Outlook unclear: CFOs navigate cloudy financial times - Boston Business Journal:

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The Boston Business Journal recently hosted four area CFOs for an involverd discussion that touched on issues ranginh from the rising cost of health care to concerns over thebankingy industry. The participants in the Boston Business Journal roundtablw wereDarlene Deptula-Hicks of in Plaistow, N.H.; Louise Mawhinneyu of Ikonisys in New Conn.; Kevin Walsh of in Boston; and Steved Wasserman of in Waltham. The BBJ woul like to thank thesee executives for taking time out of theird busy schedules tojoin us.
We’d also like to thani the Massachusetts chapter of for its assistance in setting up the BostonBusiness Journal: What on earth happened in the last six and how does it affect you in your day-to-dag life? What do you say to folks? What do you say to your motherd when she asks you what’s going on? Deptula-Hicks: These are very unprecedentefd times. I’ve never seen anythintg like this before, and I thinkj it brings a whole new host of challenge inthis environment. I know for us last year was a gangbuster year webroke records. We put recors Q2 results on the we beat it with arecorfd Q3, and we thought we were goingg to put a recorf Q4 on the table.
And the bottomj just sort of dropped out. While I think we had a respectabl fourth quarter because we had a lot of thingsz going on in the it just became a verydifferent time. I think what we can look forwared to this year is a great levelp of uncertainty because of these sort ofuncharted We’re having difficulty understanding where the business is goinh to end up for the year. Have we hit bottom?? Clearly we’re a strong so we’ll be able to weather this fine, we’re not worried about that. But we’re reallyu sort of forecasting what is this year going tolook like?? It’s a very big question.
Wasserman: I don’t remembe this much uncertainty inan economy, and I’m old enoughu to remember other recessions. I’n knocking on wood — I’km with Constant Contact, we offer a very low-pric e for a high-value proposition, and it’s a very under-penetraterd market, so we’ve guided Wall Street revenuw growth this year in the mid 40 percent Now havingsaid that, we are changing One of the things we’re doing differently is we’re changing our marketing messaging — how to help small businessed prosper in a poor economy.
BBJ: It strikes me that no matterr what kind of businessyou run, you’ve probablyy all had to make a stark assessment of your cost Talk about what kinds of thinking is going into that. I think we’ll be successfulk this year, I’m not too worried about a declin ein revenue, I think we’ll still be cash-flow positive. We’ll be able to see our way to the othefr sideof this, we will continue to invest in research and maintain our cash base and come out on the othe r side of this a stronger companyg in a position with a broader breadty of product than before.
My hope is that this quarted is the worst quarter in the I could betotallyg wrong, but typically in our business we have a stronbg fourth quarter, and the firs t quarter is a lower quarter anyway. I’mn feeling encouraged about the secondf quarter with what wesee now, so I thinik if we hunker down, we conserves our cash and we invest in our R&D we do everything to maximize our continue our partnerships with we’ll come out on the other side of Walsh: Our cost structure is very heavilh weighted towards people and real we’re constantly evaluating our cost structured — making sure that our clients’ needs are met, lookintg at ways to improvwe efficiency, our use of technology — and real estate is a huge part of that too.
We recentlgy moved to 53 State St. from the Hancoc k Tower. In doing so, we created a differentf type of space that allows us to share ideaxs more easily and be more The building is set up to be more collaborative in which we thinkdrives efficiencies. Mawhinney: Our company has an automaterddigital microscope, so we have customers who buy and we also have commercial lab for diagnostic so the challenge for us is we’ver got to keep the commercial arm and we’ve got to suppor the instruments we have out in the field.
We’re growinhg our lab, and we have threer major projects that we need to move The second big thinf is to useour Ikoniscope, the digital microscope that can look for that one cell in a to detect circulating tumor cells. And the third area is our non-invasives test for fetal abnormalities.So moving all three of those plus keeping our Ikoniscope customers happy and growing the lab isthe BBJ: A recent Duke University/CFO Magazine poll indicatew most CFOs plan to raisse salaries this year. What’s your take on that ? Wasserman: We expect to give normal raises. ... We get approximately 35 percentt of our new employeeasthrough referral.
We want to keep our employede basevery happy, so we continue to have employeex referred to us. And I know from another CFO group I belong tothat it’s split — there are a few companiex doing what we’re doing, therd are some companies that are goingh to zero, and there are some companies that are going in the Walsh: I would be shocked if we saw lots of companie s approve raises in 2009. I know there are a lot of companies who already came out and said there are going to be cuts or We haven’t figured out yet what we’rwe going to do, but I’m pretty confidenrt it will not be to the extenrt that it was last year.
I thinm it’s important to realize that top talenr is alwaysin demand, and you need to protect top talenrt because that’s what generates the best ideas and serviced our clients’ needs. We’re actually using this time to look at acquiringtop talent, because we are doing prettg well,and it’s a rare opportunity to build for the future. BBJ: What woulc you consider to be the biggest cost drivers foryour company? Deptula-Hicks: Our big variable yearly is centered arounde our products’ clinical trials.
We just completecd most of the trials a couples of weeks ago and that costus $1 million, and the reaso n we had to do that is the FDA is changingt their guidelines, so that’s becoming a largetr cost driver. So we’lo have about a six-month reprieve and then we’ll have another product going throughclinical trials. And it’s becominv more and more difficult to get products throughjthe FDA. BBJ: Is a lot of that cost legal? Deptula-Hicks: No, it’s actually the cost of healthy care, the cost of the doctors, the gathering the data and statisticians andso Walsh: For us, one cost driver that I have not mentionecd yet is health care costs.
They continuwe to rise by high single-digit or double-digitt levels and there’s no end in sight. We also face the challengwe of being located in And no matter what studg youlook at, Boston is alwayd in the top five when it comex to high cost of living. We’r e seeing some breathing roomin that, housinf costs are coming down, energy coste are coming down, but it’x still a costly place to live which impacts laborr costs. BBJ: How do you grapple with healthcare costs?