VideoWhile the prospects for a corporate revival are starting to look downright encouraging, things remain downright bleak for employees—and those looking for employment.
Consider the results of a recent survey of business conditions conducted by Tatum Partners, a firm that supplies temporary CFOs and CIOs to corporate clients. Tatum found that business conditions got better for the clients of 41 percent of the firm's partners in the past 30 days, stayed about the same for 45 percent, and got worse for 14 percent.
Interestingly—considering that the next two months include the dog days of August—the outlook is even sunnier for the upcoming 60 days. The corporate clients of 58 percent of the respondents expect business conditions to improve, while 38 percent think matters will stay about the same. Only 4 percent expect a dip.
Taken together with older forecasts, the current predictions suggest "that the worst is over for the near term," according to the report.
One thing that will likely fuel the recovery is the increased availability of cheap capital. While only 29 percent of Tatum's clients reported improved availability and cheaper capital—down from 34 percent in the June 1 survey—that was still a better percentage than at any other time in the past year.
What's more, 34 percent think capital cost and availability will get even better in the next 60 days. According to the report: "Continued strong reports on capital are the key to believing that the recovery will probably turn into expansion."
Maybe so, but it looks like it will be a jobless expansion. The portion of respondents reporting a hiring upturn dropped to 20 percent from 27 percent, while those who reported cuts in the number of workers held steadily at 20 percent.
The employment outlook isn't brilliant for the next 60 days, either. Those expecting more hiring in that time frame dropped to 30 percent from 34 percent, while those who think employment will decline in the next two months rose to 18 percent.
Bondholder-Banker Battle Busts Mirant
Yesterday Atlanta-based power provider Mirant Corp. filed for Chapter 11 bankruptcy protection after some creditors turned down the utility's debt restructuring proposal. According to court papers, Mirant has about $21 billion in assets and more than $11 billion in liabilities.
"Although we received broad support from the company's creditors on our restructuring plan," noted Mirant management, "failure to obtain the timely support of our key lenders created substantial uncertainty in the marketplace about the outcome of these discussions."
The Mirant filing is the 10th largest bankruptcy in U.S. history. It is not a rarity for the power sector, however. PG&E National Energy Group and NRG Energy both filed for bankruptcy last year. And besieged energy companies Reliant and Dynegy barely avoided Chapter 11 by striking 13th-hour deals with creditors that enabled the two companies to restructure their debt.
But Mirant could not pull off the same trick. Reportedly some lenders thought that the company's plan to refinance $3.1 billion in debt ceded too much collateral to bondholders. Conversely, Mirant management apparently didn't want to give all the security to the banks. "Mirant decided to force the issue and say if you're not going to cooperate with us, we are no longer going to protect you as a class of creditors," Lasan Johong, an analyst at Blaylock & Partners, told Bloomberg.
Citigroup Inc. and Credit Suisse First Boston are Mirant's lead bankers. State Street Bank & Trust Co. is the energy company's largest bondholder, and is owed more than $486 million. Bear Stearns Securities Corp. is also owed a fair sum: $447.3 million, according to the filing.
Mirant, which produces power in 14 states, has about $1.17 billion in cash, and reportedly secured $500 million in DIP financing. Mirant's bonds are currently worth less than two-thirds of their face value. The share price of Mirant stock, which has dropped nearly 60 percent in the past year, was unchanged on news of the bankruptcy filing, closing at $2.01 per share. Note that trading in the energy company was delayed until Tuesday afternoon.
Accenture Profits Up
Tech spending may be down, but those that depend on tech spending seem to be making out OK.
On Tuesday management and IT consultancy Accenture reported a 2 percent increase in revenues (in U.S. dollars) for its fiscal third quarter, which ended May 31. Of note: it apparently took the former Andersen unit a full 45 days to report its results.
Operating income was $404 million for the quarter, a decrease from the $435 million the consulting firm pulled in during the same quarter in 2002. The company was able to increase profits, however, by lowering its SG&A costs and reducing its effective tax rate.
For the nine months ended May 31, 2003, operating cash flow at Accenture was $1.08 billion. That's a huge jump from the $547 million the company generated for the same period the previous fiscal year.
"Given the challenging market conditions, our performance in the third quarter was satisfactory," said Joe W. Forehand, Accenture chairman and CEO. "New bookings for the quarter were $5.2 billion, $2.2 billion of which was in consulting." That represents a 6 percent increase over new bookings in consulting in the third quarter of last year.
Reader Comments» Post a comment