’re doing for the better in multiple dimensions to continue to be relevant and value-creating.
Our takeaway from this survey is the tinge of realism that is not evident in the glowing results from other firms coupled with the specific directions that successful companies have taken to manage creatively through this downturn. The agenda for change along 9 dimensions can be a bit hard for management to grasp, but a prioritization of elements and then a ruthless focus on what counts can get companies to get better situated for revenue growth and pushing through the lag end of the crisis.
The full study for those interested in the detailed results is at
http://www.ey.com/Publication/vwLUAssets/Lessons_from_change_-_Findings_from_the_market/$FILE/EY_Lessons_from_change_-_Findings_from_the_market.pdf
Ernst and Young just came out with some survey results which suggest that the overwhelmingly positive outcomes we have seen from recent PricewaterhouseCoopers and KPMG global surveys needs to be tempered with a bit of caution.
While the firm finds that the situation is drastically different in December 2009 as compared to December 2008, there is some element of hesitation on part of executives to declare that all is bright again on the horizon. Leaders still seem to be a bit nervous about the recovery and companies are tiptoeing cautiously into 2010.
In January 2009, 75% of companies were focused on their own survival and only 19% were trying to leverage the recession to pursue new market opportunities. But by end of that year December 2009, 34% were considering pursuing new opportunities; but get this – over half (53%) of companies still agreed that surviving 2010 would still remain a challenge.
John Murphy, Global Managing Partner - Markets, Ernst & Young aptly said, "The spirit of optimism has increased, but it is essentially fragile in nature. A pick up in confidence is not surprising, given the massive global government stimulus working its way through the economy and the larger developing and emerging economies beginning to rebound. Companies may be less worried about survival over the next 12 months, but the return to a healthy operating environment is still some way off."
But all was not bad, 33% of companies increased their EBITDA by over 5% in the last 12 months. And further, 7% of all businesses had seen a more than 20% increase in earnings. This trend seems to be more prevalent in mid-sized companies in the relatively robust Asia-Pacific region, with 45% reporting a 5% EBITDA increase, in Latin America (26%), Western Europe (28%) and Eastern Europe (29%) the proportion was lower. 40% of pharmaceutical, aerospace and defense and banking companies exceeded the 5% growth threshold. Companies in the oil and gas, manufacturing and automotive sectors were far more likely to report flat or declining earnings.
While the worst of the crisis is over, a good 33% saw revenue growth returning within six months, one-third said by the start of 2011 and the final third not for at least two years. After all the cost cutting is done, the path to value clearly lies through revenue growth, what Ernst and Young calls the “growth crisis”. 64% thought optimizing the markets they serve via new market entry, new products or new channels, and through revitalizing the business model with new thinking around organizational structure, core competencies and new business collaborations.
In typical consultingese, Ernst and Young reveals its 9-sided “performance wheel” which includes all the actions organizations can take to enhance stakeholder value. According to E and Y, high performance companies (taking a page from Accenture’s book) are distinguished from lower performance companies by the emphasis they place on these following parameters AND their capability to execute on the goals they set for these strategies. The four key delineating areas are:
Optimize market reach
Strengthen management talent
Accelerate decision making and execution
Strengthen stakeholder confidence
So this study is partly result reporting and partly prescriptive. The urgency of the current moment creates the imperative to change, change whatever you’re doing for the better in multiple dimensions to continue to be relevant and value-creating.
Our takeaway from this survey is the tinge of realism that is not evident in the glowing results from other firms coupled with the specific directions that successful companies have taken to manage creatively through this downturn. The agenda for change along 9 dimensions can be a bit hard for management to grasp, but a prioritization of elements and then a ruthless focus on what counts can get companies to get better situated for revenue growth and pushing through the lag end of the crisis.
The full study for those interested in the detailed results is at
http://www.ey.com/Publication/vwLUAssets/Lessons_from_change_-_Findings_from_the_market/$FILE/EY_Lessons_from_change_-_Findings_from_the_market.pdf
Monday, February 01, 2010
Ernst And Young Finds IPOs Perking Up As Capital Markets Improve
Coming on the heels of two executive confidence surveys by other Big Four firms, which corroborate general increase in optimism, here’s another data point, this time from the capital markets which further confirms that recovery is imminent.
Ernst & Young LLP’s just released Q4-2009 quarterly US IPO Pipeline report shows that US IPO activity did increase sharply in that quarter, making it the best of the last two years and matching levels we saw before entering this slowdown. Consider that the US economy did grow by around 6%, a record in recent times in the same quarter. 53 companies entered into registration in the quarter, 30 IPOs were launched and the overall pipeline increased to 54, looking for $10.3 billion from the markets. Consider this large 59% jump from just the previous quarter Q3-2009, with 30 new registrants, 14 companies that went public and a resulting pipeline of 34 registrants.
Clearly the IPO market is on the mend. See our previous blog post on the Q3-2009 IPO activity led by China and Brazil. http://bigfouralumni.blogspot.com/2009/10/ipo-activity-rises-in-q3-2009-china.html
The year over year comparisons also show why this quarter was important for the IPO market. In Q4-2009, there were 54 registrants, $10.3 billion of deals with the average deal being $273 million. A year ago, in Q4-2008, there were 57 registrants, $15.5 billion of deals with the average deal being $187 million. Two years ago, in Q4-2007, there were 90 registrants, $16.8 billion of deals with the average deal being $187 million.
So while Q4-2009 was not large in terms of volume, it does represent a big increase over the dismal numbers we have seen in previous few quarters. The big run up in capital market is emboldening private companies to seek capital markets, and on the other side, investors can now think of taking some risk to bring in some returns. And the next few months will likely show much higher activity as positive trends continue.
In terms of US regions, the West was most active with 21 companies in registration to raise $3.6 billion. The Southwest had 5 companies, and looking for $2.4 billion, while the Midwest also with 5 companies sought $1.2 billion. With tech leading the charge, California had the highest level of activity among the 50 states with 18 companies in registration.
According to Jackie Kelley, Ernst & Young LLP, Americas IPO Leader, “Finally, the markets are opening up to represent their historic diversity – a range of deal sizes, pre-recession averaging at about $190 million, and a variety of industries led by technology. The next few months are shaping up to be a key period of activity.”
Coming on the heels of two executive confidence surveys by other Big Four firms, which corroborate general increase in optimism, here’s another data point, this time from the capital markets which further confirms that recovery is imminent.
Ernst & Young LLP’s just released Q4-2009 quarterly US IPO Pipeline report shows that US IPO activity did increase sharply in that quarter, making it the best of the last two years and matching levels we saw before entering this slowdown. Consider that the US economy did grow by around 6%, a record in recent times in the same quarter. 53 companies entered into registration in the quarter, 30 IPOs were launched and the overall pipeline increased to 54, looking for $10.3 billion from the markets. Consider this large 59% jump from just the previous quarter Q3-2009, with 30 new registrants, 14 companies that went public and a resulting pipeline of 34 registrants.
Clearly the IPO market is on the mend. See our previous blog post on the Q3-2009 IPO activity led by China and Brazil. http://bigfouralumni.blogspot.com/2009/10/ipo-activity-rises-in-q3-2009-china.html
The year over year comparisons also show why this quarter was important for the IPO market. In Q4-2009, there were 54 registrants, $10.3 billion of deals with the average deal being $273 million. A year ago, in Q4-2008, there were 57 registrants, $15.5 billion of deals with the average deal being $187 million. Two years ago, in Q4-2007, there were 90 registrants, $16.8 billion of deals with the average deal being $187 million.
So while Q4-2009 was not large in terms of volume, it does represent a big increase over the dismal numbers we have seen in previous few quarters. The big run up in capital market is emboldening private companies to seek capital markets, and on the other side, investors can now think of taking some risk to bring in some returns. And the next few months will likely show much higher activity as positive trends continue.
In terms of US regions, the West was most active with 21 companies in registration to raise $3.6 billion. The Southwest had 5 companies, and looking for $2.4 billion, while the Midwest also with 5 companies sought $1.2 billion. With tech leading the charge, California had the highest level of activity among the 50 states with 18 companies in registration.
According to Jackie Kelley, Ernst & Young LLP, Americas IPO Leader, “Finally, the markets are opening up to represent their historic diversity – a range of deal sizes, pre-recession averaging at about $190 million, and a variety of industries led by technology. The next few months are shaping up to be a key period of activity.”
Friday, January 29, 2010
Deloitte: Worst Behind Us. Hiring and Retaining Talent Are Top Priorities
We just talked about PricewaterhouseCoopers’ 13th annual global CEO survey, which showed a remarkable improvement in CEO confidence this year as compared to last year 2008.
Deloitte also has recently come out with a study which validates the general improvement in optimism. In fact, Deloitte says that not only are executives more positive, but that “economic optimism has reached its highest level among surveyed executives since the study’s inception.”
That’s encouraging news. More than 33% of the 335 surveyed executives now think the worst of the recession is behind us as organizations are now focused on the right balance between offensive and defensive talent strategies. What this means is companies who were generally using the downturn as an excuse to cut heads or to freeze salaries can no longer look to that option, but have to gear up to either begin to retain existing good talent or to become ready to attract people to join their enterprise. Certainly, this is excellent news for the unemployed, the underemployed and those generally dissatisfied with their current jobs. That today’s news showing the US GDP soared in the fourth quarter of 2009 indicates the economic world is looking up and the worst has passed, and that growth may be just months away. The Deloitte research is focused more on the employment and talent aspect of executive confidence, and given today’s jobs environment, that is exactly the right set of questions to be asking top executives.
According to Jeff Schwartz, principal, Human Capital, Deloitte Consulting LLP, “Looking into the recovery, companies can no longer depend on the recession as their primary retention strategy for keeping critical employees. We expect executives to continue to shift their talent portfolios from ‘defensive’ measures, such as cutting headcount and focusing primarily on costs, to ‘offensive’ programs, including retention of critical leaders and workers and increased spending on training and development with a focus on leadership.”
Here are some key findings:
Companies are (Cautiously) Optimistic
35% of executives predicted the worst of the economic crisis is behind us, which is “the highest level of economic confidence since the survey began in January 2009.”
Talent Priorities are Shifting, Albeit Slowly
However, 35% still said reducing employee headcount remains the leading current talent priority, followed by retention (28%) and training and development (25%). Another piece of good news: only 39% of talent managers and executives anticipate additional layoffs in the next three months, compared to 51% who see no layoffs on the horizon.
Training and Development Yield World-Class Talent
40% executives expect their companies to increase programs aimed at developing high potential employees (47%) and cultivating corporate leaders (43%).
We have been saying all along that these horizontal and vertical surveys conducted by the Big Four firms across geographies, industries and time periods are an excellent indicator of how the global economy will perform. All through the last 18 months, we have reported on surveys which reached the lowest levels that we have ever seen, but of late we are now seeing rapid snapbacks in confidence, optimism, positive expectations to unanticipated levels. All this means, that unless everyone is simultaneously wrong, all economies and sectors are improving rapidly in 2010, and good days are not that far away now.
We just talked about PricewaterhouseCoopers’ 13th annual global CEO survey, which showed a remarkable improvement in CEO confidence this year as compared to last year 2008.
Deloitte also has recently come out with a study which validates the general improvement in optimism. In fact, Deloitte says that not only are executives more positive, but that “economic optimism has reached its highest level among surveyed executives since the study’s inception.”
That’s encouraging news. More than 33% of the 335 surveyed executives now think the worst of the recession is behind us as organizations are now focused on the right balance between offensive and defensive talent strategies. What this means is companies who were generally using the downturn as an excuse to cut heads or to freeze salaries can no longer look to that option, but have to gear up to either begin to retain existing good talent or to become ready to attract people to join their enterprise. Certainly, this is excellent news for the unemployed, the underemployed and those generally dissatisfied with their current jobs. That today’s news showing the US GDP soared in the fourth quarter of 2009 indicates the economic world is looking up and the worst has passed, and that growth may be just months away. The Deloitte research is focused more on the employment and talent aspect of executive confidence, and given today’s jobs environment, that is exactly the right set of questions to be asking top executives.
According to Jeff Schwartz, principal, Human Capital, Deloitte Consulting LLP, “Looking into the recovery, companies can no longer depend on the recession as their primary retention strategy for keeping critical employees. We expect executives to continue to shift their talent portfolios from ‘defensive’ measures, such as cutting headcount and focusing primarily on costs, to ‘offensive’ programs, including retention of critical leaders and workers and increased spending on training and development with a focus on leadership.”
Here are some key findings:
Companies are (Cautiously) Optimistic
35% of executives predicted the worst of the economic crisis is behind us, which is “the highest level of economic confidence since the survey began in January 2009.”
Talent Priorities are Shifting, Albeit Slowly
However, 35% still said reducing employee headcount remains the leading current talent priority, followed by retention (28%) and training and development (25%). Another piece of good news: only 39% of talent managers and executives anticipate additional layoffs in the next three months, compared to 51% who see no layoffs on the horizon.
Training and Development Yield World-Class Talent
40% executives expect their companies to increase programs aimed at developing high potential employees (47%) and cultivating corporate leaders (43%).
We have been saying all along that these horizontal and vertical surveys conducted by the Big Four firms across geographies, industries and time periods are an excellent indicator of how the global economy will perform. All through the last 18 months, we have reported on surveys which reached the lowest levels that we have ever seen, but of late we are now seeing rapid snapbacks in confidence, optimism, positive expectations to unanticipated levels. All this means, that unless everyone is simultaneously wrong, all economies and sectors are improving rapidly in 2010, and good days are not that far away now.
KPMG Predicts Modest Uptick in Global Mergers and Acquisitions
With the new year 2010 just open, the forecasts for the year ahead have started.
First out is KPMG’s Global MA Predictor which estimates that M&A appetite and capacity will move up in the next 12 months, with increased forward PE ratios from a year ago pointing to a higher deal-making appetite. Furthermore, the capacity to do deals is heightened by a decline in net debt to EBITDA ratios from earlier levels.
Let’s just clarify how this predictor works. It looks at forward Price to Earnings (PE) ratios and net debt to earnings before interest, tax, depreciation and amortization (EBITDA) multiple to track and establish the potential direction of M&A activity for the world’s 1,000 largest companies by market capitalization; and then looks at these ratios over time. The PE ratio tests for “paper appetite” i.e. the relative preparedness of companies, sectors and regions to originate deals on the basis of share values only. The net debt to EBITDA ratio tests for “debt capacity” – that is, the relative ability of companies, sectors and regions to originate deals using debt only.
Simply put, if the price to earnings ratios for the world’s largest public companies are higher, then their stock (the “currency” to do deals) has more buying power, and they can potentially more deals by issuing higher-priced stock. Simultaneously, if the debt on their books has reduced relative to their operating earnings, then they can take on more debt and still be financially solvent, which again increases their capacity to do acquisitions and issue public debt. The approach is fairly sensible, though statisticians would say these are just necessary, not sufficient conditions for upcoming M&A activity.
At the beginning of 2010, it appears that both ratios are working in favor of better deal making. Forward PE ratios are now at 14.0x for 2010 versus 13.1x for 2009, while net debt to EBITDA ratios are expected to decline by 18% from 1.5x to 1.2x. These factors now indicate a slow but sure enhancement in the global deals market over the next 12 months even though credit markets remain tight.
Looking across the world, Latin America shows the highest increases in PE ratios, moving up 62% from 8.9x to 14.5x, followed by AsiaPacific (exc. Japan) at 35%, Africa & the Middle East at 13%, Europe at 7% and North America at 4%.
On the other indicator, net debt to EBITDA ratios, Africa & the Middle East forecasts a 37% decline (down from 0.8x to 0.5x), followed by North America at 24%, AsiaPacfic (exc. Japan) at 20%, Latin America at 18% and Europe at 15%.
Across sectors, Basic Materials posted an excellent combination of results with forward PE up by 17 % and net debt down by 32 %. Technology and Non-Cyclical Consumer Goods also had 20 % and 16 % increases in PE ratios respectively. On the debt side, Healthcare and Cyclical Consumer Goods dropped 41 % and 23 % falls.
So what KPMG is really saying is that, improved equity value levels since March 2009 and companies aggressively paying down debt have created good conditions for public companies to go out and buy companies this year. Forward PE ratios (which use equity analyst estimates) have also become realistic as equity analysts have concurrently brought down target prices and moved up EPS estimates.
There is one more interesting point in this analysis, which is that corporations are also competing with private equity firms for the same targets, but KPMG believes they hold a better position this year. According to KPMG’s David Simpson, “…Even though we have seen some resurgence in private equity deals, that sector of the market will continue to be hampered by a shortage of debt, putting it at a comparative disadvantage to corporates. The Predictor shows that corporate appetite and capacity are expected to increase - so we may confidently expect that corporate M&A will lead the way in 2010.”
Predictions are just that, we have seen very dull M&A activity all across the globe in 2009, but the Kraft – Cadbury deal, the purchase of Burlington Northern by Berkshire Hathaway, Deloitte and PwC’s purchase of BearingPoint, Cisco’s acquisition of Starent and Tanberg, in recent months indicate that public companies are gearing up for more deal making. Private equity has been eerily silent.
There appear to be better news for M&A participants in 2010, and time will only tell if KPMG is accurate, but we cannot but surmise that things have to be better than 2009, which will go down in world financial history as likely one of the worst periods for M&A activity.
With the new year 2010 just open, the forecasts for the year ahead have started.
First out is KPMG’s Global MA Predictor which estimates that M&A appetite and capacity will move up in the next 12 months, with increased forward PE ratios from a year ago pointing to a higher deal-making appetite. Furthermore, the capacity to do deals is heightened by a decline in net debt to EBITDA ratios from earlier levels.
Let’s just clarify how this predictor works. It looks at forward Price to Earnings (PE) ratios and net debt to earnings before interest, tax, depreciation and amortization (EBITDA) multiple to track and establish the potential direction of M&A activity for the world’s 1,000 largest companies by market capitalization; and then looks at these ratios over time. The PE ratio tests for “paper appetite” i.e. the relative preparedness of companies, sectors and regions to originate deals on the basis of share values only. The net debt to EBITDA ratio tests for “debt capacity” – that is, the relative ability of companies, sectors and regions to originate deals using debt only.
Simply put, if the price to earnings ratios for the world’s largest public companies are higher, then their stock (the “currency” to do deals) has more buying power, and they can potentially more deals by issuing higher-priced stock. Simultaneously, if the debt on their books has reduced relative to their operating earnings, then they can take on more debt and still be financially solvent, which again increases their capacity to do acquisitions and issue public debt. The approach is fairly sensible, though statisticians would say these are just necessary, not sufficient conditions for upcoming M&A activity.
At the beginning of 2010, it appears that both ratios are working in favor of better deal making. Forward PE ratios are now at 14.0x for 2010 versus 13.1x for 2009, while net debt to EBITDA ratios are expected to decline by 18% from 1.5x to 1.2x. These factors now indicate a slow but sure enhancement in the global deals market over the next 12 months even though credit markets remain tight.
Looking across the world, Latin America shows the highest increases in PE ratios, moving up 62% from 8.9x to 14.5x, followed by AsiaPacific (exc. Japan) at 35%, Africa & the Middle East at 13%, Europe at 7% and North America at 4%.
On the other indicator, net debt to EBITDA ratios, Africa & the Middle East forecasts a 37% decline (down from 0.8x to 0.5x), followed by North America at 24%, AsiaPacfic (exc. Japan) at 20%, Latin America at 18% and Europe at 15%.
Across sectors, Basic Materials posted an excellent combination of results with forward PE up by 17 % and net debt down by 32 %. Technology and Non-Cyclical Consumer Goods also had 20 % and 16 % increases in PE ratios respectively. On the debt side, Healthcare and Cyclical Consumer Goods dropped 41 % and 23 % falls.
So what KPMG is really saying is that, improved equity value levels since March 2009 and companies aggressively paying down debt have created good conditions for public companies to go out and buy companies this year. Forward PE ratios (which use equity analyst estimates) have also become realistic as equity analysts have concurrently brought down target prices and moved up EPS estimates.
There is one more interesting point in this analysis, which is that corporations are also competing with private equity firms for the same targets, but KPMG believes they hold a better position this year. According to KPMG’s David Simpson, “…Even though we have seen some resurgence in private equity deals, that sector of the market will continue to be hampered by a shortage of debt, putting it at a comparative disadvantage to corporates. The Predictor shows that corporate appetite and capacity are expected to increase - so we may confidently expect that corporate M&A will lead the way in 2010.”
Predictions are just that, we have seen very dull M&A activity all across the globe in 2009, but the Kraft – Cadbury deal, the purchase of Burlington Northern by Berkshire Hathaway, Deloitte and PwC’s purchase of BearingPoint, Cisco’s acquisition of Starent and Tanberg, in recent months indicate that public companies are gearing up for more deal making. Private equity has been eerily silent.
There appear to be better news for M&A participants in 2010, and time will only tell if KPMG is accurate, but we cannot but surmise that things have to be better than 2009, which will go down in world financial history as likely one of the worst periods for M&A activity.
PricewaterhouseCoopers Finds CEO More Confident, Hiring
PricewaterhouseCoopers typically releases its 13th Annual Global CEO Survey (1,200 CEO interviews in Q4-2009) in sync with World Economic Forum at Davos.
Last year, CEOs were feeling insecure and diffident about the future of the global economy and of their companies.
See what we said in our blog post last year
How things have changed. Since we saw the worst of the recession in March 2009 and the huge spring back in equity markets, it also appears to have boosted executive confidence.
The current survey is much more encouraging, top business leaders are feeling better, exuding more confidence and generally inclined towards hiring than slashing costs. This survey is in line with other confidence measurements put out by the Big Four firms, and as we have said earlier, these surveys are an excellent barometer of when the global economy will bounce back. And now it seems, that recovery is imminent.
A majority, 81% of CEOs worldwide are confident of their prospects for the next 12 months, only 18% are pessimistic. Contrast this with 2008, when 64% were confident and 35% were pessimistic.
And this brings good news for the unemployed and the underemployed.
40% of CEOs plan to hire this and 25% were planning job cuts over the coming next year. Contrast this with 50% who actually cut headcount in the past 12 months.
In Asia Pacific and Canada 50% of CEOs wish to increase employment in 2010, and do so 60% in Brazil. 20% of UK CEOs are even more bullish, they expect headcount to rise by more than 8% in 2010.
31% of CEOs are now "very confident" of their short term prospects, up from 21% last year, the lowest point in CEO confidence since PwC began its tracking.
There is a large discrepancy between developing and emerging countries. 80% of North America and Western Europe CEOs are were confident of growth in the next year, but this zooms to 91% in Latin America and in China/Hong Kong, and 97% in India. Looking at the longer term, more than 90% of CEOs expressed confidence in growth over the next 3 years.
When will this recovery happen? 60% of CEOs expect recovery in second half of 2010 or later (developed countries), while 13% quite confidently said recovery was already underway (China), and 21% bet on H1-2010 (emerging markets).
Here are some other key findings of this survey:
Fears for the future
Protracted global recession is the biggest overall concern, followed by fear of over-regulation, instability in capital markets, and exchange rate volatility.
Love-hate relationship with regulators
66% of CEOs disagreed with the notion that governments have reduced the overall regulatory burden, also opposing government ownership in the private sector even in the worst of times.
Combating the effects of recession
90% of CEOs had initiated cost-cutting measures in the past 12 months, led by those in the US, Western Europe and the UK. And get this - 80% will continue cost cutting over the next three years.
Public trust and consumer behaviour
25% CEOs believe their industry’s reputation has been tarnished by the downturn, but 50% CEOs are concerned that the recession caused a permanent shift in consumer behaviour.
Risk management
41% of CEOs plan to make major changes to their company’s approach to managing risk.
Climate change
More than 60% of CEOs are preparing for the impact of climate change initiatives.
Dennis McNally, PwC Chairman, summed up, "CEOs will be in a post-survival mode in the coming months. Their most common regret about how they dealt with the recession was not fully understanding the risks, and failing to respond more quickly. The importance of managing risk was the most often cited lesson to emerge from the financial crisis. CEOs are learning to balance risk management with decisiveness and flexibility as they seek to return to prosperity."
Mr. McNally was interviewed on Bloomberg on the results of the survey. Check out Bloomberg.com/Davos2010 videos.
PricewaterhouseCoopers typically releases its 13th Annual Global CEO Survey (1,200 CEO interviews in Q4-2009) in sync with World Economic Forum at Davos.
Last year, CEOs were feeling insecure and diffident about the future of the global economy and of their companies.
See what we said in our blog post last year
How things have changed. Since we saw the worst of the recession in March 2009 and the huge spring back in equity markets, it also appears to have boosted executive confidence.
The current survey is much more encouraging, top business leaders are feeling better, exuding more confidence and generally inclined towards hiring than slashing costs. This survey is in line with other confidence measurements put out by the Big Four firms, and as we have said earlier, these surveys are an excellent barometer of when the global economy will bounce back. And now it seems, that recovery is imminent.
A majority, 81% of CEOs worldwide are confident of their prospects for the next 12 months, only 18% are pessimistic. Contrast this with 2008, when 64% were confident and 35% were pessimistic.
And this brings good news for the unemployed and the underemployed.
40% of CEOs plan to hire this and 25% were planning job cuts over the coming next year. Contrast this with 50% who actually cut headcount in the past 12 months.
In Asia Pacific and Canada 50% of CEOs wish to increase employment in 2010, and do so 60% in Brazil. 20% of UK CEOs are even more bullish, they expect headcount to rise by more than 8% in 2010.
31% of CEOs are now "very confident" of their short term prospects, up from 21% last year, the lowest point in CEO confidence since PwC began its tracking.
There is a large discrepancy between developing and emerging countries. 80% of North America and Western Europe CEOs are were confident of growth in the next year, but this zooms to 91% in Latin America and in China/Hong Kong, and 97% in India. Looking at the longer term, more than 90% of CEOs expressed confidence in growth over the next 3 years.
When will this recovery happen? 60% of CEOs expect recovery in second half of 2010 or later (developed countries), while 13% quite confidently said recovery was already underway (China), and 21% bet on H1-2010 (emerging markets).
Here are some other key findings of this survey:
Fears for the future
Protracted global recession is the biggest overall concern, followed by fear of over-regulation, instability in capital markets, and exchange rate volatility.
Love-hate relationship with regulators
66% of CEOs disagreed with the notion that governments have reduced the overall regulatory burden, also opposing government ownership in the private sector even in the worst of times.
Combating the effects of recession
90% of CEOs had initiated cost-cutting measures in the past 12 months, led by those in the US, Western Europe and the UK. And get this - 80% will continue cost cutting over the next three years.
Public trust and consumer behaviour
25% CEOs believe their industry’s reputation has been tarnished by the downturn, but 50% CEOs are concerned that the recession caused a permanent shift in consumer behaviour.
Risk management
41% of CEOs plan to make major changes to their company’s approach to managing risk.
Climate change
More than 60% of CEOs are preparing for the impact of climate change initiatives.
Dennis McNally, PwC Chairman, summed up, "CEOs will be in a post-survival mode in the coming months. Their most common regret about how they dealt with the recession was not fully understanding the risks, and failing to respond more quickly. The importance of managing risk was the most often cited lesson to emerge from the financial crisis. CEOs are learning to balance risk management with decisiveness and flexibility as they seek to return to prosperity."
Mr. McNally was interviewed on Bloomberg on the results of the survey. Check out Bloomberg.com/Davos2010 videos.
Apple iPad Priced at $499, Impact on Deloitte Study
So Apple just announced the price of the iPad at $499 and that it will be available in March and April 2010.
We earlier had speculated a price of $1,000 and 20 million units, at half the price, lets assume that price-elasticity moves the numbers sold to 35 million (Note that Apple just announced it had sold 250 million iPods), the incremental sales are $17.5 billion, that's only a few billion below our previous number.
There'll be a lot of analysts with better predictions of volume, and we trust Deloitte with a known price point can do an update of their study with more accuracy, and we'll come back with our response
So Apple just announced the price of the iPad at $499 and that it will be available in March and April 2010.
We earlier had speculated a price of $1,000 and 20 million units, at half the price, lets assume that price-elasticity moves the numbers sold to 35 million (Note that Apple just announced it had sold 250 million iPods), the incremental sales are $17.5 billion, that's only a few billion below our previous number.
There'll be a lot of analysts with better predictions of volume, and we trust Deloitte with a known price point can do an update of their study with more accuracy, and we'll come back with our response
Wednesday, January 27, 2010
Deloitte Expects Tens of Millions iPads Sold
Apple just today displayed to the world its much anticipated ipad tablet PC, with Steve Jobs wowing the crowd with its amazing functionalities. Finally, speculation on the name was laid to rest - the ipad is just a vowel away from the ipod! Boring as the name is, the potential for this device is simply huge.
The ipad is the big brother of ipod, it has all the cool features of the ipod on a much bigger screen, as also allows gaming, reading of books and watching of movies without the disadvantages of a smaller device.
In a press release today, Deloitte estimates that the "Goldilocks" device will be sold in the "tens of millions" this year alone. And why the Goldilocks moniker, its not too big (as a PC), its not too small (as an iPhone), yes - it's just right!!
The ipad fills a niche between smartphones (too small for watching videos or internet) and notebooks and PCs (too heavy or expensive). And here's the brilliant part, they will not cannibalise either segment, but become a utility device which adds to the growing ubiquity of computing in every household, creating a scenario where "connected, browser based devices become as ubiquitous in the living room as scatter cushions.”
Apple did not quote a price on this device, but lets say for argument's sake it is $1,000. If 20 million were sold, that is $20 billion in revenues alone from this product. Note that Apple's Q4-2009 revenues were $12.5 billion, which translates into a run rate of $50 billion annually, the ipad could become a substantial portion of the company's business.
There is no doubt that Apple loyalists will jump to buy this device at their first opportunity. But the large scale success will lie in the millions of consumers in the middle who will buy the ipad in addition to and not in lieu of an iphone or a Mac.
And not only that, this device will spur simultaneous revenue streams for ipad applications and wireless WiFi companies, not to mention cool ipad games.
So there's money to be made of this in billions, and perhaps one clear way to play this game is to buy Apple stock and let that enjoy all the upside potential
Deloitte Expects Tens of Millions iPads Sold
Apple just today displayed to the world its much anticipated ipad tablet PC, with Steve Jobs wowing the crowd with its amazing functionalities. Finally, speculation on the name was laid to rest - the ipad is just a vowel away from the ipod! Boring as the name is, the potential for this device is simply huge.
The ipad is the big brother of ipod, it has all the cool features of the ipod on a much bigger screen, as also allows gaming, reading of books and watching of movies without the disadvantages of a smaller device.
In a press release today, Deloitte estimates that the "Goldilocks" device will be sold in the "tens of millions" this year alone. And why the Goldilocks moniker, its not too big (as a PC), its not too small (as an iPhone), yes - it's just right!!
The ipad fills a niche between smartphones (too small for watching videos or internet) and notebooks and PCs (too heavy or expensive). And here's the brilliant part, they will not cannibalise either segment, but become a utility device which adds to the growing ubiquity of computing in every household, creating a scenario where "connected, browser based devices become as ubiquitous in the living room as scatter cushions.”
Apple did not quote a price on this device, but lets say for argument's sake it is $1,000. If 20 million were sold, that is $20 billion in revenues alone from this product. Note that Apple's Q4-2009 revenues were $12.5 billion, which translates into a run rate of $50 billion annually, the ipad could become a substantial portion of the company's business.
There is no doubt that Apple loyalists will jump to buy this device at their first opportunity. But the large scale success will lie in the millions of consumers in the middle who will buy the ipad in addition to and not in lieu of an iphone or a Mac.
And not only that, this device will spur simultaneous revenue streams for ipad applications and wireless WiFi companies, not to mention cool ipad games.
So there's money to be made of this in billions, and perhaps one clear way to play this game is to buy Apple stock and let that enjoy all the upside potential
Scammers Attack PricewaterhouseCoopers and Deloitte
It appears that scam artists have latched on to Big Four firms.
At this time, we see that PricewaterhouseCoopers and Deloitte are the victims of two publicly known attacks.
On their website, PricewaterhouseCoopers reports a scam where folks got bogus checks dated December 21, 2009 embossed with the PwC logo with a letter which advises “the recipients that they had been selected to be "secret shoppers." The letters guided the potential scam victims to cash the checks at specific banks, then wire the funds to another address for use by a second "secret shopper."
PwC is now working with law enforcement agencies and the Postal Service to close out this illegal effort. PwC wants anyone who has received one of the solicitations to contact Doug Smith, Postal Inspector at (813) 281-5228, or fax a check copy and instructions to 813-375-8047. The firm has put all its people on notice, in case they see or hear anything.
"Since the first batch of checks went out in December, we suspect those recipients have either reported the issue or thrown out the materials," said Rose Littlejohn head of PwC US Security. "But right now there is nothing to prevent the scammers from making another attempt"
So, beware of any checks that sound too good to be true or ask you to do something that doesn’t feel quite right, despite looking quite legitimate. Though we don’t have direct knowledge of anyone affected, its possible enough numbers have received this check to have made it to PwC’s website.
The situation is quite different with Deloitte, which has been the victim of another hoax. The Charleston, West Virginia observer reports that Robert M. "Robe" Otiso, 36, of Elk River, MN was arrested in November 2009 and charged with mail fraud, wire fraud and conspiracy to launder money. Prosecutors believe that Otiso and his alleged co-conspirators in the U.S. and in Kenya tricked state governments into diverting large payments into accounts bearing names that closely resembled those of actual vendors.
In December 2009, the paper reports that Angela Chegge-Kraszeski, a Kenyan woman living in North Carolina, admitted that she followed instructions e-mailed from Kenya to incorporate companies such as "Deloite" Consulting Corp. and "Unisyss" Corp., deliberate misspellings of real companies Deloitte Consulting LLC and Unisys Corp. She then mailed forms that instructed state governments to direct payments to the fake firms instead of the real ones, she said. Money from those accounts was later wired to Kenya.
According to the November indictment, before officials caught on, the scheme netted $919,916 from West Virginia, with an additional $1,288,037 stolen from Massachusetts, $869,546 from Kansas and $301,571 from Ohio.
Nothing of this has made it to the Deloitte website yet, as the firm is an indirect victim, along with other well known companies, of a well orchestrated effort, causing the matter to be under the purview of US law agencies. As with PwC, we hope there is a quick indictment of the true perpetrators of this scam.
Theft and misuse of logos, well-known names and top reputations is likely more prevalent now in this internet age. Folks that have received the “You are the sole recipient of $64 million” know enough to delete, but as crooks get more sophisticated, they are now getting to catch unsuspecting people in newer ways. It pays to be careful, and as the old adage goes, Caveat Emptor.
If you are aware of such checks or any new developments on the Deloitte case, do comment.
It appears that scam artists have latched on to Big Four firms.
At this time, we see that PricewaterhouseCoopers and Deloitte are the victims of two publicly known attacks.
On their website, PricewaterhouseCoopers reports a scam where folks got bogus checks dated December 21, 2009 embossed with the PwC logo with a letter which advises “the recipients that they had been selected to be "secret shoppers." The letters guided the potential scam victims to cash the checks at specific banks, then wire the funds to another address for use by a second "secret shopper."
PwC is now working with law enforcement agencies and the Postal Service to close out this illegal effort. PwC wants anyone who has received one of the solicitations to contact Doug Smith, Postal Inspector at (813) 281-5228, or fax a check copy and instructions to 813-375-8047. The firm has put all its people on notice, in case they see or hear anything.
"Since the first batch of checks went out in December, we suspect those recipients have either reported the issue or thrown out the materials," said Rose Littlejohn head of PwC US Security. "But right now there is nothing to prevent the scammers from making another attempt"
So, beware of any checks that sound too good to be true or ask you to do something that doesn’t feel quite right, despite looking quite legitimate. Though we don’t have direct knowledge of anyone affected, its possible enough numbers have received this check to have made it to PwC’s website.
The situation is quite different with Deloitte, which has been the victim of another hoax. The Charleston, West Virginia observer reports that Robert M. "Robe" Otiso, 36, of Elk River, MN was arrested in November 2009 and charged with mail fraud, wire fraud and conspiracy to launder money. Prosecutors believe that Otiso and his alleged co-conspirators in the U.S. and in Kenya tricked state governments into diverting large payments into accounts bearing names that closely resembled those of actual vendors.
In December 2009, the paper reports that Angela Chegge-Kraszeski, a Kenyan woman living in North Carolina, admitted that she followed instructions e-mailed from Kenya to incorporate companies such as "Deloite" Consulting Corp. and "Unisyss" Corp., deliberate misspellings of real companies Deloitte Consulting LLC and Unisys Corp. She then mailed forms that instructed state governments to direct payments to the fake firms instead of the real ones, she said. Money from those accounts was later wired to Kenya.
According to the November indictment, before officials caught on, the scheme netted $919,916 from West Virginia, with an additional $1,288,037 stolen from Massachusetts, $869,546 from Kansas and $301,571 from Ohio.
Nothing of this has made it to the Deloitte website yet, as the firm is an indirect victim, along with other well known companies, of a well orchestrated effort, causing the matter to be under the purview of US law agencies. As with PwC, we hope there is a quick indictment of the true perpetrators of this scam.
Theft and misuse of logos, well-known names and top reputations is likely more prevalent now in this internet age. Folks that have received the “You are the sole recipient of $64 million” know enough to delete, but as crooks get more sophisticated, they are now getting to catch unsuspecting people in newer ways. It pays to be careful, and as the old adage goes, Caveat Emptor.
If you are aware of such checks or any new developments on the Deloitte case, do comment.
Tuesday, January 26, 2010
Scammers Attack PricewaterhouseCoopers and Deloitte
It appears that scam artists have latched on to Big Four firms.
At this time, we see that PricewaterhouseCoopers and Deloitte are the victims of two publicly known attacks.
On their website, PricewaterhouseCoopers reports a scam where folks got bogus checks dated December 21, 2009 embossed with the PwC logo with a letter which advises “the recipients that they had been selected to be "secret shoppers." The letters guided the potential scam victims to cash the checks at specific banks, then wire the funds to another address for use by a second "secret shopper."
PwC is now working with law enforcement agencies and the Postal Service to close out this illegal effort. PwC wants anyone who has received one of the solicitations to contact Doug Smith, Postal Inspector at (813) 281-5228, or fax a check copy and instructions to 813-375-8047. The firm has put all its people on notice, in case they see or hear anything.
"Since the first batch of checks went out in December, we suspect those recipients have either reported the issue or thrown out the materials," said Rose Littlejohn head of PwC US Security. "But right now there is nothing to prevent the scammers from making another attempt"
So, beware of any checks that sound too good to be true or ask you to do something that doesn’t feel quite right, despite looking quite legitimate. Though we don’t have direct knowledge of anyone affected, its possible enough numbers have received this check to have made it to PwC’s website.
The situation is quite different with Deloitte, which has been the victim of another hoax. The Charleston, West Virginia observer reports that Robert M. "Robe" Otiso, 36, of Elk River, MN was arrested in November 2009 and charged with mail fraud, wire fraud and conspiracy to launder money. Prosecutors believe that Otiso and his alleged co-conspirators in the U.S. and in Kenya tricked state governments into diverting large payments into accounts bearing names that closely resembled those of actual vendors.
In December 2009, the paper reports that Angela Chegge-Kraszeski, a Kenyan woman living in North Carolina, admitted that she followed instructions e-mailed from Kenya to incorporate companies such as "Deloite" Consulting Corp. and "Unisyss" Corp., deliberate misspellings of real companies Deloitte Consulting LLC and Unisys Corp. She then mailed forms that instructed state governments to direct payments to the fake firms instead of the real ones, she said. Money from those accounts was later wired to Kenya.
According to the November indictment, before officials caught on, the scheme netted $919,916 from West Virginia, with an additional $1,288,037 stolen from Massachusetts, $869,546 from Kansas and $301,571 from Ohio.
Nothing of this has made it to the Deloitte website yet, as the firm is an indirect victim, along with other well known companies, of a well orchestrated effort, causing the matter to be under the purview of US law agencies. As with PwC, we hope there is a quick indictment of the true perpetrators of this scam.
Read the full article at
http://www.wvgazette.com/News/201001220581
Theft and misuse of logos, well-known names and top reputations is likely more prevalent now in this internet age. Folks that have received the “You are the sole recipient of $64 million” know enough to delete, but as crooks get more sophisticated, they are now getting to catch unsuspecting people in newer ways. It pays to be careful, and as the old adage goes, Caveat Emptor.
If you are aware of such checks or any new developments on the Deloitte case, do comment.
It appears that scam artists have latched on to Big Four firms.
At this time, we see that PricewaterhouseCoopers and Deloitte are the victims of two publicly known attacks.
On their website, PricewaterhouseCoopers reports a scam where folks got bogus checks dated December 21, 2009 embossed with the PwC logo with a letter which advises “the recipients that they had been selected to be "secret shoppers." The letters guided the potential scam victims to cash the checks at specific banks, then wire the funds to another address for use by a second "secret shopper."
PwC is now working with law enforcement agencies and the Postal Service to close out this illegal effort. PwC wants anyone who has received one of the solicitations to contact Doug Smith, Postal Inspector at (813) 281-5228, or fax a check copy and instructions to 813-375-8047. The firm has put all its people on notice, in case they see or hear anything.
"Since the first batch of checks went out in December, we suspect those recipients have either reported the issue or thrown out the materials," said Rose Littlejohn head of PwC US Security. "But right now there is nothing to prevent the scammers from making another attempt"
So, beware of any checks that sound too good to be true or ask you to do something that doesn’t feel quite right, despite looking quite legitimate. Though we don’t have direct knowledge of anyone affected, its possible enough numbers have received this check to have made it to PwC’s website.
The situation is quite different with Deloitte, which has been the victim of another hoax. The Charleston, West Virginia observer reports that Robert M. "Robe" Otiso, 36, of Elk River, MN was arrested in November 2009 and charged with mail fraud, wire fraud and conspiracy to launder money. Prosecutors believe that Otiso and his alleged co-conspirators in the U.S. and in Kenya tricked state governments into diverting large payments into accounts bearing names that closely resembled those of actual vendors.
In December 2009, the paper reports that Angela Chegge-Kraszeski, a Kenyan woman living in North Carolina, admitted that she followed instructions e-mailed from Kenya to incorporate companies such as "Deloite" Consulting Corp. and "Unisyss" Corp., deliberate misspellings of real companies Deloitte Consulting LLC and Unisys Corp. She then mailed forms that instructed state governments to direct payments to the fake firms instead of the real ones, she said. Money from those accounts was later wired to Kenya.
According to the November indictment, before officials caught on, the scheme netted $919,916 from West Virginia, with an additional $1,288,037 stolen from Massachusetts, $869,546 from Kansas and $301,571 from Ohio.
Nothing of this has made it to the Deloitte website yet, as the firm is an indirect victim, along with other well known companies, of a well orchestrated effort, causing the matter to be under the purview of US law agencies. As with PwC, we hope there is a quick indictment of the true perpetrators of this scam.
Read the full article at
http://www.wvgazette.com/News/201001220581
Theft and misuse of logos, well-known names and top reputations is likely more prevalent now in this internet age. Folks that have received the “You are the sole recipient of $64 million” know enough to delete, but as crooks get more sophisticated, they are now getting to catch unsuspecting people in newer ways. It pays to be careful, and as the old adage goes, Caveat Emptor.
If you are aware of such checks or any new developments on the Deloitte case, do comment.
We see from a recent press release that Deloitte was selected as the top Big Four accounting firm service provider by hedge funds with $1 billion or more in assets, ranking second overall, in the Institutional Investor 2009 Alpha Awards. Deloitte has now ranked first among the Big Four in five consecutive years.
Deloitte was ranked first overall for client satisfaction for audit, hedge fund expertise, and regulatory and compliance by hedge funds with $1 billion or more in assets. The 2009 Alpha Awards surveyed more than 650 hedge fund firms, which collectively manage more than $1.1 trillion in assets.
When you think of financial services audit, its typically KPMG which comes to mind as the leading auditor for banks, financial institutions, mutual funds, and insurance companies. So Deloitte's ranking as the top auditor for hedge funds and its retention of the number one spot for five years calls upon traditional thinking of which firm is in top of mind while thinking of specific industries. Is KPMG losing steam not only on hedge funds, but also in other sub-sectors of the financial services industry? Also, does other rules of thumb hold, such as Ernst & Young for upcoming technology start ups?
If our readers have any thoughts on this, we look forward to your comments.
Deloitte was ranked first overall for client satisfaction for audit, hedge fund expertise, and regulatory and compliance by hedge funds with $1 billion or more in assets. The 2009 Alpha Awards surveyed more than 650 hedge fund firms, which collectively manage more than $1.1 trillion in assets.
When you think of financial services audit, its typically KPMG which comes to mind as the leading auditor for banks, financial institutions, mutual funds, and insurance companies. So Deloitte's ranking as the top auditor for hedge funds and its retention of the number one spot for five years calls upon traditional thinking of which firm is in top of mind while thinking of specific industries. Is KPMG losing steam not only on hedge funds, but also in other sub-sectors of the financial services industry? Also, does other rules of thumb hold, such as Ernst & Young for upcoming technology start ups?
If our readers have any thoughts on this, we look forward to your comments.
Deloitte, Ernst and Young, KPMG and PricewaterhouseCoopers At Davos 2010
The World Economic Forum starts tomorrow Wednesday January 27, 2010 for four jam-packed days of the world’s most powerful and influential leaders from industry, government, academia and non-profit organizations. The sessions cover an extraordinary variety of interesting topics and bring together the planet’s best minds to discuss, debate, validate and set forth actions to improve human life and sensibility.
The organizing theme for this 40th World Economic Forum Annual Meeting in 2010 is a call to action, "Improve the State of the World: Rethink, Redesign, Rebuild", with a focus on six thematic pillars:
How to Strengthen Economic and Social Welfare
How to Mitigate Global Risks and Address Systemic Failures
How to Ensure Sustainability
How to Enhance Security
How to Create a Values Framework
How to Build Effective Institutions
Here is just a brief list of what we believe are the most interesting sessions:
27.01.2010 What Is the "New Normal" for Global Growth?
27.01.2010 The Growing Influence of Social Networks
27.01.2010 Skills Creation: The Future of Employment
27.01.2010 The Next Global Crisis
27.01.2010 Management Innovations from the Fringe
27.01.2010 Rethinking Values in the Post-Crisis World
27.01.2010 Trouble with Bubbles
27.01.2010 Who Is the New Consumer?
27.01.2010 Design for Sustainability
27.01.2010 Rethinking Population Growth
27.01.2010 The Art and Science of Imagination
27.01.2010 The Economics of Happiness
27.01.2010 Reading Leaders' Minds
27.01.2010 The Rise of Asia
27.01.2010 What Is Life?
28.01.2010 Values in Your Everyday Life
28.01.2010 Overcrowded World
28.01.2010 Rethinking Humanitarian Assistance
28.01.2010 Global Energy Outlook
28.01.2010 Next Generation Materials
28.01.2010 The Information Age and Human Behaviour I
28.01.2010 Rebuilding Long-term Economic Growth
28.01.2010 Will India Meet Global Expectations?
28.01.2010 Strengthening the Rule of Law
28.01.2010 Rebuilding Fragile States
28.01.2010 Managing the Global Commons
28.01.2010 Enrichment through Music
28.01.2010 Does an Algorithm Run Your Life?
28.01.2010 Towards Low-Carbon Prosperity
28.01.2010 Constructing the Ephemeral: Light in the Public Realm
28.01.2010 Rethinking Market Capitalism
28.01.2010 A Future by Design?
28.01.2010 Right and Wrong: What Science Tells Us
29.01.2010 Nuclear Non-Proliferation: Getting to Zero
29.01.2010 Creating Jobs and Strengthening Social Welfare
29.01.2010 Personalized Medicine
29.01.2010 Achieving Social Goals: The Power of Behavioural Science
29.01.2010 Rethinking the Economic and Social Impact of Fitness
29.01.2010 Brazil: What Is Next?
29.01.2010 A Global Solution to Illicit Trade?
29.01.2010 From Brain Drain to Brain Circulation?
29.01.2010 Beautiful Science
29.01.2010 Prepared for a Pandemic?
29.01.2010 Saving Art through Science
29.01.2010 Does Religion's Claim to Truth Lead to Violence?
29.01.2010 Europe's Role on the Global Stage
29.01.2010 The Nature of Intelligence
29.01.2010 Entrepreneurship: The Key to Sustainable Growth
30.01.2010 Towards an East Asian Community?
30.01.2010 Discover a Hacker's Mindset
30.01.2010 Facing a Sea Change
30.01.2010 Redesigning Financial Regulation
30.01.2010 A World without Nuclear Weapons: Utopia?
The complete list is at
http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?date=ALL
For the inquiring mind, this is a delectable menu of topics with each vying for the other for attention. Sadly, even the delegates have to consciously choose their best set of simultaneous sessions, and of course leave enough time for very high-powered networking and interviews.
The Big Four firms are also represented at Davos 2010, and below are the key programs in which the CEOs from Deloitte, Ernst and Young, KPMG and PricewaterhouseCoopers will participate. Interestingly, we had to pull this from the WEF website, and could find hardly a mention of this on the firm’s websites, contrary to prior years when a press release would proudly proclaim their participation. Are the Big Four firms keeping a low profile this year? We wonder why?
Dennis Nally, Chairman, PricewaterhouseCoopers International, PricewaterhouseCoopers, USA is on the panel on rethinking the "new normal" for key economies going forward.
James H. Quigley, Global Chief Executive Officer, Deloitte, USA moderates a panel, which asks “What values need rethinking in the wake of the "Great Recession"?
James S. Turley, Chairman and Chief Executive Officer, Ernst & Young, USA discusses global employment by looking at human capital imbalances for a sustainable post-crisis recovery
Timothy P. Flynn, Chairman, KPMG International, USA in on the panel which inquires how business leaders can rebuild trust among their stakeholders
The participation of these firms and the choice of topics seem quite appropriate, they are engaged in serious debates on business values, employment, stakeholders and global growth.
http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?id=30183
What Is the "New Normal" for Global Growth?
Date: 27.01.2010
Time: 08:45-10:00
Location: Sanada 1+ 2, Congress Centre
Despite an upward revision of the International Monetary Fund's most recent World Economic Outlook, average real GDP growth of the global economy over the next five years is expected to be less than that of the five years (2003-2007) before the crisis.
In partnership with Time magazine, industry leaders, economists and policy-makers rethink the "new normal" for key economies going forward.
Simultaneous interpretation in German
This session is open to the reporting press.
Moderated by
Michael J. Elliott ** Editor, Time International, Time Magazine, USA
Panellists
Dennis Nally ** Chairman, PricewaterhouseCoopers International, PricewaterhouseCoopers, USA
Arif M. Naqvi ** Founder and Group Chief Executive Officer, Abraaj Capital, United Arab Emirates; Co-Chair of the Governors Meeting for Investors 2010
Raghuram G. Rajan ** Eric J. Gleacher Distinguished Service Professor of Finance, University of Chicago Booth School of Business, USA
Nouriel Roubini ** Chairman, Roubini Global Economics Monitor, USA
David M. Rubenstein ** Co-Founder and Managing Director, Carlyle Group, USA
Heizo Takenaka ** Director, Global Security Research Institute, Keio University, Japan; Member of the Foundation Board of the World Economic Forum
** confirmed for this session
http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?id=29950
Rethinking Values in the Post-Crisis World
Date: 27.01.2010
Time: 10:45-12:00
Location: Congress Hall, Congress Centre
Values are considered important and enduring principles, which are correct and desirable in life, shared by members of a community.
What values need rethinking in the wake of the "Great Recession"?
This session is open to the reporting press.
Moderated by
James H. Quigley ** Global Chief Executive Officer, Deloitte, USA
Panellists
Yvan Allaire ** Chair of the Board of Directors, Institute for Governance of Public and Private Organizations (IGOPP), Canada
Thomas H. Glocer ** Chief Executive Officer, Thomson Reuters, USA
Yasuchika Hasegawa ** President and Chief Executive Officer, Takeda Pharmaceutical Company, Japan
Hartmut Ostrowski ** Chairman and Chief Executive Officer, Bertelsmann, Germany
Jim Wallis ** Editor-in-Chief and Chief Executive Officer, Sojourners, USA
Muhammad Yunus ** Managing Director, Grameen Bank, Bangladesh
** confirmed for this session
http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?id=29937
Skills Creation: The Future of Employment
Date: 27.01.2010
Time: 09:00-10:15
Location: Aspen 1, Congress Centre
Although unemployment rates continue to rise, there are still 2.6 million jobs unfilled in the US and 4 million in Europe because of a shortage of skilled workers.
What imbalances in terms of human capital should be addressed for a sustainable post-crisis recovery?
This session will be webcast and on the record.
Moderated by
J. Frank Brown ** Dean, INSEAD, France
Panellists
Kris Gopalakrishnan ** Chief Executive Officer and Managing Director, Infosys Technologies, India
Jeffrey Joerres ** Chairman and Chief Executive Officer, Manpower Inc., USA
Wallace King ** Chief Executive Officer, Leighton Holdings, Australia
Fred van Leeuwen ** General Secretary, Education International, Belgium
Lubna S. Olayan ** Deputy Chairperson and Chief Executive Officer, Olayan Financing Company, Saudi Arabia; Chair, Arab Business Council, World Economic Forum
James S. Turley ** Chairman and Chief Executive Officer, Ernst & Young, USA
** confirmed for this session
http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?id=29952
Rebuilding Trust in Business Leadership
Date: 28.01.2010
Time: 09:00-10:00
Location: Congress Hall, Congress Centre
A global survey in 2009 revealed that only 29% of respondents trust information communicated by CEOs, down from 36% in 2008.
What steps should business leaders take to rebuild trust among their stakeholders?
This session is open to the reporting press.
Moderated by
Richard W. Edelman ** President and Chief Executive Officer, Edelman, USA
Panellists
Eckhard Cordes ** Chairman of the Management Board and Chief Executive Officer, METRO, Germany
Timothy P. Flynn ** Chairman, KPMG International, USA
John Monks ** General Secretary, European Trade Union Confederation (ETUC), Brussels
Ferit F. Sahenk ** Chairman, Dogus Group, Turkey
Ruben K. Vardanian ** Chairman of the Board and Chief Executive Officer, Troika Dialog Group, Russian Federation
** confirmed for this session
The World Economic Forum starts tomorrow Wednesday January 27, 2010 for four jam-packed days of the world’s most powerful and influential leaders from industry, government, academia and non-profit organizations. The sessions cover an extraordinary variety of interesting topics and bring together the planet’s best minds to discuss, debate, validate and set forth actions to improve human life and sensibility.
The organizing theme for this 40th World Economic Forum Annual Meeting in 2010 is a call to action, "Improve the State of the World: Rethink, Redesign, Rebuild", with a focus on six thematic pillars:
How to Strengthen Economic and Social Welfare
How to Mitigate Global Risks and Address Systemic Failures
How to Ensure Sustainability
How to Enhance Security
How to Create a Values Framework
How to Build Effective Institutions
Here is just a brief list of what we believe are the most interesting sessions:
27.01.2010 What Is the "New Normal" for Global Growth?
27.01.2010 The Growing Influence of Social Networks
27.01.2010 Skills Creation: The Future of Employment
27.01.2010 The Next Global Crisis
27.01.2010 Management Innovations from the Fringe
27.01.2010 Rethinking Values in the Post-Crisis World
27.01.2010 Trouble with Bubbles
27.01.2010 Who Is the New Consumer?
27.01.2010 Design for Sustainability
27.01.2010 Rethinking Population Growth
27.01.2010 The Art and Science of Imagination
27.01.2010 The Economics of Happiness
27.01.2010 Reading Leaders' Minds
27.01.2010 The Rise of Asia
27.01.2010 What Is Life?
28.01.2010 Values in Your Everyday Life
28.01.2010 Overcrowded World
28.01.2010 Rethinking Humanitarian Assistance
28.01.2010 Global Energy Outlook
28.01.2010 Next Generation Materials
28.01.2010 The Information Age and Human Behaviour I
28.01.2010 Rebuilding Long-term Economic Growth
28.01.2010 Will India Meet Global Expectations?
28.01.2010 Strengthening the Rule of Law
28.01.2010 Rebuilding Fragile States
28.01.2010 Managing the Global Commons
28.01.2010 Enrichment through Music
28.01.2010 Does an Algorithm Run Your Life?
28.01.2010 Towards Low-Carbon Prosperity
28.01.2010 Constructing the Ephemeral: Light in the Public Realm
28.01.2010 Rethinking Market Capitalism
28.01.2010 A Future by Design?
28.01.2010 Right and Wrong: What Science Tells Us
29.01.2010 Nuclear Non-Proliferation: Getting to Zero
29.01.2010 Creating Jobs and Strengthening Social Welfare
29.01.2010 Personalized Medicine
29.01.2010 Achieving Social Goals: The Power of Behavioural Science
29.01.2010 Rethinking the Economic and Social Impact of Fitness
29.01.2010 Brazil: What Is Next?
29.01.2010 A Global Solution to Illicit Trade?
29.01.2010 From Brain Drain to Brain Circulation?
29.01.2010 Beautiful Science
29.01.2010 Prepared for a Pandemic?
29.01.2010 Saving Art through Science
29.01.2010 Does Religion's Claim to Truth Lead to Violence?
29.01.2010 Europe's Role on the Global Stage
29.01.2010 The Nature of Intelligence
29.01.2010 Entrepreneurship: The Key to Sustainable Growth
30.01.2010 Towards an East Asian Community?
30.01.2010 Discover a Hacker's Mindset
30.01.2010 Facing a Sea Change
30.01.2010 Redesigning Financial Regulation
30.01.2010 A World without Nuclear Weapons: Utopia?
The complete list is at
http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?date=ALL
For the inquiring mind, this is a delectable menu of topics with each vying for the other for attention. Sadly, even the delegates have to consciously choose their best set of simultaneous sessions, and of course leave enough time for very high-powered networking and interviews.
The Big Four firms are also represented at Davos 2010, and below are the key programs in which the CEOs from Deloitte, Ernst and Young, KPMG and PricewaterhouseCoopers will participate. Interestingly, we had to pull this from the WEF website, and could find hardly a mention of this on the firm’s websites, contrary to prior years when a press release would proudly proclaim their participation. Are the Big Four firms keeping a low profile this year? We wonder why?
Dennis Nally, Chairman, PricewaterhouseCoopers International, PricewaterhouseCoopers, USA is on the panel on rethinking the "new normal" for key economies going forward.
James H. Quigley, Global Chief Executive Officer, Deloitte, USA moderates a panel, which asks “What values need rethinking in the wake of the "Great Recession"?
James S. Turley, Chairman and Chief Executive Officer, Ernst & Young, USA discusses global employment by looking at human capital imbalances for a sustainable post-crisis recovery
Timothy P. Flynn, Chairman, KPMG International, USA in on the panel which inquires how business leaders can rebuild trust among their stakeholders
The participation of these firms and the choice of topics seem quite appropriate, they are engaged in serious debates on business values, employment, stakeholders and global growth.
http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?id=30183
What Is the "New Normal" for Global Growth?
Date: 27.01.2010
Time: 08:45-10:00
Location: Sanada 1+ 2, Congress Centre
Despite an upward revision of the International Monetary Fund's most recent World Economic Outlook, average real GDP growth of the global economy over the next five years is expected to be less than that of the five years (2003-2007) before the crisis.
In partnership with Time magazine, industry leaders, economists and policy-makers rethink the "new normal" for key economies going forward.
Simultaneous interpretation in German
This session is open to the reporting press.
Moderated by
Michael J. Elliott ** Editor, Time International, Time Magazine, USA
Panellists
Dennis Nally ** Chairman, PricewaterhouseCoopers International, PricewaterhouseCoopers, USA
Arif M. Naqvi ** Founder and Group Chief Executive Officer, Abraaj Capital, United Arab Emirates; Co-Chair of the Governors Meeting for Investors 2010
Raghuram G. Rajan ** Eric J. Gleacher Distinguished Service Professor of Finance, University of Chicago Booth School of Business, USA
Nouriel Roubini ** Chairman, Roubini Global Economics Monitor, USA
David M. Rubenstein ** Co-Founder and Managing Director, Carlyle Group, USA
Heizo Takenaka ** Director, Global Security Research Institute, Keio University, Japan; Member of the Foundation Board of the World Economic Forum
** confirmed for this session
http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?id=29950
Rethinking Values in the Post-Crisis World
Date: 27.01.2010
Time: 10:45-12:00
Location: Congress Hall, Congress Centre
Values are considered important and enduring principles, which are correct and desirable in life, shared by members of a community.
What values need rethinking in the wake of the "Great Recession"?
This session is open to the reporting press.
Moderated by
James H. Quigley ** Global Chief Executive Officer, Deloitte, USA
Panellists
Yvan Allaire ** Chair of the Board of Directors, Institute for Governance of Public and Private Organizations (IGOPP), Canada
Thomas H. Glocer ** Chief Executive Officer, Thomson Reuters, USA
Yasuchika Hasegawa ** President and Chief Executive Officer, Takeda Pharmaceutical Company, Japan
Hartmut Ostrowski ** Chairman and Chief Executive Officer, Bertelsmann, Germany
Jim Wallis ** Editor-in-Chief and Chief Executive Officer, Sojourners, USA
Muhammad Yunus ** Managing Director, Grameen Bank, Bangladesh
** confirmed for this session
http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?id=29937
Skills Creation: The Future of Employment
Date: 27.01.2010
Time: 09:00-10:15
Location: Aspen 1, Congress Centre
Although unemployment rates continue to rise, there are still 2.6 million jobs unfilled in the US and 4 million in Europe because of a shortage of skilled workers.
What imbalances in terms of human capital should be addressed for a sustainable post-crisis recovery?
This session will be webcast and on the record.
Moderated by
J. Frank Brown ** Dean, INSEAD, France
Panellists
Kris Gopalakrishnan ** Chief Executive Officer and Managing Director, Infosys Technologies, India
Jeffrey Joerres ** Chairman and Chief Executive Officer, Manpower Inc., USA
Wallace King ** Chief Executive Officer, Leighton Holdings, Australia
Fred van Leeuwen ** General Secretary, Education International, Belgium
Lubna S. Olayan ** Deputy Chairperson and Chief Executive Officer, Olayan Financing Company, Saudi Arabia; Chair, Arab Business Council, World Economic Forum
James S. Turley ** Chairman and Chief Executive Officer, Ernst & Young, USA
** confirmed for this session
http://www.weforum.org/en/events/AnnualMeeting2010/IntProgramme/index.htm?id=29952
Rebuilding Trust in Business Leadership
Date: 28.01.2010
Time: 09:00-10:00
Location: Congress Hall, Congress Centre
A global survey in 2009 revealed that only 29% of respondents trust information communicated by CEOs, down from 36% in 2008.
What steps should business leaders take to rebuild trust among their stakeholders?
This session is open to the reporting press.
Moderated by
Richard W. Edelman ** President and Chief Executive Officer, Edelman, USA
Panellists
Eckhard Cordes ** Chairman of the Management Board and Chief Executive Officer, METRO, Germany
Timothy P. Flynn ** Chairman, KPMG International, USA
John Monks ** General Secretary, European Trade Union Confederation (ETUC), Brussels
Ferit F. Sahenk ** Chairman, Dogus Group, Turkey
Ruben K. Vardanian ** Chairman of the Board and Chief Executive Officer, Troika Dialog Group, Russian Federation
** confirmed for this session
Friday, January 22, 2010
All Big Four Firms Are Best Companies To Work For In 2009
All the Big Four firms recently made Fortune’s 2009 “100 Best Companies to Work For” list, though not at the very top as we have become very accustomed to seeing in BusinessWeek or Diversity or Working Mothers magazine. Nonetheless a very creditable performance against a tough crowd of equally impressive and quality peers. 2009 sported tougher competition as three of the five firms dropped rank from the 2008 listing.
In addition, we are seeing a varied picture with firms actively cutting positions to some minor increases at Deloitte and PwC from 2008 to 2009, in line with the general decrease in business for these firms in the Americas.
Check out our January 2009 blog post on the 2008 rankings
http://bigfouralumni.blogspot.com/2009/01/big-four-firms-honored-by-fortune.html
However, tough external conditions appear to have created some welcome bonuses for employees, either through additional holidays, a sabbatical program or less travel.
Fortune has a rigorous process to select these top companies, and with a large chunk of the selection process based on true employee responses, its hard to game this list, so makes the results reliable. It conducts the most extensive employee survey in corporate America with 347 companies in the overall pool. Two-thirds of a company's score is based on the results of survey sent to a random sample of employees from each company with questions on attitudes management's credibility, job satisfaction, and camaraderie. The other third of the scoring is based on the company's responses on pay and benefit programs, hiring, communication, and diversity.
Ernst and Young was the first to rank among the firms at #44 for 2009, moving up 7 ranks from #51 in 2008. E&Y has 24,815 US employees, down 4% from 2008, and Fortune commented that “E&Y offers a traditional pension in addition to a 401(k). The firm is courting alumni via a new magazine, Connect.”
Deloitte follows Ernst and Young with #70 rank in 2009, but down 9 ranks from # 61 in 2008. Deloitte had 39,065 US employees and actually increased its staff count by 1%, as we have said earlier, Deloitte seems to be the most resilient among Big Four firms to the global slowdown. Fortune says, “Firm has invested $300 million in Deloitte University, a 107-acre campus in Texas that opens in 2011 and will be the "symbolic heart" of their organization.”
PricewaterhouseCoopers is just behind Deloitte at #71 for 2009, falling 13 ranks from #58 in 2008. PwC also increased its ranks by 1% in the US and had 29,387 US employees in 2009. Fortune did pick up on this employee level increase and the minor bonus in terms of holidays, stating, “Accounting firm had minor layoffs (less than 1% of the staff), canceled 2008 year-end holiday parties, and gave two extra paid holidays to employees.”
Accenture who had just made the list in 2008 with a #97 rank moved up smartly by 13 ranks to #84 for 2009. Accenture was quite tough in letting people go in the US, dropping headcount by 7% to 30,000 US employees. According to Fortune, “Management consultant adopted new Smart Work program to cut down on time employees spend at client sites; 36 offices have videoconferencing facilities.”
KPMG was the final firm to make the list this year at #88 in 2009, dropping a whopping 32 ranks from a creditable #56 in 2008. KPMG also slashed employees, and as our previous performance analysis shows, had the largest drop in revenue among Big Four firms, KPMG had 20,972 US employees in 2009, down 7%. On the bright side though, Fortune reported that, “Audit firm introduced a sabbatical program allowing employees to take leaves of four to 12 weeks at 20% of pay. Some 450 employees immediately signed up for it. Employees average 25 paid days off.”
All the Big Four firms recently made Fortune’s 2009 “100 Best Companies to Work For” list, though not at the very top as we have become very accustomed to seeing in BusinessWeek or Diversity or Working Mothers magazine. Nonetheless a very creditable performance against a tough crowd of equally impressive and quality peers. 2009 sported tougher competition as three of the five firms dropped rank from the 2008 listing.
In addition, we are seeing a varied picture with firms actively cutting positions to some minor increases at Deloitte and PwC from 2008 to 2009, in line with the general decrease in business for these firms in the Americas.
Check out our January 2009 blog post on the 2008 rankings
http://bigfouralumni.blogspot.com/2009/01/big-four-firms-honored-by-fortune.html
However, tough external conditions appear to have created some welcome bonuses for employees, either through additional holidays, a sabbatical program or less travel.
Fortune has a rigorous process to select these top companies, and with a large chunk of the selection process based on true employee responses, its hard to game this list, so makes the results reliable. It conducts the most extensive employee survey in corporate America with 347 companies in the overall pool. Two-thirds of a company's score is based on the results of survey sent to a random sample of employees from each company with questions on attitudes management's credibility, job satisfaction, and camaraderie. The other third of the scoring is based on the company's responses on pay and benefit programs, hiring, communication, and diversity.
Ernst and Young was the first to rank among the firms at #44 for 2009, moving up 7 ranks from #51 in 2008. E&Y has 24,815 US employees, down 4% from 2008, and Fortune commented that “E&Y offers a traditional pension in addition to a 401(k). The firm is courting alumni via a new magazine, Connect.”
Deloitte follows Ernst and Young with #70 rank in 2009, but down 9 ranks from # 61 in 2008. Deloitte had 39,065 US employees and actually increased its staff count by 1%, as we have said earlier, Deloitte seems to be the most resilient among Big Four firms to the global slowdown. Fortune says, “Firm has invested $300 million in Deloitte University, a 107-acre campus in Texas that opens in 2011 and will be the "symbolic heart" of their organization.”
PricewaterhouseCoopers is just behind Deloitte at #71 for 2009, falling 13 ranks from #58 in 2008. PwC also increased its ranks by 1% in the US and had 29,387 US employees in 2009. Fortune did pick up on this employee level increase and the minor bonus in terms of holidays, stating, “Accounting firm had minor layoffs (less than 1% of the staff), canceled 2008 year-end holiday parties, and gave two extra paid holidays to employees.”
Accenture who had just made the list in 2008 with a #97 rank moved up smartly by 13 ranks to #84 for 2009. Accenture was quite tough in letting people go in the US, dropping headcount by 7% to 30,000 US employees. According to Fortune, “Management consultant adopted new Smart Work program to cut down on time employees spend at client sites; 36 offices have videoconferencing facilities.”
KPMG was the final firm to make the list this year at #88 in 2009, dropping a whopping 32 ranks from a creditable #56 in 2008. KPMG also slashed employees, and as our previous performance analysis shows, had the largest drop in revenue among Big Four firms, KPMG had 20,972 US employees in 2009, down 7%. On the bright side though, Fortune reported that, “Audit firm introduced a sabbatical program allowing employees to take leaves of four to 12 weeks at 20% of pay. Some 450 employees immediately signed up for it. Employees average 25 paid days off.”
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