VideoOn the other end of the spectrum, Wells Fargo managed to raise $12.6 billion in November, despite its position near the nexus of the market meltdown. Through a public offering of 468.5 million shares of common stock, the company tapped the market to help fund its acquisition of Wachovia.
CFOs Have Never Been More Important
Chief executives turned to their finance departments during the early days of the financial crisis both to learn more about exactly what was happening on Wall Street and to better understand their companies' liquidity position. Now, they're looking to them to find out what to do next. CFOs and their finance teams are modeling both best-case and doomsday scenarios for their bosses and boards and, in many cases, they are the ones making the call on layoffs, office closures, or other major changes.
"If you have the stomach for it, you bet it's a good time to be a CFO," says Tom Kolder, president of the Chicago recruiting firm Crist Kolder Associates. "We're seeing more companies looking for CFOs than we have even in the hot times of the last couple of years. People who have a broad financial skill-set are extremely well positioned for certainly the next five years." Treasurers, who have recently played second fiddle to controllers as companies have raced to strengthen their accounting systems, are suddenly in high demand as well, says Kolder, who notes that many companies are now looking for finance chiefs with treasury and capital-markets skills.
A Buy Rating on Buying
It's a great time to buy almost anything. From companies to stocks to houses to sweaters at the Gap, everything is on sale. Especially for young people just starting to build their retirement nest eggs, buying opportunities abound. Only a handful of stocks in the S&P 500 were up on the year through mid-November. The index is down nearly 50 percent for the year. Such a bludgeoning means at least some of these stocks are undervalued, and some experts say price/earnings ratios are now at historic norms, which may mean a rebound is in the offing.
From a corporate perspective, the strengthened U.S. dollar will make it easier for U.S. companies to expand abroad through acquisition, something many had postponed during the dollar's prolonged slide last year. And with debt markets unpredictable at best, private-equity buyers won't provide as much competition for cash-rich strategic acquirers as they have in recent years.
Green Piece
Clean energy could provide a way out of this mess. Investment in alternative-energy companies continues apace, with the industry racking up more than $5 billion in investments in 2008 despite the brutal capital-raising environment.
If President-Elect Barack Obama pursues his proposed green infrastructure and technology initiatives, government spending could make this sector shine even brighter. On the campaign trail, Obama outlined a plan to invest $15 billion a year toward development of alternative fuels and other renewable-energy technology, upgrading the nation's electric power grid, and improving energy efficiency, a promise he reiterated at an international climate-change summit in November. Researchers at the University of Massachusetts found that such investment in upgrading existing infrastructure to meet new efficiency standards would create 2 million jobs for a broad spectrum of workers, from assembly-line employees to roofers, many of whom have been hit hard by the dramatic plunge in the automobile-manufacturing and housing industries. One recent beneficiary of the green movement has been Fuel Systems Solutions, a maker of hydrogen-powered engines, which reported 62 percent revenue growth in the third quarter of 2008.
A Chance to Simplify & Prepare
Nothing lasts forever. The economy will eventually rebound — nearly 60 percent of CFOs expect the recovery to begin in the fourth quarter of 2009 or later, according to the most recent CFO/Duke University Global Business Outlook Survey — and many executives are trying to figure out how to position their companies in the downturn so that they can be among the first to benefit from the upside.
David Knowlton, managing partner at investment-banking boutique Watch Hill Partners, just added two partners and a senior adviser to his 20-person firm in anticipation of future growth. "We're going to come out of this," he says. "How do you prepare for that today?" While an expanding investment bank at a time when many deals are on hold seems a bit counterintuitive, Knowlton maintains that boutique banks will do well because of their simple cost structures and straightforward business propositions. "We don't have huge bureaucracies. We don't have capital-markets arms. We do one thing, and that's give advice, and we're in a great position to offer that objectivity to clients who are dealing with this crisis," he says.
Less Pain at the Pump
As of this writing, gas was well below $2 a gallon nationally. That's down from more than twice that level last summer. The sharp decline has provided some measure of economic relief to both individuals and companies as it has eased commuting costs for workers and shipping costs for businesses, not to mention input costs for the many companies that rely on petroleum byproducts in their manufacturing processes.
Reader CommentsDisplaying 2 of 2
David Newman
Jan 6, 2009 8:12 PM ET
Good article
An interesting and optimistic read which is needed at this time for many. One way to view this article, and perhaps … more
leon haller
Jan 6, 2009 11:29 AM ET
10 positive forces for the future - article
Just because stocks are 'cheap, there is no reason to buy now. There is NO effective, meaningful P/E. E is non … more
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