Suddenly, consulting is out.
KPMG will probably delay the IPO of its consulting operation until next year due to the stock market’s overall volatility and the poor performance among consulting stocks in general, according to FT.com.
The website said that KPMG had completed the “major steps” required before going public but wanted to wait for the stock market to calm down a bit. “They are . . . watching the markets,” the site quoted a source close to the deal. “Obviously [they hope] the opportunity to move will coincide with a less volatile market.”
KPMG hopes to raise $2.2 billion to $3.3 billion from the IPO.
For the past few weeks, Hewlett-Packard was said to be trying to work out a deal for the consultancy arm of PricewaterhouseCoopers. Late last week word was it was mulling a lower price tag.
However, Monday morning…
Hewlett-Packard Says No to PricewaterhouseCoopers Deal
Hewlett-Packard said it will not buy the consulting business of PricewaterhouseCoopers. The computer and printer company gave no reason except to say that it failed to reach an agreement on a deal.
Published reports had put a potential price tag at around $17 billion to $18 billion.
Of course, this announcement comes at the same time that Hewlett-Packard stunned investors by missing its quarterly consensus earnings estimates by a wide margin. The company reported fiscal fourth-quarter profits from operations of $0.41 a share. Analysts were expecting $0.51. Yikes.
The reasons: Margin pressure, adverse currency effects, higher-than-expected expenses, and the company’s business mix.
H-P’s earnings disappointment comes on the heels of Friday’s announcement from Dell Computer that its growth rate would dramatically slow down next year.
Now, there are two big questions on execs’ and investors’ minds: Is the big technology growth phase coming to a close? And did Reg FD prevent announcements like H-P’s earnings surprise to leak out in advance, thereby easing the blow for startled investors?
Park Placing its Chips on its Own Stock
Park Place Entertainment decided that the best way to deploy its rich cash flow is to buy its own shares, which are off 30% from their highs.
The casino company said it will buy back 20 million shares of its stock.
Park Place may not be alone if the stock market continues to tumble. Certainly, a number of companies whose shares are way off from their highs are a bit nervous that an unwanted suitor might make a bid.
Analysts certainly think Park Place could afford to buy these shares. One analyst was quoted as saying that the company could generate about $700 million in cash flow next year, which would easily cover its capital expenses, estimated to be around $400 million.
From the CFO.com “Brief” Case
- Visteon Corp. said Friday it has established an ‘odd-lot’ program that allows stockholders who own fewer than 100 shares an inexpensive way to raise their holdings to 100 or sell their stake entirely. The voluntary program, open until Dec. 13, will be independently administered by Georgeson Shareholder Communications Inc. Visteon will not buy or sell any of the shares or participate in the program.
- A federal jury on Friday ruled that biotechnology firm Affymetrix Inc. infringed an Oxford Gene Technology Ltd.’s patent for technology that quickly determines the activity of genes. A second trial will be scheduled on Affymetrix’s claim that the patent is invalid, but no date has been set yet. If Affymetrix loses, there will be a third trial on Oxford’s claim for up to $40 million in damages. The jury found that there was no willful infringement by Affymetrix, which means Oxford won’t be able to receive compensation for damages, which would have been triple the damages.
From the CFO.com “Brief” Case
- FedEx Corp., looking to expand its overnight delivery dominance to the ground, is in serious talks to buy American Freightways Corp. for $900 million to $1 billion in cash and stock, according to The Wall Street Journal. FedEx (FDX) is said to be offering about $28 a share, a huge premium to American’s Friday closing price of $17.50 per share.
- A Texas state judge dismissed a case against Shell Oil Co. and its retailing joint ventures filed by more than 400 gasoline dealers who claimed the companies’ pricing practices were forcing them out of business, according to The Wall Street Journal reported. District Judge Scott Brister rejected the dealers’ allegations that Shell, Motiva Enterprises LLC and Equilon Enterprises LLC schemed to drive them out of business by raising rents, removing incentives and pricing their gasoline higher than wholesale prices. Lawyers for the dealers said they would appeal.
- A KPMG LLC partner who headed the group in charge of auditing Lernout & Hauspie Speech Products NV for many years joined an L&H affiliate last year. This came shortly after KPMG signed off on the Belgian software company’s 1998 accounts, which are currently in dispute, according to The Wall Street Journal.
- OPEC agreed on Monday not to change the amount of oil that it will supply the rest of the world.
- The American Institute of CPAs is leading an effort to create a new global designation for professional services workers. The group says the new title, tentatively called “cognitor,” will help businesses in other countries select CPAs, business lawyers and consultants who have met international standards for ethics and finance.