Big4 RSS FEEDhttp://www.big4.com/2009-01-06 16:01:482009-01-06 16:01:4812.22.200811:49
KPMG just announced today its 2008 revenues, which have increased 14.5% from US$19.8 billion to US$22.7 billion for the year ending September 30, 2008. In local currency terms growth was only 8.4%, the difference of 6.1% being attributable to the declining US dollar against all major world currencies in this period.

By service, Audit grew to $10.7 billion in 2008 from $9.4 billion in 2007, up 14%; Tax increased to $4.7 billion from $4.0 billion, up a strong 18.3%; and Advisory increased to $7.3 billion from $6.4 billion, up13.0% for the year.

By geography, Americas grew to $7.2 billion in 2008 from $6.6 billion in 2007, up a modest 8.8%; Asia Pacific grew to $3.1 billion from $2.6 billion, up a whopping 21.6%; and Europe, Middle East, Africa increased to $12.4 billion from $10.7 billion, up a solid 16.3%.

While Americas grew relatively modestly, growth outside the US was strong, notably the BRIC countries saw spectacular growth, Brazil was up 39%, Russia saw revenues rise 64.5% India zoomed up 49%, China rose 26% and Africa revenues increased 16.5%. Central and Eastern Europe was up 34.4%, the Commonwealth of Independent States grew 62, Spain posted 29% and Denmark 25%.

In Europe, KPMG in Spain, KPMG in the Netherlands and KPMG in Belgium voted this year to join the KPMG merger in Europe along with U.K., Germany and Switzerland, making KPMG Europe LLP Europe’s largest fully integrated accounting firm.

Despite these great numbers, KPMG was not immune from the credit crisis. Timothy P. Flynn, Chairman, KPMG International, said. “As we witnessed the accelerated impact of the credit crisis in recent months, it became clear that businesses in every region and in every sector are being confronted with unprecedented challenges to maintain liquidity, anticipate fluctuating customer demand and maintain operating performance.”

KPMG’s fiscal year starts on September 30, 2007 and ends September 30, 2008 which coincides exactly with the onset of the global credit crisis in October 2007. Compared to the other Big 4 accounting firms, KPMG captures a full three months more of economic impact in this fiscal year. Its growth is then expectedly smaller than that say of Deloitte which grew 18.6% and E&Y which grew 16.2%.

We’ll blog on comparative Big4 performance shortly.

KPMG, Annual Performance, 2008 Revenue, Growth, BRIC, Timothy Flynn
]]>12.17.20085:11 pm
On KPMG’s home page, we find an interesting prescription for strategic management through these tough times, much like a top-tier consulting firm would provide in their CEO glossies, entitled, “The subtle art of turning round your business in a storm.” The article is a good read, since it has lots of real-life companies which exemplify each action.

We paraphrase here KPMG’s “eight guiding principles for a corporate turnaround.”:

1. What state are you in?
Start with figuring out where you are today with respect to all your stakeholders - customers, suppliers, employees, markets, growth prospects etc. This will provide a clear picture of critical issues which need to be addressed in the short term to keep the organization survive through the turmoil.

2. Do you need your CEO?
Really? This is almost heretic, but perhaps all the business needs is a Chief Restructuring Officer who can lead a team of existing senior and middle managers, and dispense with the CEO. It appears more and more companies are resorting to this type of drastic management structure.

3. Hunt for buried treasure
KPMG calls this the “treasure-in-the-attic approach”, insisting that the company look deep into the balance sheet or hidden assets (customer, market or patents for example) for any sources of undiscovered value. A bonus, but not a life saver.

4. Sort out your priorities
Make a comprehensive and well-thought plan, and manage to a clear strategy. Focus, focus, focus on your top priorities, which need urgent attention in the near term.

5. Who needs to know?
Multilateral flow of information is as critical as cash. KPMG wants everyone to know the bad news truthfully, it’s best you disseminate rather than through rumors.

6. Take back control
Central command is vital in tough times, rein in far-flung divisions and ensure the company operates from the center as an unified entity. But, as KPMG points out, “It’s a short step from pragmatic centralization to meddling micromanagement. And you need people on side: if staff don’t believe in the turnaround, it won’t happen.”

7. Understand your costs
And then cut the right costs, not all across the board. Costs which have no benefits need to go, but you have to stay away from those which adversely affect the core of the business can have disastrous consequences. And having accurate, up-to-date information is of course critical to this exercise.

8. Think the unthinkable
KPMG says, "You need contingency plans….Most companies go bust because they run out of cash. If you’re not proactively managing your situation, you increase the risk that you will go bust."

Managers must shed hope and denial, two enemies of the reality of the current situation.


Finally, KPMG opines on “what not to do when business turns infernal”, closing cash-cows, selling sacred assets, ignoring internal value creation, glorifying immediate cash can lead the business into more trouble.

Our wrap-up conclusion on this is that while this is a good overview of what every company needs to ideally do in this difficult economic environment, the circumstances for each organization are unique and some of these points may be fully applicable. What is on point however is that a rigorous, well-thought plan along these general principles is really needed for each and every economic entity.

For the full article, see http://www.kpmg.com/Global/IssuesAndInsights/ArticlesAndPublications/Pages/subtle-art-business-turnaround.aspx

KPMG, Economic crisis, management, turnaround, restructuring officer, situation
]]>12.16.20084:50 pm

Earlier, we had blogged on how BearingPoint’s stock had fallen below 20 cents a share, clearly others were also taking notice. Just days ago on November 13, 2009, BearingPoint, Inc. received notice from NYSE Regulation, Inc. that the NYSE had decided to suspend BE's common stock from trading prior to market opening on Monday, November 17, 2008. The NYSE based its decision on the "abnormally low" trading price of BE common stock, which closed at just 7 cents on November 12, 2008. Further, BE had previously fallen below the NYSE's continued listing standard for minimum average closing price of $1.00 over a consecutive 30 trading day period and minimum average market capitalization of $100 million over a consecutive 30 trading day period.

BearingPoint is appealing the decision. Nonetheless the stock is out of the NYSE for now and trades as BGRP.PK on the OTC (Over the Counter) exchange as a so-called penny stock on pink sheets. The stock price is not much more than a penny, falling to just 4.5 cents a share on November 24, 2008, and reaching an abysmal low of 2.5 cents on November 18, 2004. With 220 million shares outstanding, the market capitalization of this stock is about $10 million, while its revenue is close to $3.5 billion or $10 million for each day of the calendar year.

Again, we ask, where does this lead, will BearingPoint finally become a private company and be spared of daily market valuations. Really, at this price, even an ESOP could buy out the equity interest.

BearingPoint, Delisting, NYSE, BGRP.PK, Stock Price
]]>11.24.20088:31 pm
During one of the most riveting election campaigns in recent times, President-Elect Barack Obama has achieved a historic landslide victory.

Now comes the tough part. Delivering on his promises in a tough financial environment.

One key issue that Obama embraced was the institution of universal health coverage by reforming the current US health system to expand access and make health care less expensive.

In a comprehensive report, PricewaterhouseCoopers examines what this all means in dealing with how and who will pay for these programs; impact of expanding health insurance coverage; and ensuing strains on the existing health care system.

Here are the important points in this report:

The Obama plan could provide coverage for two-thirds of the uninsured, and lead to a taxpayer annual cost of $75 billion if enacted in 2009. But finding this money under tight budgetary conditions will be a challenge
In Massachusetts, where universal healthcare was made into law provides an excellent example of how this could play out. The state now has the lowest uninsured rate in the country, reversing its position from the most expensive healthcare state in the US
40% of about 30 million Americans who would get access to health insurance would obtain this through their employers. This trends reverses a troublesome movement towards erosion of employer-based coverage. A backdrop to all this are increasing number of 65+ aged baby-boomers.
About one-third of the cost of the Obama plan could come from existing funding for the uninsured, with the balance coming from repealed tax cuts, raising taxes or other constraints in spending.
Managing costs is critical. Without tough limits, pressure from healthcare costs could increase costs rapidly over time and reduce its effectiveness; and consequently its mandate of keeping federal costs sustainable.
PwC posits that the entire health industry can improve care and lower costs through public-private efforts, specifically through five ideas below and some bold ideas that could lead to positive disruptions
Keep people well
Reorder treatment around collaboration
Simplify the system
Make interoperable electronic medical records a reality
Use genes to pick the lock on disease

The report also discusses in detail how the Obama plan impacts employers, providers, insurers and hospitals; and a fascinating read for all those in the healthcare industry and general knowledge for all.

It can be downloaded at http://www.pwc.com/extweb/pwcpublications.nsf/docid/9A205B0B97EB9E50852574FE0014DE06

PricewaterhouseCoopers, Barack Obama, Healthcare, Universal plan, Election promises
]]>11.18.200810:10 pm
KPMG finds the European Union is quickly heading towards a recession. The recently published KPMG Business Outlook Survey, which questions 2,800 service sector firms all across the Union finds that the 12-month outlook for business activity has turned negative. Moreover, activity is expected to decrease on both volume and revenue fronts, and disturbingly, every non-price measure has fallen into negative territory, including new business, employment, profits, capital expenditure and outsourcing.

A silver lining to this dismal outlook is that expectations for inflation have also decreased, along with the precipitous decline in oil prices and commodity price levels since June 2008. But this has little offsetting impact on the larger decline in consumer and business demand.

As further bad news, confidence in the EU service sector economy on business activity outlook over the next year also reduced dramatically in October to a record survey low. This net balance of expected volume of business activity has fallen three times in a row since April 2007 and now stands at -2.9 in October, indicating that more service companies expect activity as also revenue to decline than those anticipating growth.

Along with this negative expectations for activity and revenues and profit pressure, KPMG finds that EU service providers are set to cut workforces over the next twelve months. The net balance fell quickly into negative territory for the first time in October, to -14.4, from +12.2 in April.

According to Andrew Smith, Chief Economist, KPMG, “The extreme downturn in service sector confidence — output, profits and employment are now all expected to fall in the coming year — spells recession for the wider economy as well. The only saving grace is the collapse in inflation expectations, leaving the door open for deeper interest rate cuts in coming months”

While there is raging debate on whether the US is technically in a recession, which requires two consecutive quarters of negative economic growth, this survey shows that EU is also rapidly heading in the same direction with some lag. There was some small hope that EU may have dodged the recession bullet, but this may not be so according to this survey. Now the whole world may be following US’ lead and heading into economic downturn.

KPMG, EU survey, recession, survey
]]>11.11.200811:34 am


Just a few days ago, the Treasury Department of the United States Government announced it had hired two of the Big Four firms, PricewaterhouseCoopers and Ernst & Young to help the government implement the $700 billion bailout program aimed at Wall Street and the economy.

The US government, US Treasury Department and the US Federal Reserve recently unveiled their Troubled Asset Relief Program (TARP) to help inject liquidity and stability into the US banking system. $250 billion of this will be used to buy preferred stock from several large commercial banks and a variety of regional banks.

The Treasury has indicated that it has signed blanket contracts to allow both these firms to perform actions on an as-needed basis to implement the bailout program, with both contracts going to September 30, 2011.

In a statement, Treasury said that the two firms will help the department with accounting and internal control services that will be needed "to administer the complex portfolio of troubled assets the department will purchase, including whole loans and mortgage-backed securities."

PricewaterhouseCoopers will be the main program auditor to monitor the purchase of billions of dollars of preferred bank stock as well as toxic assets from banks. PwC stands to gain $191,000 from this initial order for auditing work.

Ernst & Young will provide general accounting support, and will initially get $492,000 from the Treasury.

Inevitably, the onus of credible and unbiased participants in this entire process falls again on the Big Four firms, to continue their watchdog duties on behalf of investors. In this case, this is perhaps the highest profile auditing work that could be granted to any firm. Investors in this case are taxpayers in the United States and the client is the US government. The whole process will be under extraordinary scrutiny and every step of the audit would need to be rigorously checked for quality. More so, since this is a unique initiative, the auditing circumstances are quite complex. PwC and E&Y have been awarded this prime engagement, but this is not without risk.

We question what happened to KPMG and Deloitte in this process, were they not awarded for some reason, or did they not even choose to participate.

PricewaterhouseCoopers, Ernst And Young, TARP, Auditors
]]>10.26.200810:14 am
KPMG just appointed John B. Harrison to a newly created and critical position in firm management. Harrison 52, will become deputy chairman of KPMG International. He was most recently chairman of KPMG’s Asia Pacific region and co-chairman of the KPMG China and Hong Kong SAR firm with Carlson Tong, 53. Harrison will continue to hold both positions through March 2009, when his terms expire. Harrison joined KPMG London in 1977 with a B.Sc. in Mathematics from Durham University.

Though not clearly stated in KPMG’s announcement, Harrison will presumably report to Timothy P. Flynn, chairman, KPMG International. Michael P. Wareing remains chief executive officer of KPMG International.

We can only conjecture that the Asia-Pacific’s growing importance within the KPMG firm and prospect of their continued strong growth would propel the regional chairman to take a leading role within the KPMG global organization.

KPMG, John Harrison, Deputy Chairman, KPMG International, Asia Pacific
]]>10.14.20088:41 pm
We blogged earlier that BearingPoint stock had touched its all time low of 50 cents a share in September. But that was before the current meltdown in the financial markets, with today’s (October 9, 2008) shocking drop in the Dow of ~ 700 points, BearingPoint’s stock has fallen further amazingly to an even lower all-time low of 20 cents, touching at one point an intra-day low of 17 cents.

The entire company’s market capitalization is now only about $40 million, this for a consulting firm in annual sales in excess of $3 billion.

BearingPoint’s stock price is now less than a pack of Wrigley’s gum.

If there is any value to be created, this may be a time to go private, if of course there is a willing investor and a receptive debt market to absorb the risk and make the dollars available for this transaction.

The bar is so low, but we ask, are there any takers?

BearingPoint, stock price, all-time low
]]>10.09.20085:14 pm
Another Big4 firm reports good performance.

Today, Ernst & Young reported that its worldwide revenues increased to US$24.5 billion for the fiscal year ending 30 June 2008, rising 16.2% in dollar terms and 9.5% in local currency terms from the previous year’s revenue of $21.1 billion. Major factors included
gaining new clients, new services sales and ROI in emerging markets, offset somewhat by “audit efficiencies enabled by the new US internal control standard” (which we would assume are clients automating their processes and relying less on E&Y) and economic slowness in many markets.

In terms of geography, Asia-Pacific grew 34.3% to US$3.3 billion (Japan up 43%, Far East Area up 32% and Oceania Area up 29.0%). EMEIA was up 18.4% to US$11.4 billion and Americas growing 8.9% to US$9.8 billion. In line with other Big four firms, Ernst and Young recorded highest growth in Asian markets and still turned in creditable performance in the USA.

Across service lines, Assurance & Advisory Business Services grew 14.2%, Tax grew 21.2% and Transaction Advisory Service revenues increased 19.6%.

Recently we blogged about PricewaterhouseCoopers increasing revenues by 14% and Deloitte and Touche growing its top line by 17%, so Ernst and Young’s performance is in line with its peers. With this, its probably safe to say that Ernst and Young will retain its third position among Big Four firms, KPMG is yet to report and unless it shows a remarkable increase, it is likely to say in fourth place.

June 30, 2008 does mark almost a year of financial crisis and slowing global economies, and to turn in double digit growth from very large revenue bases shows the clout of the Big Four firms, their global nature, ability to perform despite tough external economic conditions, and crucial role in the global business environment.

Once KPMG results come in a few weeks, we’ll publish our 2008 Annual Big Four Firms Financial Performance Scorecard.


Ernst and Young, 2008 revenues, Big Four, growth
]]>10.07.20082:50 pm

KPMG Holland reported today that its 208 partners had agreed to join KPMG Europe which was established in 2007 and contains the list of British, German, Swiss and Spanish firms. In 2007, KPMG Holland had voted against the merger. But now, the Dutch firm chairman Herman Dijkhuizen cited internationalization, specialization and seamless service as key drivers for this change of heart.

Even with the German and British firms combined, we recall that KPMG had stated that the merged firm would be the largest in Europe and adding the Dutch firm now will only make this behemoth larger. We have not seen similar aggregation among the European units of the other Big Four firms, but soon they may have to react in order to stay global, multi-country, pan-European and competitive.

Our Dutch readers can see the original press release here:
http://www.kpmg.nl/site.asp?id=2036&process_mode=mode_doc&doc_id=46267

Others can get it translated in Google
http://translate.google.com/translate?u=www.kpmg.nl%2Fsite.asp%3Fid%3D2036%26process_mode%3Dmode_doc%26doc_id%3D46267&hl=en&ie=UTF-8&sl=nl&tl=en

KPMG Holland, Merger, Herman Dijkhuizen, KPMG Germany, KPMG Britain, Vote
]]>10.03.20082:24 pm


PricewaterhouseCoopers just released its 2008 revenue figures for the year ending June 30, 2008. Global revenues were US$28.2 billion, increasing at 8% at constant foreign exchange rates and 14% at variable exchange rates, since the US dollar plummeted against foreign currencies during this period. In USD reporting terms, 2008 revenues of $28.2 billion did grow 14% from 2007 revenues of $24.7 billion. With this, PwC remains the top dog among Big Four firms.

Assurance practice reported revenues at US$13.8 billion were up only 3% due to difficult market conditions and settling down after many years of high growth. PwC also pointed to “changing regulatory requirements and the very competitive nature of the assurance market” as a reason for this relative sluggishness.

Tax operations increased 13% to US$7.5 billion due to strong growth on all service offerings. Advisory business were up 14% to US$6.9 billion due to good performances in all major markets, a fast maturing consulting business, and good M&A advisory despite the drooping M&A transactions area.

Combined tax and advisory were 51% of PwC’s global revenues compared with 48% in FY2007 and 44% in FY 2003. With non-assurance businesses now in the majority, we ask a rhetorical question whether the Big Four firms are truly in the public audit business or really global consultancies offering tax, M&A, management advisory with an attached assurance division.

Geographically, Asia revenue was up 21%, Middle East and Africa up 20%, Central and Eastern Europe up 20%, Western Europe was decent at 8% but North America was up only by 2%. Which brings up another rhetorical question – are the Big Four firms are really US-centric, given that North American revenues are only 30% of total revenues and it is the slowest growing region among all.

As we blogged earlier, PwC is implementing a new “global cluster” structure, and said, “The new structure is effective immediately. PwC member firms will continue to be locally owned and managed partnerships, preserving the organisation's entrepreneurial culture and retaining a high level of accountability to stakeholders and regulators.”

Finally, we saw Deloitte grow its 2008 revenue by 17% to $27.0 billion from 2007 revenue of $23.1 billion. Deloitte is only $1.2 billion behind PwC in 2008 whereas it was $1.6 billion behind PwC in 2007, rapidly closing this gap. Consider hypothetically that if Deloitte grew 15% from its 2008 revenue of $27.0 to 2009 revenue of $31.1 billion, and PwC grew 10% from its 2008 revenue of $28.2 to 2009 revenue of $31.0 billion, Deloitte could conceivably become the largest Big Four firm on the planet.

PricewaterhouseCoopers, 2008 revenue, tax and advisory, assurance, cluster structure, growth
]]>10.01.200811:07 am


The Big Four firm Chairmen are key players in the World Economic Forum Annual Meeting of New Champions in Tianjin, China. Deloitte and Touche, Ernst and Young and PricewaterhouseCoopers are key Mentors of the program, while KPMG was noticeably missing.

Here are some excerpts from their interviews. The key takeaway is that these Chairmen while fully acknowledging the financial crisis threatening the world economic order and its tough consequences on business and growth, seem to have a pragmatic positive attitude on a new world order where the BRICs lead with inordinate growth, creating opportunities for continued expansions in financial and business services.


Deloitte and Touche – Jim Quigley

What do you see as being the most significant growth trends for financial services?

Much of the significant growth trends relate to the emerging markets, particularly the BRIC countries of Brazil, Russia, India and China. As businesses in those markets seek to expand, either domestically or globally, they are increasingly looking for financial due diligence, corporate finance, and capital raising advisory services.

The rapidly growing middle class in these emerging markets is also now demanding a wide range of financial services, including consumer banking, insurance products and various investment and wealth management services.

http://www.weforum.org/en/events/AnnualMeetingoftheNewChampions2008/InterviewJimQuigley/index.htm


Ernst and Young – Jim Turley

Entreprenuers can thrive in this tough environment since they are persistent visionaries since they look at the world around them and fulfill a need that they see with a product or service. There are more needs today than ever before and entrepreneurs can do well to persevere and fulfill the needs. Globalization and efficient capital movement around the world leading to world standards. Reverse coupling between Asia and USA seems to be the new order of the day.

http://www.youtube.com/watch?v=Aux9iiUlgKA


PricewaterhouseCoopers – Samuel DiPiazza

Do you support the thesis that the Asian economies have now ‘decoupled’ from that of the US economy?

It is true that the economic volatility and problems experienced in the United States and other developed markets would have, in the past, spelled a global economic downturn. This time around, however, the economic strength of key Asian and other emerging markets—most notably China and India—could at least partially offset the impact of economic slowdowns in the developed world. These markets have enormously robust domestic economies – they’re growing and that’s good for all of us. The world is however a connected place and I don’t believe a complete decoupling will become a reality.

http://www.weforum.org/en/events/AnnualMeetingoftheNewChampions2008/Interview_samueldipiazza/index.htm


Big Four firms, World Economic Forum Annual Meeting of New Champions in Tianjin, China. Deloitte and Touche, Ernst and Young, PRicewaterhouseCoopers
]]>09.28.20087:08 pm

And The Accenture Machine Keeps Rolling On!

Crisis? Slowdown?

What crisis? Where slowdown?

You would not believe your senses on Accenture’s results reported yesterday. Q4-2008 profits of 57 cents grew 34% from 50 cents from prior year quarter and actually beat analysts' expectations by a penny. The company forecasts further growth in the year ahead. According to Accenture, more clients are looking for its consulting and outsourcing services despite a weak economy and terrible financial markets.

Net revenue, or revenue before reimbursements from clients rose to $6.0 billion from $5.1 billion, beating Wall Street estimates by $19 million. Shares were up 2.2% in after hours trading on Thursday, September 25, 2008 and rose a further 5.5% on Friday to $39 per share. ACN’s has been strong at around $40 per share for all of 2008, in spite of the doom and gloom over other parts of the market.

In typical Accenture fashion, CEO William Green said that while financial institutions account for around 20 percent of its overall business, the recent crisis posed opportunities as well as challenges. "Many companies are being forced to reinvent themselves, and seeking Accenture's expertise in helping companies transform into more efficient organizations,” he said.

Not only that, the company is bullish about 2009 as well. It forecast earnings of $2.85 to $2.93 a share, compared with analyst consensus of $2.88. On the sales front, Accenture expects net revenue growth of 9 percent to 12 percent from $23.39 billion in fiscal 2008.

For Q1-2009 (Quarter ending 11/31/2008), it forecast net revenue of $6.15 -$6.35 billion, above Wall Street of $6.13 billion by a good $200 million. Accenture said that new bookings for the fourth quarter were a record $7.67 billion, a sign its strong momentum would continue into 2009. The company raised its annual dividend to 50 cents per share, up 8 cents from the previous year.

As an investor, what’s not to like about this company, unparalleled financial results, strength in a despairing environment, tough management, global franchise, secure balance sheet, opportunity capitalizer and just an overall money machine. We have been commenting all along that this is a fortress stock, and Accenture has not disappointed in delivering superlative performance in an atmosphere where almost every company has sounded alarms and lack of confidence. We just hope that there is nothing here which is not transparent and shows up the company in a bad light.

Accenture (NYSE: ACN), Q4-2008, earnings results, beating analysts
]]>09.26.20082:39 pm


On September 19, 2008 just a week ago, BearingPoint (NYSE: BE) stock hit a new 52 week and all-time low of just 50 cents a share. Based on the 218 shares outstanding, the market capitalization on that day was only $109 million. Add this to about $650 million in debt to come to an enterprise value of $759 million.

These is an astounding stock price. At sales of $3.4 billion, the price to sales ratio is 0.03 or that sales are almost thirty times the market capitalization. Market capitalization per each of the 15,900 employees is only about $7,000 less than an month’s salary for a typical consultant.

BE’s June 2008 2nd quarter actually produced net income of $18 million when analyst were expecting a loss of $18 million, a 200% surprise, which however did nothing to the stock price, down to historic lows today from heady heights of high teens in 2001.

We have asked the question earlier whether BE should continue as a public company, with such low market capitalizations, the case for privatization becomes even stronger. The question is whether investors have the risk appetite and can even find the credit to consummate such a deal.

BearingPoint (NYSE: BE), stock price, 52-week low, 50 cents, market capitalization
]]>09.26.20082:24 pm


Earlier, we had blogged about Nomura of Japan buying the equities and investment banking business of Lehman Brothers Europe for an undisclosed amount. PricewaterhouseCoopers UK were appointed the administrators of this bankrupt firm to assure an orderly disposal.

The Wall Street Journal recently revealed that the purchase was made for a nominal sum of $2, less than a Big Mac or about the change in your wallet. Nomura does take over compensating the employees but excludes the liabilities, so it is protecting financial jobs in the City of London. But what a price to pay!

Now we hear that Nomura will not be buying Lehman’s fixed income business

PricewaterhouseCoopers UK, Lehman Brothers, Nomura, administrators
]]>09.26.20082:22 pm
Here's the Top 10 URL link:

http://www.workingmother.com/web?service=direct/1/ViewArticlePage/dlinkFullArticle&sp=1658&sp=94

Here's a synopsis of what's involved and how companies get into this select list (extracted from the working mother website):

"What's Measured Seven areas are measured and scored: workforce profile, compensation, child care, flexibility, time off and leaves, family-friendly programs and company culture.

This Year's Winners With the help of an independent survey research company, we validated the applications for completeness and tabulated the scores, which then determined the winners.

For this year's 100 Best, we gave particular weight to family-friendly programs, flexibility, leave policies and benefits for part-timers. All applicants receive feedback showing how they compare to other applicants; however, the names of applicants that do not make the list are kept confidential. The company profiles, culled from the applications and interviews with company representatives, reflect 2007 data. Fact checkers verify all the information."

Kudos again to the Big Four firms for actively supporting working mothers, enabling them to balance their busy family lives with their career aspirations, and actively providing creative ways for moms to advance within a framework which often demands full-time attention to career development and firm matters. ]]>09.25.20089:42 am
According to PricewaterhouseCoopers LLP, “….we are absolutely delighted to be able to confirm that we have secured a sale of the investment banking and equities businesses of Lehman Brothers in the UK and Europe. This sale, which is conditional on a number of issues, means the continuing employment of around 2,500 Lehman’s staff, a vast number of whom have been working with us to get this unprecedented deal done.”

While this is good news for Lehman Brothers employees in Europe, and certainly kudos to PwC for orchestrating a complex transaction in barely a week after being appointed administrators, we certainly hope “the sale, which is conditional on a number of issues” does clear all those conditional issues and does get done. As many in the M&A business know, buyers propose a large number of conditions advantageous to their situation, and quite rigorous in insisting on their fulfillment to consummate the deal. The big issue is what potential liabilities are on Lehman’s books and balance sheet, and their unintended consequences which could be driving up the buyer’s risk and eventual ability to close.

Nomura picked up all of Lehman’s Asian operations for just $225 million, but the financial terms of this deal were not available as of the time we went to print.

PricewaterhouseCoopers LLP, joint administrators, Lehman Brothers International Europe, investment banking and equities businesses, Nomura, Japan
]]>09.23.200812:06 pm
FannieMae (NYSE:FNM) and FreddieMac (NYSE:FRE) are now under US government conservatorship
Bear Stearns (NYSE:BSC) was purchased for a pittance by JP Morgan (NYSE:JPM)
Merrill Lynch (NYSE:MER) sold itself to Bank of America (NYSE:BAC)
Lehman Brothers went bankrupt recently (NYSE:LEH)

Till just a while ago, all these were public companies traded on the stock exchange and being regularly audited by none other than the Big Four firms. Now with the loss of these firms, the firms have lost big audit fees (at least as a first order impact), not counting any continuations of audit under US government conservatorship or their buying companies, or eventual work from these events.

From our quick analysis (we believe our numbers are right, but provide no guarantees), Deloitte appears to be the most negatively impacted.

Deloitte loses almost $130 million of audit, tax and advisory fees at 2007 levels due to the change of ownership of:
Merrill Lynch (2007 total fees: $57.1 million, 2006 total fees: $51.9 million)
Bear Stearns (2007 total fees: $20.8 million, 2006 total fees: $18.7 million)
FannieMae (2007 total fees: $49.3 million, 2006 total fees: $42.2 million)

Next comes PricewaterhouseCoopers with a loss of $73 million at 2007 levels due to the change of ownership of:
Freddie Mac (2007 total fees: $73.1 million, 2006 total fees: $46.1 million)

Next comes Ernst and Young with a loss of $30 million at 2007 levels due to the change of ownership of:
Lehman Brothers (2007 total fees: $30.1 million, 2006 total fees: $29.5 million)

Surprisingly, KPMG, which is reputedly strongest in financial services and known to have the largest client roster in this sector has been unaffected as yet.

Total Loss to Big Four Firms: $231 Million Dollars

Though our sympathies are totally with the employees (including likely thousands of Big4 alumni) of the affected firms, who have been affected likely due to no fault of their own, we thought we would point out how deep this crisis has affected the Big Four firms.

Financial crisis, audit fees, Lehman Brothers, Merrill Lynch, Deloitte, Freddie Mac
]]>09.19.20084:44 pm
Entities in administration include Lehman Brothers, the principal UK trading company in the Lehman group, Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd., which are currently the only UK incorporated companies in administration. . Lehman Brothers International (Europe) is the European unit of Lehman Brothers Holdings Inc.

Today’s news suggest that PwC is close to selling at least the bank's asset management and corporate finance units within days. "We are in discussions with potential partners at present and our aim is to complete a deal in the next few days," according to PwC. The disposal of LB’s European real estate interests is likely to take more time, even though PwC had made good progress in identifying the assets involved

According to PwC, "Since appointment on 15 September, despite the complexity of LBUKRE and its trading activities, the Administrators have made considerable progress in identifying what assets are under the control of LBUKRE and have taken steps to ensure that the pace and structure of any disposals optimise the realisations generated for the creditors of LBUKRE. Our review of the LBUKRE portfolio will not be completed for several weeks, but we are gathering all expressions of interest so that we can communicate with interested parties as soon as we are ready".

On the legal side, 20 Linklaters UK partners are advising on the Lehman Brothers UK administration along with 60 associates, reputedly one of the largest senior legal teams involved in a bankruptcy since 2000. Owing to the complexity, Linklaters estimates the legal team will zoom to 200 within months.

Barclays bought at least some part of Lehman’s US operations gaining 10,000 top Lehman employees and a valuable asset at a throwaway price.

The financial crisis appears to be impacting every single financial institution of note and along with it, in a direct manner the Big Four Accounting Firms.

PricewaterhouseCoopers, Lehman Brothers UK, administration, insolvency, bankruptcy, Linklaters
]]>09.19.20083:26 pm
The Wall Street Journal article has to be viewed through subscription but the WebCPA article is at http://www.webcpa.com/article.cfm?articleid=28993&searchTerm=deloitte%20layoff

There is also an extensive write-up on this at the Re:The Auditors blog who confirm this based on the author, Francine McKenna’s phone conversation with Deborah Harrington.
http://www.retheauditors.com/2008/08/deloitte-statement-on-layoffs.html.

According to these sources, "Just like anybody else, we are looking to cut costs," said spokesperson Deborah Harrington. Further in an email statement, "In a move to align its workforce to better reflect business and client needs, Deloitte LLP is taking a number of steps to reduce costs, including adjustments to its workforce levels in the United States. The cost-containment program is taking place across all support functions and client service units. Part of the plan is to align our headcount according to current and projected revenues. Like our competitors, we are affected by a number of economic events, including the overall slowdown in the U.S. and global economies."

If this is true, then Deloitte seems to be succumbing to the economic pressures which seem to have completely bypassed the Big Four firms (see Accenture’s confidence) and Deloitte’s recent whopping 18% revenue growth statement. Also it seems to be at odds with KPMG’s recently announced Global Job Fair, which would point to their attempt to attract employees quickly and cut through any hiring chain delays.

The other Big Four firms have not followed suit as far as we know, but can only imagine that certain practices within the firms must have been affected by economic turmoil (real estate, M&A, financial services, advisory to name a few), and the management may be prudently managing either voluntary or forced attrition in response to slowing client demands for professional services.

Deloitte LLP, layoff, 900 staff, US workforce, Deborah Harrington, attrition
]]>09.12.20089:49 am
Great news for Big Four Alumni! You made the right choice for your career.

Business Week Magazine just came out with its list of “100 Best Places to Launch A Career in 2008.” And all four of the Big Four firms this year are in the top 5 of that list, the only other is the ultra prestigious investment banking firm of Goldman Sachs.

The top five in descending 2008 ranks are:

1. Ernst and Young, 2007 rank of 3 (http://images.businessweek.com/ss/08/09/0904_first_jobs/2.htm)

2. Deloitte and Touche, 2007 rank of 1 (http://images.businessweek.com/ss/08/09/0904_first_jobs/3.htm)

3. PricewaterhouseCoopers, 2007 of 2 (http://images.businessweek.com/ss/08/09/0904_first_jobs/4.htm)

4. Goldman Sachs, 2007 rank of 13

5. KPMG, 2007 rank of 11 (http://images.businessweek.com/ss/08/09/0904_first_jobs/6.htm)

In 2007, three of the Big Four firms were in the top five, but with KPMG having creditably moved up from 11 to 5, they have essentially shut out the competition. The Big4 firms had a total of 12,000 new hires in 2007, and provide them with a salary of $50,000 to $60,000, and a nice starting bonus of around $3,000.

All these firms even beat hotshot Google, which actually dropped from being rank 5 in 2007 to rank 7 in 2008.

Also in the top 100 list is Accenture with 2008 rank of 47, falling precipitously from 2007 rank of 8.

Here’s what Business Week gushed about Ernst and Young, “No one recognizes the importance of perks more than Ernst & Young, where average salaries haven't increased substantially in at least three years. The Big Four firm still attracts more than 3,000 highly sought-after accounting students each year with extensive training and mentoring programs, performance bonuses, and the promise of face time with top executives—including an annual trip to Walt Disney World (DIS) for all U.S.-based interns, where they get to mingle with the powers that be. It's perks like that, along with a recruiting machine in overdrive and near-certain advancement to a supervisor-level position in just two years, that landed Ernst & Young atop BusinessWeek's third annual Best Places to Launch a Career ranking this year, unseating rival Deloitte.”

And more about E&Y, “To improve retention, Ernst & Young in 1999 began doubling its match after four years of service to 3%. Today, it boasts the best five-year retention among Big Four firms: 34%. Although that still leaves a lot to be desired, the savings in recruiting and training expenses are significant. Explains Mary A. Stringfield, E&Y's head of Americas benefits: "Retention was a key factor for designing that match formula."”

And BW provided just a backhanded compliment to banks, “While accounting firms again dominate the top of the list, owing to impressive perks and intense demand, one of the most surprising things about this year's ranking is just how well the investment banks fared.”….and we can only guess what this year’s survey will say about Wall Street.

Congratulations to all the Big Four firms, their efforts to hire, retain and nurture top talent has landed them top slots, making their alumni both proud and pleased to have been part of building such tremendous reputations.

Big Four, Business Week, Best Places to Launch a Career, Top Ranked, Ernst and Young, Deloitte and Touche
]]>09.06.20084:41 pm
We were browsing KPMG’s website and came across the upcoming KPMG World Job Fair, virtually available on the internet from 24 to 26 September 2008, and an interesting event for all Big4 alumni who wish to learn more about KPMG people and career options.

This offers an exciting and unique look into the fairly private world of Big4 firms and recruiting processes. KPMG will run this global fair for a straight 48 hours and offers a variety of way to interact:

At the Exhibition Hall, you can see stands from various countries and functions at KPMG to help you understand better Life at KPMG and its culture, values, and corporate citizenship.

At the Conference Center, you have the opportunity to watch videos and take part in live question & answer sessions.

Finally, in the Networking Lounge, KPMG invites you to really discover what life and work is really about at the firm, by talking live to KPMG staff from all over the world.

In KPMG’s own words, “This is a great chance to quiz KPMG firms' professionals - and find out everything you want to know. Find out first hand why it's such a great place to build your career.” Strong sentiment indeed.

We enjoy such openness at a time when recruitment has become a blackbox and it is difficult to make real contacts with hiring professionals within organizations. More so, the Big4 firms have become so big and bureaucratic that reaching the manager who has hiring needs often means meandering through HR complexities.

If this fair works as good as it sounds, KPMG may have a chance to meet thousands, if not tens of thousands, of interested global applicants and enable them to connect with the right folks within the firm. From another viewpoint, this makes KPMG a net savvy recruiter, allowing it to get to candidates without going through the recruiting pipeline.

Clearly, this is a place where the internet’s initial threat of disintermediation is really working in connecting large groups of people on either side to intimately connect with each other.

On our part, we’ll try to visit the fair and provide our impressions, it’s not as exciting as the DNC or the RNC, but much more relevant to your career we believe.

More details on this fair at http://events.unisfair.com/index.jsp?eid=298&seid=29&code=kpmgflash

KPMG World Job Fair, Virtual recruiting, Alumni connections, Career, Jobs, September 24
]]>09.03.20089:45 am
Starting from the West, the West Cluster includes USA, Canada, Mexico, South and Central America and the Caribbean; Central Cluster includes the UK, Western Europe, Central and Eastern Europe, the Middle East, India, Pakistan, Sri Lanka, Africa , the Channel Islands, Gibraltar, Iceland and Isle of Man; and East Cluster will include Hong Kong, China, Singapore, the South East Asia Peninsula, Australia, New Zealand, Japan, Korea, and the South Pacific countries.

If one were to trifurcate the planet by drawing four North to South imaginary lines, the first passing through New York, the second through London, the third through Sri Lanka, and the fourth through Los Angeles, one would generally land up at PwC’s clusters.

This is not far from other Big4 organizations which typically divide the world into manageable regions along continental lines. But in PwC’s case, the motive appears to be somewhat different in that large structural changes in the firm’s organizational structure is hinted at, but not completely explicated. Reorganization at Big Four firms, as every alum knows, is a constant process - groups are constantly shifted, renamed and realigned and new formations created almost annually.

PwC talks about a new Network Leadership Team of just a few senior partners – so we ask if this change is some reactive or proactive response to higher level power mongering? The “further growth on emerging markets” seems to be a tepid reason, there were little structural impediments in the past which prevented a focus on higher-growing emerging markets….consider the explosions in PwC BRIC firms.

We can only speculate why PwC would reorganize at this point in time, perhaps our readers have more insights they would like to share by adding their comments.

PricewaterhouseCoopers, reorganization, member firms, network, clusters, leadership
]]>08.27.20088:52 am
All this stems from a relationship between E&Y and Mark C. Thompson, during which Thompson was a Board of Directors member of three E&Y audit clients. The SEC did not name the three audit clients by name. E&Y and Thompson collaborated to create a series of audio CDs called The Ernst & Young Thought Leaders Series between October 2002 through early May 2004. Apparently, E&Y paid Thompson over the course of the relationship, $377,500, for co-producing seven completed CDs in five separate audiobooks, and unbeknownst to E&Y, this sum was approximately half of Thompson’s net income at the time.

As we see it, this was a business development effort by Ernst and Young to elevate itself as a thought leader and produce insightful material that would allow it to have “critical leadership issues” discussions with company CEOs which could lead to potential engagements to Ernst and Young. This is a reasonably common practice for professionals service firms to produce thought-provoking interviews or written pieces to establish themselves as thought leaders, with a view to influence key decision makers and gain strategic or tactical projects.

However, it appears that Ernst and Young did not adequately disclose this relationship to companies A, B and C. Moreover, a senior internal E&Y review concluded that this relationship would not impair its independence, and was a “ordinary course of business” matter. On the contrary, the SEC claims that E&Y was not truly independent when it issued its auditing opinion since it had this relationship with Thomson, who was on the Board of Directors of these three affected companies. Further, E&Y did not fully and adequately disclose this relationship to the companies.

By doing so, it violated its auditor independence, since as the rules explicated, “An accountant is not independent if, at any point during the audit and professional engagement period, the accounting firm or any covered person in the firm has any direct or material indirect business relationship with an audit client, or with persons associated with the audit client in a decision-making capacity, such as an audit client’s officers, directors, or substantial stockholders.”

This only highlights the fine line that public auditors have to walk when they engage in any sort of arrangement with any influential party who is connected with their audit clients. Did E&Y adequately address the risk and consequence of such relationships? Did they draw the right conclusion in that it was not an extraordinary relationship? Why should the SEC see it differently? How important is the definition of independence and necessity of disclosure? These are serious questions which perhaps should be considered at the outset, but perhaps never done, since it is not evident that seemingly innocuous events can lead to bad future consequences with regulatory authorities.

This also emphasizes the need for risk management at the highest levels of the Big Four firms of anything that lead to skirmishes with the authorities. The scrutiny of the SEC on the Big Four firms and the glare on auditor independence is just beginning to show in such cases, and likely to get more intense as the years pass. The firms have to quickly get to manage these risks in their course of business.

By piecing events together, the media gathered that Company A was Best Buy Company.

The SEC has a large amount of detail in its pronouncement of August 5, 2008 at http://www.sec.gov/litigation/admin/2008/34-58309.pdf



SEC, Fines, Ernst and Young, Auditor Independence , Mark Thomson, Best Buy, Thought Leaders]]>08.06.200812:48 pm
Accenture recently announced its Accenture Green Technology Suite, which is a comprehensive set of tools focused on helping companies assess its environmental standing, provide recommendations to better manage its carbon footprint through effective IT management and supporting the entire organization’s green agenda.

What does this new toolset do? Here’s what Accenture promises:
o Provides a holistic view across the entire IT organization, including an assessment of the enterprise’s position on a green “maturity spectrum”
o Recommends IT initiatives to proactively address the company’s future carbon footprint
o Calculates impact of specific initiatives in terms of workplace environmental efficiency and data center energy savings


The “Accenture Green Technology Suite” includes:

The Accenture Green Maturity Model – to identify IT environmental efficiency, and recommendations to improve the organization’s overall environmental standing. Based on the responses to 300 questions, the maturity model produces a comprehensive scorecard rating organization on the green maturity spectrum on a 0-5 scale; and further comparing it to peers.

The Data Center Estimator for an assessment of environmental and financial impact of data centers, especially power usage and server effectiveness.

The Workplace Estimator – to help recycling and energy saving policies for personal computers and procuring new equipment with energy efficiency in mind.


Essentially, Accenture believes that IT can help companies better understand their power consumption and environmental footprint, enabling them to take focused actions for environmental improvements and profits. The improvement of IT infrastructure alone can lead to improvement, consider all the electric power absorbed by huge data centers, networks, servers, telecom equipment, printers and PCs in a typical company. This effort leverages Accenture’s might in an area not typically considered an environmental hazard (at least as compared to power plants, chemical plants and factories), but still has scope for improvement. In addition, it allows Accenture to promote its green agenda directly to the CIO and eventually to the CEO, as green initiatives start to take center stage on almost every managing executive’s long-term strategy.

Accenture indicates that the tool has been developed and tested and ready for client rollout, we will have to watch and see how this is embraced by clients, given that the tool’s effectiveness increases almost exponentially when new users join the survey. Also, interesting to watch how professional service firms are finding innovative ways to latch on the ever-growing green phenomenon.

Accenture, green agenda, Green Maturity Model, environment, IT, data centers, power consumption
]]>07.31.200811:46 am
Ernst & Young’s BaroMed survey has recently found that the Euro-Mediterranean zone has good potential for significant growth opportunities for international investors. This zone has 17 countries: France, Portugal, Spain, Italy, Greece, Turkey, Cyprus, Malta, Morocco, Algeria, Tunisia, Libya, Egypt, Jordan, Israel, Lebanon and Syria. This group ranks third among the world’s regions in terms of GDP and among the top three for foreign direct investment (FDI).

"BaroMed 2008" styles itself as the first international survey of its kind, designed to measure the attractiveness of the Euro-Mediterranean zone. Given the proximity of these countries to developed nations of Europe, it is no surprise that they compete directly with Eastern Europe and Asia. A full-third of decision-makers polled said that they had projects planned for the Euro-Mediterranean zone.

Split geographically, countries on the north (France, Spain and Italy) are perennial favorites evidenced by 923 FDI announcements in 2007. But it is the southern countries (Turkey, Morocco and Tunisia) which are strengthening their competitiveness for industrial and logistics-related activities.

Add closeness to Europe, centralized geographic locations, educated workforce, and low cost labor, not to mention the excellent Mediterranean climate would make these countries favored locations for investments and growth.

Right next to the Euro Med zone is MENA (Middle East North Africa), another booming area flush with oil wealth and ready for taking entrepreneurial investments. That’s not to say the BRICs are far behind. The one thing that investors have to avoid is too much alphabet soup conjured by professional firms and investment banks when they look around the globe!

Ernst & Young, BaroMed survey, Euro-Mediterranean zone, MENA (Middle East North Africa), attractiveness, growth
]]>07.24.20084:00 pm
Deloitte Touche Tohmatsu ("Deloitte") just came out with its fiscal year 2008 aggregate member firm performance for year from July 2007 to June 2008. Global revenue increased from US$23.1 billion in FY2007 by 18.6% in U.S. dollars, and 13.0% in local currencies to US$27.4 billion, marking an amazing sixth consecutive year of U.S. dollar double-digit revenue growth from continuing operations. Growth was seen in each and every service line and geographic region delivered strong growth. The global slowdown seemed to have no effect on this tremendous growth performance.

Deloitte increased its headcount by 10% from 150,000 people in 2007 to 165,000 in 2008 (that’s almost 60 net hires each business day in 2007). Deloitte's BRIC firms have grown 90% headcount in the past three years.

By service line, Financial Advisory grew at 26.6% to US$2.4 billion, consulting services at 22.2% to US$6.3 billion; Tax and legal at 20.4% to US$6.0 billion, and Audit at 14.8% to US$12.7 billion.

By region, Asia Pacific led with revenue growth of 30.3% to US$3.2 billion; Europe, the Middle East, and Africa increasing by 22.6% to US$11.3 billion; and CIS up 40.8% percent. In the Americas, revenues were up12.9% to US$13.0 billion, with Latin America and the Caribbean growing at 22.4%.

Deloitte remains confident about continued success because of the strength of its model, which combines local depth and global scale, despite the uncertain economic climate.

Deloitte, results, revenue growth, sixth consecutive year, double digit, Quigley
]]>07.23.200812:09 pm
KPMG's Global M&A Predictor anticipates that the global deal environment will likely deteriorate into the second half of 2008, with both deal value and volume with forward-looking corporate valuations down 10% compared to just 6 months ago. The firm’s predictor shows a decrease in both ‘appetite’ (forward valuations) and ‘capacity’ (estimated net debt to EBITDA) for M&A activity.

KPMG claims to have “accurately called the top” of the M&A market a year ago, and says that “the next 12 months will become increasingly difficult for transactions right across the globe.”

Two key trends seem to be apparent. First, investors are paying less for future earnings, in that the forward-looking Price to Earnings ratio (for acquired companies) has uniformly fallen all over the world, including the recently-hot Asia Pacific and Latin American regions. Globally the PE ratio has decreased 10.3% from 17.0x to 15.3x in the six months to the end of May 2008. Second, investors are finding debt harder to come by to execute highly leveraged deals. With net debt to EBITDA ratios reducing to 0.81 times from 0.93 times indicating, “capacity to drive deals through debt may soon be negatively impacted and deteriorate.”

The latest Predictor, a forward looking index of 1,000 leading companies’ estimated net debt to EBITDA ratios and forward Price Earnings ratios shows that 2008 deal levels and values for the remainder of the year should continue to fall away. This is supported by what is happening in the real M&A world. According to Dealogic, the five months up to the end of May 2008 saw 15,968 deals globally at a value of U.S. $1,421.3 B, compared to 19,784 deals recorded in the second half of 2007 at a value of U.S. $ 2,161.3 B, a drastic drop of 34%, with the bright spot only in Asia Pacific.

Not surprisingly, the credit crunch, rising oil prices, slowing global economy, uncertain outlook and decreased consumer confidence has taken its toll on the M&A market. The days of Mega Mondays when a huge acquisition would be announced seems quite far away. The private equity bubble has also quietened down, and they are finding both a surfeit of deals and a total lack of commercial bank support. Only the strategics seemed to be buying in this environment, and they are making strong longer-term deals, but even that has thinned out. So, KPMG may be more right than wrong, and we’ll just have to wait for all this to clear before some cheer comes back to the M&A market.

KPMG, Global Mergers, Predictor, PE, EBITDA, Mergers, Acquisitions, Slowdown
]]>07.21.20085:03 pm Accenture (NYSE: ACN) has proven its solid business model with investors by producing the best shareholder performance in comparison with its other Big4 siblings, Capgemini (PARIS: CAP.PA) and BearingPoint (NYSE: BE).

Accenture (NYSE: ACN)’s stock price today is $39.07 on the NYSE stock exchange, and has risen 100% over the last five years, 40% over the last two years, and 10% year to date in 2008. This is excellent performance given that the global growth has slowed down considerably and stockmarkets all over the world have been on the downswing since last summer. Just this year, ACN’s stock is up 25% relative to the S&P500, which is down 15% from January to July 2008. Moreover, Accenture recently revealed terrific earnings and seemed to be immune from any client project cancellations or delays.

Capgemini, which trades in Paris, has a current stock price of EUR 36 a share, and has risen 0% over the last five years, 10% down over the last two years, and negative 15% year to date in 2008. Just this year, Capgemini’s stock is pretty much flat relative to the S&P500, both are down 15% from January to July 2008. Capgemini’s results have been solid but unimpressive, its Q1-2008 revenues were down 1.4% from Q1-2007 and the company is looking for 2-5% growth in full year 2008 versus full year 2007.

The problem child in this lot is BearingPoint (NYSE: BE) whose stock has been on a free fall since July 2007, dropping 90% and currently trading at 67 CENTS per share, down from $7 per share in August 2007, just a year ago. Investors seem to have lost total confidence in this stock, the market capitalization is about $140 million on annual sales of $3.2 billion, just a terrible conversion of sales and profits into value. The NYSE disallowed trading of BE stock till the stock reaches $1.10 per share, and there seems to be absolutely no chance that it will happen, absent a total buyout or some large-scale business change, in the near term.

BE’s Chief Financial Officer quit only after a month on the job, and Morningstar is reviewing its fair value, saying "Whereas before we had based our expected value of the firm on three scenarios (severe financial distress, a successful turnaround, and an acquisition), we are likely to base our revised expected value on only two scenarios (severe financial distress and acquisition)."

BearingPoint’s Q1-2008’s gross revenue of $830 million decreased 4.2% from Q1-2007, with net revenue of $672 million basically flat from Q1-2007. Q1-2008 gross profit increased by $21 million or 15.7% to $153 million or 18.4% of gross revenue compared to $132 million and 15.2% of gross revenue in Q1-2007. Total voluntary annualized attrition in Q1-2008 was 26.3% up from 23.7% in Q1-2007. These are not horrible performance numbers, but the stock is beset by other factors, including a lack of confidence from insiders and investors.

Something drastic is needed to restore value to this company.

Accenture (NYSE: ACN), Capgemini (PARIS: CAP.PA), BearingPoint (NYSE: BE), stock performance, Big Four, earnings, sales

]]>07.14.200810:08 am
The recently released 12th annual World Wealth Report co-authored by Capgemini and Merrill Lynch has some amazing findings:

The number of global high net worth individuals (HNWIs, with wealth greater than $1 million) rose 6% in 2007 to 10.1 million, and the number of ultra high net worth individuals (Ultra-HNWIs, with wealth greater than $30 million) increased by 8.8%. For the first time in the history of this report, the average assets held by HNWIs exceeded US$4 million. The combined assets of HNWIs now exceeds $40 trillion!

The largest growth of HNWIs was in the Middle East, Eastern Europe, and Latin America, growing at 15.6%, 14.3% and 12.2% respectively. What drove these increases?: gains in commodity exports coupled with growing international acceptance of emerging financial centers as significant global players.

India led the world in HNWI growth at 22.7%, due to equity market capitalization
growth of 118% and 7.9% real GDP growth. China followed India with 20.3% population growth, due to market capitalization growth of 291% and real GDP growth of 11.4%. Brazil was third, with HNWI growth rate in 2007 of 19.1% driven by robust market capitalization growth of 93% and real GDP growth of 5.1%. Russia rounded out the BRICs with 14.4% population growth.

Compared with this exuberant growth in the BRIC economies, the downturn in the US economy weighed on other mature economies – causing slower GDP growth and weak equity market performances in parts of Europe and Asia – fueled by a cooling housing market, tightened credit availability, and greater volatility and price declines in equity markets.

HNWIs are smart and safe investors too. In 2007, due to stock market turmoils, HNWIs moved to conservative investments. Cash/deposits and fixed income securities accounted for 44% of HNWI financial assets, up 9% from 2006. Fixed income securities saw a 6% increase in asset allocation, accounting for 27% of holdings, up from 21% in 2006.

What is the outlook for HNWIs and global wealth creation. The report states, “Despite heightened uncertainty regarding the near-term global outlook, still-strong fundamentals
in emerging markets are likely to sustain high levels of growth. …the global economy has two distinctive obstacles to overcome: inhibitors to growth in mature markets and high risks of inflation in emerging markets. …however, global HNWI wealth will
grow to US$59.1 trillion by 2012, advancing at a rate of 7.7% per year.”

Consider that from January 2008 to July 2008, poor stock market performance
will likely put a dent in HNWI wealth:

Indian stock market is down 30%
Chinese market is down 45%
Brazilian market is generally flat
Russian market is down 15%
US market is down nearly 15%
European markets are down around 25%

See the full study at:

http://www.capgemini.com/m/en/n/pdf_Merrill_Lynch_and_Capgemini_Release_12th_Annual_World_Wealth_Report.pdf

High Net Worth, Capgemini, Merrill Lynch, India, $40.7 Trillion, Wealth Report
]]>07.10.20089:16 pm
We have completely revamped and redesigned our site, focused totally on our members!

This is a major change from our previously static site. We have tons of Web2.0 capabilities, new and fresh content, and a sleek look and feel.

We have been the only site fully dedicated to the Big Four alumni community for over seven years. This launch allows us to actively foster a vibrant social network and enable inter-alumni connectivity.

Alumni, you can create your own personal profile, lead groups, invite friends, start your blog, add to a wiki, search jobs and much more.

Recruiter functionalities have also been enhanced, and there's more opportunities to advertise.

We invite you to fully explore all the new site offers. Join today and tell your alumni friends.

We'll be chatting with you through this blog, and welome your comments.

Best,

The Big4 Team]]>06.03.200812:47 pm