CategoryCFO

Cookin’ Apple Strudel with Some Cinnamon

apple-ceo-tim-cook-has-dataApple Inc. recently reported its first-ever revenue decline in 13 years. The stock price of Apple has declined by about 30% over the past 12 months. The high flying stock was trading at a high of $135 around May of last year but today it trades around $95. The billionaire investor Carl Icahn announced last week that he had sold his entire stake in Apple citing China’s economic slowdown. He also worries that the government could make it very difficult for Apple to conduct business.

Some financial gurus disagree with the market’s negative assessment of Apple and the company’s future prospects. The Sage from Omaha, the Financial Guru Warren Buffet, does not share the market’s adverse outlooks on Apple. Buffett’s Berkshire Hathaway Inc. declared on May 16 that it had invested $1 billion in Apple Inc. stock earlier this year. Apple stock went up the same day by about 4% which created value of more than $18 billion.

China

Among various Apple products, the iPhone business is the prime driver of Apple’s profitability and global growth. Apple iPhones account for almost two-thirds of its global revenues. China plays a crucial role in propelling Apple’s business. Following the U.S., China is Apple’s second-largest market in the world. Tim Cook, the CEO of Apple, has visited China 8 times since taking up the reigns of the company.

Many investors have serious doubts whether China can contribute towards Apple’s growth. With a slowing Chinese economy, phone sales have declined in China which is a key reason for Apple’s deceleration in revenues. To confront the decay in revenues, Mr. Cook visited China earlier this month and met with senior government and Communist Party leaders. Apple also announced that it would invest $1bn in Chinese ride-hailing app Didi Chuxing to better understand the Chinese market.

Is the China commentary likely to lead to “one bad apple?” Carl Icahn seems to believe so.

Cookin’ With Spices

The solution for Apple is to replicate the Chinese success story with another country with comparable population and one that is hungry for smartphones. Low and behold, Cook landed in India this week just in time for a monsoon wedding. Mr. Cook is hobnobbing with the Indian Prime Minister, meeting with key industrialists, and boogying with the Bollywood starlets. Mr. Cook is cookin’ Apple strudel with a hint of cinnamon!

India accounts for only 1% of iPhone sales. Why? The answer is simple. India’s market is dominated by phones under $75, while Apple’s models start at around $500. As a price sensitive market, it is not surprising that Apple with its expensive iPhones has been unable to make a dent on the smartphone market in India. Apple is now aiming to grab the Indian smartphone market share and resurrect its growth story.

Bilateral Trade  

Apple has announced major investment in India. It plans to set up the first development Centre in India in Hyderabad. Apple also announced a “design and development accelerator” in Bangalore. Although, Apple is expected to continue to have its manufacture hub in China, the company had announced last year that it plans to invest $5bn in India to make Apple devices.

But what does Apple want in return for its massive investments in India? According to the Economist, Mr. Cook is hoping that the Indian government will allow Apple to sell its refurbished phones in India, which has the dual advantage of finding an outlet for its used phones and also meet the lower price barrier of smartphones in India.

Future of Apple stock?

Hard to say, but winners like Apple have a way of figuring out how to win even when the odds are stacked against them. They defy all odds, which is why we call them winners.

It is safe to ride the apple wave with the King of Omaha.

New York, May 20, 2016; 12.12P

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Accounting firms projected to increase audit fees

 

Aloke GhoshAccording to Bloomsbury Professional, the threat of corporate cost cutting and overarching concerns that clients would be unwilling to accept fee increases had previously discouraged accounting firms firms to increase audit fees. However, according to a recent study by Bloomsbury Professional, that pattern appears to be changing. The growing confidence in the economy has lead many accounting firms to declare that they intend to increase the fees charged for audit services.

– See more at: http://economia.icaew.com/news/may-2015/accountancy-firms-to-increase-fees


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India Execs Tops U.S. As World’s Most Optimistic CFOs

India Execs Tops U.S. As World’s Most Optimistic CFOs

Aloke GhoshWhere are corporate financial executives most optimistic? Hint, it’s not Russia. It’s not France. The eighth annual American Express/CFO Research And Global Spending Monitor shows CFOs are most optimistic in India, followed by the U.S. and, believe it or not, European problem child Spain.

More than two-thirds of financial executives in Asia and Australia predict expansion in their local economies this year. But Indian CFOs are far and away the most optimistic, with 94% expecting great things from the economic policies of new Prime Minister Narendra Modi. That’s up from 86% in 2014 and 78% in 2013. On the flip side, China’s confidence dropped significantly since 2013 to 78% from 94%. Read the full story.

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Why CFOs Need to Care About Accounting & More News

Why CFOs Need to Care About Accounting

Aloke GhoshThe Securities and Exchange Commission is on a mission — gunning for instances of accounting fraud. For the first time since 2007, the SEC’s enforcement actions against companies alleged to have cooked the books is higher than the previous year, up 46% to 99 enforcement actions.

This year’s enforcement actions could be even higher, given the release of the first cases by a new SEC task force tasked with ferreting out financial reporting misconduct. If caught within the commission’s crosshairs, the sanctions are severe — tens of millions of dollars in penalties plus the ignominy of public revelations on business prospects. Read the full story.

IIA Merges with Auditing Roundtable

The Institute of Internal Auditors is merging with the Auditing Roundtable to create a new Environmental, Health, and Safety Audit Center that will serve environmental, health and safety auditors around the world, starting in 2016.  Read the full story.

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SEC Demands Money from Tech CFOs for Accounting Fraud + Congress Should Not Undo Progress on Financial Data Reform

SEC Claws Back Money from Tech CFOs for Accounting Fraud

Aloke Ghosh - SEC Claws Back Money from Tech CFOs for Accounting FraudIn a settlement with the Securities and Exchange Commission, two former CFOs of a Silicon Valley technology company agreed to return nearly a half-million dollars in bonuses and stock sale profits received while the company was allegedly engaged in accounting fraud. Read the full story.

Congress Should Not Undo Progress on Financial Data Reform

Financial statements submitted to the U.S. Securities and Exchange Commission (SEC) are used by regulators and investors alike to assess risk and detect fraud, and are an important tool in promoting corporate transparency. In 2009, the SEC issued rules requiring public companies to submit financial statement information in the machine-readable eXtensible Business Reporting Language (XBRL) data format, as opposed to traditional, text-based formats like PDF or HTML. This decision had the potential to increase the speed, accuracy and utility of this data. However, company submissions were often rife with errors, frustrating investors and regulators who were unable to perform reliable, automated analysis of this information, causing some to see the practice as wasteful and unnecessary.

In response to these shortcomings, Rep. Michael Fitzpatrick (R-Pa.) introduced the Promoting Job Creation and Reducing Small Business Burdens Act in January 2015. The legislation would, among other things, exempt small companies from the XBRL reporting requirement. Read the full story.

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Finance and Accounting Skills Gap Vexes CFOs + Latin American Corporate Finance

Finance and Accounting Skills Gap Vexes CFOs

Aloke Ghosh While CFOs generally say on the record that they have no problem finding young accounting and finance talent, research suggests that such assertions are less than candid.

Indeed, a shortage of top-quality, entry-level employees in the field is worsening as companies raise the bar for the skills they require from newbies, largely because of today’s advanced information systems and complex data-analytics tools. Read the full story.

Latin American Corporate Finance: Is There a Dark Corner?

Since last year there has been much talk of possible financial stress stemming from increased debt leverage in non-financial corporates of emerging markets economies. A recent study has brought to light some key evidence on the Latin American case (Bastos et al, 2015). Read the full story.

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CFOs reveal 2020 objectives + Auditing Passion Is the Goal of Deloitte’s New CEO

CFOs reveal 2020 objectives

Aloke Ghosh BlogA new Ernst & Young survey of insurance CFOs has revealed that insurers are looking to place a greater focus on data management and analytic capabilities to spur growth in the next five years.

The 2014 Global Insurance CFO Survey reveals the top priorities for some of the top priorities for insurers with 66% of respondents saying that achieving growth, expanding into new markets and expanding through merger and acquisition activity was one of the top three priorities to 2020. Read the full story.

Auditing Passion Is the Goal of Deloitte’s New CEO

Cathy Engelbert, incoming chief executive officer at Deloitte, talks about nurturing and developing talent in the audit and accounting industry and her focus for the company. She speaks on “Bloomberg Surveillance.” Watch the video.

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FASB Likely to Weigh Proposal To Defer New Revenue Rules + CFOs Weigh In on Obama’s Corporate Tax Plan

FASB Likely to Weigh Proposal To Defer New Revenue Rules

Aloke GhoshFinancial Accounting Standards Board plans to decide early in the second quarter whether to propose a delay in the Jan. 1, 2017 effective date by which companies have to shift to new, far-reaching standards on revenue recognition.

A number of U.S. companies, particularly telecom and technology companies, have sought a deferral of the rules, issued jointly by FASB and the International Accounting Standards Board last spring. The companies have said that applying the new standards would entail burdensome systems and other changes that would require more time. Read the full story.

Obama’s Corporate Tax Plan? CFOs Weigh In

President Barack Obama’s proposed 2016 budget calls for a one-time 14% tax on companies’ overseas earnings. Future foreign profits would incur a 19% tax, lower than the current 35% rate. Finance chiefs with overseas operations will have to adjust their balance sheets should the budget be approved with this provision in its current form.

CFO Journal is talking to finance executives today about the proposed budget and, if passed, the implications it could have for their companies going forward. Read the full story.

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Investors Pour Into Vanguard, Eschewing Stock Pickers + The Future of the CFO

Investors Pour Into Vanguard, Eschewing Stock Pickers

The Future of the CFO | Professor Al GhoshInvestors are pouring money into Vanguard Group, the epitome of the hands-off approach to investing, flocking to funds that track market indexes and aren’t run by stock pickers or star managers.

The inflow has pushed the mutual-fund giant to almost $3 trillion in assets under management for the first time. Read the full article.

The Future of the CFO

The title of chief financial officer may be a bit of a misnomer in the modern enterprise. For one thing, finance only begins to describe what the C-suite, shareholders and the rest of the business expects of a finance chief. CFOs are expected to play a more strategic role in the C-suite at the same time that technology and globalization are adding layers of complexity—and overwhelming opportunity—to the corporate finance function in the Asia-Pacific region in particular. Perhaps chief technology evangelizer, chief strategic engineer or chief operations partner should share the billing with the finance title. CFOs today are expected to fill all of these roles.

To gauge these expectations, Forbes Insights and KPMG surveyed 178 chief executives, business owners and chairmen of large companies to understand their changing views. The survey spanned 13 countries and territories in the Asia-Pacific region. CEOs from ANZ Australia, Pactera, Minor Hotel Group and other companies in the region also shared their views during in-depth one-on-one interviews. Read the full article.

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CFOs Project Strong Economy in 2015 + Asia Pacific CEOs Say Role of CFO Increasingly Important

Aloke Ghosh BlogCFOs Project Strong Economy in 2015

The nation’s chief financial officers anticipate the U.S. economy will be in good shape in 2015, with earnings at their companies rising a robust 9 percent and hiring on the upswing as well.

The latest survey of CFOs conducted by Duke University and CFO Magazine finds that CFOs expect hiring of full-time workers by the U.S. companies will rise by about 3 percent over the next 12 months, which is  double the hiring outlook of CFOs surveyed a year earlier. Read the full article.

Asia Pacific CEOs Say Role of CFO Increasingly Important

Chief executive officers in the Asia Pacific are demanding more from their finance chiefs but many are concerned their CFOs aren’t stepping up to the challenge, according to a survey released Tuesday.

Nearly three-quarters of CEOs said they expected the CFOs role to become more important over the next three years, but about a third said their CFOs do not understand, or help them address issues facing their companies, according to a survey for KPMG’s Asia Pacific branch. Read the full article.

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