VideoFor a guy who spent his early days as a number cruncher at manufacturing and energy companies, Thom Weatherford's career sure has gotten sexier of late.
After graduating from the University of Houston with an undergraduate degree in business administration, Weatherford joined Texas Instruments, where he held a variety of positions during an 11-year period. "I ultimately decided to leave TI," explains Weatherford, "because the finance people there were very narrowly focused. All I did in my last position was planning and closing the books. I wanted to learn more about treasury, currencies, and tax."
So Weatherford made a big career move, leaving TI and signing on with energy giant Schlumberger. "That experience allowed me to learn an entirely new industry and the importance of working with financial models," he says.
It wasn't until 1993, however, that Weatherford really changed the direction of his career. At the time, he was offered the CFO job at Logitech, the Swiss maker of keyboards and mice. Weatherford jumped at the chance, even though Logitech was losing money at the time. After getting the struggling company back on track, Weatherford joined Netcom On-line Communication Services Inc., an Internet service provider. "My job was to get a financial model in place and get more fundamentals into a business that was consuming cash like water," he recalls.
Using techniques he picked up during his days in manufacturing, he was able to help Netcom cut its cash burn from more than $100 million a year to almost nothing. "We were able to become the first ISP to have positive operating cash flow in the Internet space, as a result of managing it like a manufacturing operation," he recalls. Two years later, Weatherford joined Business Objects, a French analytics software vendor. "Wall Street was very negative about the company at the time," he notes, but he says he nevertheless believed in the company's technology. "It seemed like the only thing that was missing was the financial side, and I knew I could do that part."
Indeed, Weatherford has given Business Objects a strong financial footing. The company has managed to meet or exceed earnings expectations for 18 consecutive quarters. And despite the recession, revenue increased 19 percent in fiscal 2001, reaching $415.8 million versus $348.9 million in 2000. What's more, the company was also able to win over some 680 new customers in the fourth quarter, including heavyweights like Honda and Allstate Insurance. The share price of Business Objects has almost doubled since September.
Weatherford recently spoke with CFO.com's Jennifer Caplan about the challenges of going from Old Economy manufacturers to high-tech businesses and keeping Wall Street happy through a recession.
You spent 11 years of your career at Texas Instruments. Was that a good training ground for becoming a CFO?
I couldn't have gotten better training. When I joined Texas Instruments, there was a policy of moving people around every 2 years. They were always promoting from within. In 11 years I had about seven different jobs in three different countries in a variety of different divisions. They also had a tendency to throw you in right away, so you really had to learn how to survive very early on in your career. I joined Texas Instruments in production planning, and got into accounting as soon as I got the chance. The production planning experience was good because I learned about the challenges of working within a manufacturing operation, which gave me a very good foundation for my future positions. Throughout the years I have always been able to fall back on my manufacturing experience. Running a manufacturing operation is one of the hardest things to do from an accounting as well as from an operations perspective. It was truly fantastic training.
You joined Business Objects with experience in manufacturing and some knowledge of the Internet. Was it difficult for you to transition into the software space, which can be so technical and fast paced?
I think you are always reluctant to leave a space you really believe in, and I very much believed in the Internet space. But manufacturing and software are not as different as you would think. You still have gross margins, operating expenses, and operating income. When I arrived at Business Objects, license margins were 95 percent. We now make 99 percent license margins because I went to our director of manufacturing and said, "I want to know what makes up the 5 percent cost." I found out we were shipping out tons of documentation around the world, whether the customer needed it or not. So we started cutting back. By doing that we took margins up in less than two years.
From a finance perspective, you have to understand that in the end it's all about fundamentals. There are some differences, of course. In software you don't have long backlogs, for example, like you have in manufacturing. So you just need to make sure that you don't overcommit and that you're really tracking linearity. There are different challenges, but in the end it's really the same.
Although you are with a tech company, you are nevertheless a finance person. How have you been able to educate yourself and keep up with technological developments, not just in terms of Business Objects's products, but also in deciding what technologies should be deployed within your company?
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