Lacking visibility in the corner office

What worries Chief Financial Officers most about their companies? Inability to forecast results is the No. 1 concern internally, according to the CFO Magazine/Duke University Global Business Outlook survey. Results are reported in the January 2009 issue of CFO (online here).

That lack of visibility, of course, makes life hard for investor relations: IR can offer less forward-looking information in the current malaise.

Externally, weak consumer demand and the credit crunch are causing CFOs to lose the most sleep. A majority of 1,275 finance officers polled aren’t even expecting recovery to start at least until the fourth quarter. Some 39% can’t see a recovery beginning until 2010 or later.

Albeit without much faith in their own forecasts, CFOs are predicting an average 8% drop in earnings in 2009.

In response, the finance execs expect to reduce work forces 5% on average this year. They plan to cut capital expenditures more than 10%, marketing and advertising 7%, and IT spending 4%. Specific plans along those lines might provide forward-looking tidbits that management is willing to share – even as the overall earnings outlook seems more elusive.

Characterizing the uncertainties – the lack of visibility – may be more valuable to investors than giving guidance that turns out to be wrong.

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