With many tech and Internet stocks way off their lows, most corporate insiders probably bailed out months ago, right?
Wrong! At least when it comes to chief executive officers.
About 95% of the CEOs at the 200 largest U.S. companies have still not cashed in their vested stock options, according to a recent survey, conducted by Pearl Meyer & Partners. This could be a sign of confidence in the current and future value of their firms, according to Pearl Meyer.
However, I’ll bet many of them are kicking themselves for not selling, say, half the underlying stock.
In any case, the survey notes that the CEOs are sitting with average paper profits valued at $33.7 million.
Pearl Meyer said its analysis was based on closing stock prices as of October 18, and noted that four CEOs surveyed do not hold any options and six do not hold any vested options.
Did They or Didn’t They?
The rumors sure were flying on Wall Street Thursday that Oracle Corp. Chief Executive Larry Ellison and Chief Financial Officer Jeff Henley had resigned.
At one point, Oracle’s stock fell as much as 13% before the company officially denied the reports. “The rumor is unfounded,” Oracle’s vice president of communications, Jennifer Glass, told CFO.com. She added that Oracle decided not to put out a release, and is responding to individual media calls. Says Glass: “We don’t know where this one started.”
According to a wire service, one rumor among traders was that Ellison had died.
Unemployment Rate Remains Steady
The U.S. unemployment remained at its 30-year low of 3.9% in October.
The Labor Department also said that the number of workers on payrolls outside the farm sector rose by 137,000. However, in September the gain was 195,000. This number was adjusted downward from the initial report of a 252,000 increase.
Average hourly earnings rose 0.4%, slightly above the consensus forecast of a 0.3% rise. The average workweek dipped to 34.3 hours from 34.4 hours in September.
Who Wants to be a CPA?
Not as many as in the past, according to a new survey.
In the past four years, the number of accounting majors has fallen by 23%, according to a report entitled: “Accounting Education: Charting the Course through a Perilous Future,” a joint project of the American Accounting Association, American Institute of CPAs, Institute of Management Accountants, and the Big Five. It was written by W. Steve Albrecht, past president of the AAA and associate dean of the Marriott School of Management at Brigham Young University, and Robert Sack, emeritus professor of business administration at the University of Virginia.
The 72-page report discusses why the future of accounting education is in danger; how the business environment has changed and reactions to these changes; why accounting student enrollment has declined; “why accounting educators and practitioners would not major in accounting again;” and what needs to be done to improve accounting education.
Among the reasons for the decline in interest: Changes in the business environment. These changes include technology, globalization and “the concentration of power in certain market investors, primarily large mutual and pension funds,” according to the report. These changes have spawned inexpensive information and increased competition.
The reports also points out that accounting starting salaries now lag behind competing professions.
Bringing the Internet to Employees
In the early days of the auto industry, Henry Ford said he wanted to pay his employees well enough so that they could afford to buy his cars.
Today, two other auto companies are making today’s near necessity affordable for its employees.
General Motors and Daimler-Chrysler said Thursday that they will offer their 300,000 U.S. employees a cut-rate deal on Internet access if they sign up with AOL or AOL-TV.
These are the three pricing options:
- Standard AOL service for $3 per month. AOL and many other ISPs currently charge $21.95 per month.
- AOL-TV interactive television for $5 per month.
- Both AOL-TV and DirecTV satellite TV service for $31.95 a month.
Of course, GM owns DirecTV.
In addition, employees who sign up for this program will be given access to a website that will offer company and personal information. The site also will offer finance, health and leisure channels, as well as company news, benefits information and employee development tools. The website will be developed by employee human-relations Web site developer Workscape, AOL, Sun Microsystems and Netscape (which is owned by AOL).
Surprise! Internet Companies Get Less VC Dough
Here’s empirical proof of what we already intuitively know.
Internet companies are fetching less of the venture capital money that is being invested, according to venture capital research firm Venture One.
Internet-related companies raised $13.1 billion in the third quarter, down from $14.9 billion in the second quarter and $16.1 billion in the first quarter.
Altogether total investments across all industries fell 6% from the second quarter, mostly due to a 12% decline in investments in Internet companies.
However, total funding was almost double the $6.8 billion raised in the last year’s third quarter.
Did funding rise in any industry? Yes.
Internet infrastructure companies raised a record $3.2 billion in the third quarter, up nearly 30% from the second quarter. Internet software investments climbed 9% to a record $3.1 billion.
Electronics and semiconductors showed mild gains in venture capital funding. Healthcare companies raised a record $1.6 billion, according to the survey.
The big drops in funding affected mostly Internet commerce, content and business services companies.
Another IPO Is Withdrawn
Excelergy Corp., a business-to-business transaction management services provider to the retail energy industry, on Thursday withdrew an $86.3 million initial public offering.
The software company had initially hoped to go public in March, just when the IPO market and tech stocks began their delirious decline.
The company gave no reason for the postponement. However, it is just the latest of a slew of companies withdrawing plans to go public in the past six months or so.
Excelergy planned to use the proceeds for general corporate purposes, including working capital as well as potential acquisitions.
Deutsche Banc Alex. Brown and Robertson Stephens were the lead managers of the IPO.
Corning Increases Convert Offering
Corning Inc. increased the size of its convertible bond sale to $1.75 billion from $1.2 billion.
The company also cut the expected yield to maturity on the bonds, to 2% to 2.5% from an original 2.5% to 3%. They are expected to be convertible into Corning common stock at a 21% to 25% premium over the stock price at the time of sale.
Corning is mostly using proceeds from the convertible offering as well as an offering of common shares, to buy Optical Technologies USA, a maker of lasers, components and fibers. The convertible bonds are rated “Single-A” by Standard & Poor’s.
- Qualcomm said it earned $0.25 per share in the most recent quarter, beating the consensus forecast by a penny. Revenue came in at $635 million, at the low end of expectations. Still, its stock is up $5.50 to $68.31 in pre-market trading. The company also said that it postponed plans to spin off its integrated circuits and system software business.
- Sprint warned that earnings in both 2000 and 2001 would come in lower than expected due to lackluster revenue growth. Rivals AT&T and Worldcom recently issued similar warnings.
- Priceline.com said it lost a penny per share in the third-quarter compared with an $0.08 loss for the same quarter a year ago. Revenues more than doubled to $341 million, but they still came in about 5% below analysts’ low-end revenue estimates. The company also announced plans to lay off 16% of its workforce. In addition, CFO Heidi Miller resigned.
From the CFO.com Briefcase
- The European Central Bank said Friday that it intervened in the foreign exchange markets to support the euro. The euro was quoted at $0.8795 after the intervention was announced, up from $0.859 late Thursday in New York trading. It reached its all-time low of $08228 on Oct. 26.
- Viacom Inc. said it will buy BET Holdings, the largest media and entertainment company geared to an African-American audience, for $2.5 billion in stock. The deal’s total price tag is $3 billion, including the roughly $500 million in BET debt that Viacom will assume.
- PepsiCo was rebuffed in its attempt to buy Quaker Oats for about $14 billion in stock.
- Cox Communications on Thursday sold $1 billion of debt in two parts through Chase Securities and Merrill Lynch. The yield spreads were in line with expectations.
- The SEC said that it will continue to support the Edgar legacy filing system along with the modernized Edgar filing system beyond the original November 27, 2000 transition date. The Commission is taking this action at the request of members of the filing community. The new termination date for the Edgar legacy system will be April 20, 2001. No legacy filings may be submitted after that date. As of April 20, 2001, filers using EDGARLink software will have to use EDGARLink Version 7.0 (or higher) to submit filings to Edgar over the Internet, through direct transmission or on magnetic tape cartridge. Filers may continue to submit their official filings in either ASCII or HTML format.
- Belew Averitt LLP, the second largest CPA firm in Dallas, has merged with BDO Seidman. Belew Averitt was a member of Horwath International.