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C-Suite CPAs Remaining Pessimistic on the Economy

Posted on by GoingConcern

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

Following up from our brief mention yesterday, senior level CPAs have turned much more pessimistic about the economy. And somewhat surprisingly, they are partly concerned about deflation.

Just 21 percent of CPAs serving as C-suite executives said they are optimistic about the US economy, way down from 40 percent who were optimistic in May and the lowest level since April 2009, according to the American Institute of Certified Public Accountants and the University of North Carolina’s Kenan-Flagler Business School’s latest Quarterly Economic Outlook Survey. What’s more, pessimists outnumbered optimists by a two-to-one margin.

Even more worrisome, 78 percent believe US business conditions will not return to pre-recession levels until 2012 or later.

This sentiment seems to parallel a number of recent economic and corporate reports.


Altogether, 40 percent were pessimistic about the economy, up from 25 percent in the last quarter.

“Our survey signals the nascent economic recovery that buoyed expectations last quarter is stalling,” said AICPA Vice President for Business, Industry and Government Carol Scott, in a press release accompanying the survey’s findings.

What are these numbers crunchers worried about? Unemployment and a tight credit market, to name two.

The survey found that CPAs are much less concerned about inflation these days. This is not surprising, given the economy’s lackluster pace, the high unemployment rate and the inability of companies to raise prices.

Interestingly, 20 percent are now concerned their organizations will be impacted by deflation in the next six months.

This is further proof that deflationary fears are not just coming from a fringe group of radical thinkers, but are now entering the mainstream.

One silver lining from the survey: Nearly one-quarter of the survey participants are upbeat about the prospects for their own organizations. Still 55 percent of survey respondents do not anticipate their organizations’ employment levels returning to pre-recession levels in the next year, compared with seven percent who anticipate staffing levels returning to normal in the next year.

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Some People Aren’t Too Concerned About the Walgreen CFO’s Second DUI

Yesterday we shared with you the unfortunate tale of Walgreen CFO Wade Miquelon picking up his second DUI in just over a year. While Mr. Miquelon is obviously responsible for his own actions, this whole mess could have been avoided if WAG would just splurge a tad and get him 24/7 car service. Sure you might catch some shit from Footnoted but isn’t that better than people getting hurt?

Anyhoo, most of the coverage on this story is in and around Chicago but naturally, analysts that cover the company were asked about the whole ordeal and frankly, since jumping behind the wheel after a few highballs doesn’t seem to have any effect on Wade’s professional capacity, it’s really NBD:

Dereck Leckow with Barrington Research […] sees no reason for investors to be concerned.

“Certainly, it’s rather embarrassing, but he’s not been found guilty of anything at this point,” said Leckow.

“At this point in time, it’s not something to be concerned about,” he concluded. Leckow has an “Outperform” rating on Walgreen shares and a $46 price target.

The risk for investors, if anything serious were to result from the latest charge, is that Miquelon is regarded as key to restructuring that’s been going on at Walgreen.

“Wade has been very valuable for the company’s cost-reduction efforts,” observes Scott Mushkin of Jefferies & Co. “If there were any problem that would take him away from his responsibilities at Walgreen, that would be a negative,” said Mushkin.

As we noted yesterday, WAG isn’t commenting on this “personal matter” but some people are wondering aloud about Wade’s decision-making ability:

Companies have to disclose “events that occurred during the past 10 years and that are material to an evaluation of the ability or integrity” of an officer. This includes whether the person “was convicted in a criminal proceeding … (excluding traffic violations and other minor offenses),” according to the Securities and Exchange Commission.

So the question becomes when does such an issue stops being a “personal matter” and starts becoming a “material” one. And what does it say about a person who makes such repeated mistakes, risking himself and others in the process? Can shareholders trust him with running the finances of their company?

The answer is, it depends.

“Some companies might have disclosed the second arrest right away; some might have said something somewhere,” said Edward Best, a partner at law firm Mayer Brown. “Other companies could reasonably have concluded, ‘Hey, the guy still showed up Monday morning.’ He’s still able to fly to New York to meet with rating agencies, investors and bankers. It’s not a material issue.”

One thing is for certain – Miquelon is losing his license for three years effective November 10th, so Walgreen has a couple of weeks to arrange for that car service.

Walgreen: Street Unperturbed By CFO DUI Arrest [Barron’s]
Walgreen CFO Arrested on Drunk Driving Charges … Again [Daily Finance]
Walgreens CFO charged for 2nd time with DUI [Chicago Breaking Business]

Apple CFO’s Seemingly Banal Statement Interpreted Quite Differently by The Wall St. Journal

Apple Insider reported yesterday that when Apple CFO Peter Oppenheimer was asked about Google’s acquisition of Motorola he reportedly said, “$12.5 billion is a lot of money.” Now, I don’t know anyone that would say, “$12.5 billion is pocket change,” or “I piss on $12.5 billion.” Not even the most ostentatious Russian oligarch would be so bold to laugh in the face of that sum of money.

Having said that, it appears the Wall St. Journal seems to think that Oppenheimer’s statement are akin to fighting words, as illustrated by the headline: “Apple CFO Snipes at Google’s Motorola Bid” which included the following:

Peter Oppenheimer, Apple’s CFO, took a shot at Google when asked about the company’s $12.5 billion bid for Motorola Mobility Holdings during a conference call with investors hosted by Gleacher & Company. Oppenheimer said that companies should invent their own technology rather than buy it from the outside, adding that “$12.5 billion is a lot of money,” according to a report from Apple Insider.

First of all, to look at Peter Oppenheimer you wouldn’t think he’s capable of “sniping.” Secondly, “snipe” is defined as “To make malicious, underhand remarks or attacks” according to Wiktionary. For example, if Oppenheimer had said something like, “Larry Page couldn’t get laid in a monkey whorehouse with a bag of bananas” or “Androids are the Yugos of the smartphone world,” those would qualify as snipes. They are malicious, underhanded and are attacks.

Conversely, “$12.5 billion is a lot of money” is not a snipe. It is a statement of a fact-ish. It is a lot of money. You could argue that it is Oppenheimer’s opinion but as posited above, very few would argue that it isn’t a lot of money. Is Google overpaying for Motorola? That’s the question Michael Hickins ultimately asks in his article but somehow the hook for this was that Apple’s CFO brings the same level of snark as the CEO.

Apple CFO Snipes at Google’s Motorola Bid [WSJ]