Greg Dickinson Case

Introduction:

In his article "With a Note of Caution, CFO Expectations Rise" Greg Dickinson presented and discussed information about actions and the thinking of CFO's of the largest companies in North America. Article is based on "CFO Signals survey" conducted quarterly by Deloitte. In the first quarter of 2013, 106 CFO's participated in survey (70% were from publicly traded companies and over 85% were from the companies with the revenues of more than $1B). The main purpose of this survey is to gather and share the information provided by CFO's which outlines their opinions and prognosis in such areas, as: expectations of the company, business environment, company priorities, finance priorities and personal priorities.

Company Expectations and priorities:

In this part of the survey, CFO's offered their views and plans on potential growth of sales and earnings, use of cash and dividends in a slow economy, future hiring and the most worrisome risks their companies facing.

According to the survey, in the first quarter of 2013, CFO's expectations on earnings growth rose from the previous quarter's 10.9% to 12.1%. This increase is above the survey low 8% in third quarter of 2012. Also, it's nice to see that the CFO's expectations not only increasing in U.S., but also in Mexico , 13% compared to 9.2% last quarter, and Canada, 11.8% compared to 9.2%. Financial and technology services showed large gains this quarter, whereas retail, healthcare and manufacturing industries reported declines.

Sales expectations remained somewhat steady (5.6% in the fourth quarter of 2012 and 5.4% in the first quarter of 2012). It makes perfect sense since the retail, manufacturing and healthcare industries showed declines. CFO's expectations for domestic hiring slightly decreased from the previous survey, 0.9% from 1% in the last quarter of 2012. In fact, 28% of CFO's expect cuts on domestic hiring. Not good news for U.S. economy, however both outsourcing and offshore hiring are expected to rise in comparison to 2012. Considering current level of unemployment, this trend would not be helping U.S economy to recover.

CFO's expecting to increase capital spending from 4.5% over the last two quarters to 7.8% this quarter. Most of them said that cash availability is not an issue, however with current state of economy and high uncertainty it is hard to find growth opportunities worth to invest in. Overall CFO's seemed very optimistic on prognosis of all the factors discussed above.

Business Environment

CFO's determined positive and negative factors which will stand in a way of their companies' growth. Positive factors included: 1) state of economies in North America; 2) high demand in specific industries; 3) dynamics of the industry; 3) the state of economy in China; 4) capital availability and its cost. Negative