General Motors Co’s new chief financial officer told analysts the automaker remains committed to the low-debt strategy and discipline on vehicle pricing emphasized by his predecessor. In a dinner meeting with analysts on Thursday, Dan Ammann said GM faced limited impact from the Japan crisis, was increasing its auto credit capabilities, and was reducing its exposure to incentives in the U.S. market, according to research notes from Barclays Capital and J.P. Morgan. “Dan emphasized fundamental continuity around GM’s financial strategy and philosophy with his predecessor,” Barclays analyst Brian Johnson said. “Dan plans to continue the low-debt strategy of his predecessor.” [Reuters]
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CFOs Want Tech Investments to Pay Off…Stat!
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
CFOs and CIOs have very different priorities when it comes to IT spending, and that dichotomy is not likely to change any time soon, even as IT budgets are starting to once again increase.
After being slashed to almost nil during the height of the crisis for many corporations across sector and size, IT budgets are beginning to rise.
But CFOs are keeping a keen eye on where that money is going and still expect a relatively swift return on investment (ROI) in order to consider anything beyond maintenance and upgrades.
They want to clearly see that ROI—whether it be through qualitative measures, like better compliance or improved risk management, or through quantitative measures like reductions in days sales outstanding (DSO) or decreased cost-per-check.
As Craig Himmelberger at SAP said in a recent interview I did for Global Finance magazine: “People don’t want to rip and replace systems that are still functioning well, so a lot of the investments we see now are incremental.”
This IT budget allocation is likely to continue for the near future, at any rate, regardless of what CIOs may want. However, there does have to be a balance. At some point when liquidity risk fears begin to subside, CFOs will once again be more open to their CIOs’ suggestions for IT spending.
And what CIOs want to see is more spend on innovation, as Ellen Pearlman noted in her blog on CIOZone.com last month.
She quoted CXO Art Sedighi as saying: “In the current time and environment, the biggest challenge is [to] convince upper management to open up their wallets again after almost 3 years. The IT staff has been pulling things together with nothing short of band-aids since 2008, and things are about [to] fall apart. All management sees is the fact that spending was down, and they survived.”
Pearlman points out that while most execs believe that IT innovation is important, companies have consistently slashed spend on innovation over the past decade. In an AT Kearney study, executives cited IT innovation spend of 30 percent in 1999, compared with just 14 percent by 2009.
In the study, 45 percent of IT budget went to improving operations and 41 percent went to business enablement/process improvement. Most respondents felt that 24 percent of the IT budget should be directed towards innovation.
The current budget split certainly meshes with the continued corporate focus on driving down costs across the working capital chain. Indeed, it may be quite some time before CIOs get their dream IT allocation.
There’s at Least One Interesting Theory Out There About the Wells Fargo CFO’s Sudden Resignation
Last week, we told you about Wells Fargo’s announcement that their CFO gave himself an early birthday gift by throwing a retirement party for himself. As previously mentioned, Howard Atkins’s departure was a little mysterio and no one had any theories (crackpot or otherwise) on the Atkins’s march in. That all changed yesterday when Christopher Whalen, an analyst at Institutional Risk Analytics issued a report that stated that he, for one, wasn’t buying the “personal issues” story put out by the bank:
“The departure of Atkins, we are led to believe, was not merely the result of personal issues, but reflects an ongoing internal dispute within [Wells Fargo’s] executive suite regarding the bank’s disclosure,” he writes.
Whalen then goes on to argue that Wells Fargo’s “public behavior suggests significant problems in the bank’s internal systems and controls as defined by the Sarbanes-Oxley law. We further understand that some officials of [Wells Fargo], increasingly uncomfortable with the bank’s aggressive public disclosure regime, have reached out to regulators because of concerns regarding accounting issues.”
The Stagecoach Gang, for their part, is sticking to their story citing the “personal reasons” and their spokesman dismissed Whalen’s report with “pfffft” and a wave of the hand, saying, “I haven’t heard anything like that. It’s speculation. I’m not going to comment on it.”
Wells Fargo CFO Exit Tied to Disclosure: Analyst [The Street]
MySpace, Trying to Remain Relevant, Hires a CFO
Maybe it won’t help but at least they hired one. There may be something to the strategy of not having a CFO but we’ll be damned if know what that is. Hey, if you’re making money hand over fist and getting the checks cut on time, who gives a damn, right?
Unfortunately for MySpace, their ever-shrinking market share has maybe gotten to the point where some semblance of a financial strategy may be necessary. Enter Mark Rosenbaum who will surely help turn this ship around. Or maybe not, who knows. Good luck man.
MySpace Hires Finance Chief [WSJ]