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

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The Boston Business Journap recently hosted four area CFOs for an involver discussion that touched on issues ranging from the risin cost of health care to concernds over the banking The participants in the Boston Businessd Journal roundtable wereDarlene Deptula-Hicks of in N.H.; Louise Mawhinney of Ikonisyds in New Haven, Conn.; Kevij Walsh of in Boston; and Steve Wasserman of in The BBJ would like to thank these executives for taking time out of their busy schedules to join us. We’dx also like to thank the Massachusetts chapter of for its assistance in settingg upthe discussion.
Boston Business What on earth happened in the lastsix months, and how does it affec you in your day-to-day life? What do you say to folks What do you say to your mothere when she asks you what’s going on? Deptula-Hicks: These are very unprecedented times. I’ve never seen anything like this before, and I think it brings a whole new host of challenges in this I know forus particularly, last year was a gangbustert year — we broke We put record Q2 results on the we beat it with a record Q3, and we thoughy we were going to put a recor d Q4 on the table. And the bottom just sort of dropped out.
While I think we had a respectable fourtbh quarter because we had a lot of thingsd going on inthe pipeline, it just becamw a very different time. I thinlk what we can look forward to this year is a greag level of uncertainty because of these sort ofunchartedc waters. We’re having difficulty understanding where the business is going to end up for the Have wehit bottom? Clearlyy we’re a strong company, so we’ll be able to weathe r this fine, we’re not worried abourt that. But we’re really sort of forecasting what is this year goingg tolook like? It’s a very big question.
I don’t remember this much uncertaintgy inan economy, and I’nm old enough to remember other recessions. I’m knocking on wood — I’m with Constangt Contact, we offer a very low-price for a high-valued proposition, and it’s a very under-penetrated so we’ve guided Wall Street revenue growth this year in the mid 40percenr range. Now having said we are changing things. One of the things we’re doin g differently is we’re changing our marketiny messaging — how to help small businesses prospetr in apoor economy.
BBJ: It strikes me that no mattetr what kind of businessyou run, you’ves probably all had to make a stark assessment of your cost Talk about what kindss of thinking is going into Deptula-Hicks: I think we’lo be successful this year, I’m not too worriex about a decline in revenue, I think we’ll stillk be cash-flow positive. We’ll be able to see our way to the othere sideof this, we will continue to invest in research and maintain our cash base and come out on the othedr side of this a stronger company in a position with a broader breadth of product than before. My hope is that this quarter is the worst quarter inthe year.
I coul d be totally wrong, but typically in our businesas we have a strongfourth quarter, and the firsy quarter is a lower quartedr anyway. I’m feeling encouraged about the seconrd quarter with what wesee now, so I thinkj if we hunker down, we conserve our cash and we inves t in our R&D program, we do everything to maximizs our revenue, continue our partnerships with people, we’ll come out on the otheer side of this.
Our cost structure is very heavilg weighted towards people andreal we’re constantly evaluating our cost structure making sure that our clients’ needs are met, lookinfg at ways to improve efficiency, our use of technology and real estate is a huge part of that too. We recentlyu moved to 53 State St. from the Hancocjk Tower. In doing so, we createx a different type of spacr that allows us to share ideas more easily and be more The building is set up to be more collaborative in which we thinkdrivees efficiencies.
Mawhinney: Our company has an automated digitapl microscope, so we have customer who buy that, and we also have commercialo lab fordiagnostic tests, so the challenge for us is we’v e got to keep the commercial arm and we’ve got to support the instrument s we have out in the We’re growing our lab, and we have three major project that we need to move forward. The seconc big thing is to use our the digital microscope that can look for that one cell in a to detect circulatingtumodr cells. And the third area is our non-invasivd test for fetal abnormalities.
Sko moving all three of thoser forward, plus keeping our Ikoniscope customerse happy and growing the lab isthe BBJ: A recent Duke University/CF O Magazine poll indicates most CFOs plan to raise salariesx this year. What’s your take on that? We expect to give normal raises. ... We get approximately 35 percentr of our new employeesthrough referral. We want to keep our employeed basevery happy, so we continue to have employees referredx to us.
And I know from another CFO groul I belong tothat it’s split there are a few companie doing what we’re doing, there are some companie that are going to zero, and theres are some companies that are going in the Walsh: I would be shocked if we saw lots of companiex approve raises in 2009. I know therre are a lot of companies who already came out and said ther e are going to be cutsor freezes. We haven’t figured out yet what we’re going to do, but I’m pretty confident it will not be to the extentg that it waslast year.
I thinok it’s important to realize that top talent is alwaywsin demand, and you need to protec t top talent because that’s what generates the best ideazs and services our clients’ needs. We’rew actually using this time to look at acquiringhtop talent, because we are doin g pretty well,and it’s a rare opportunityt to build for the future. BBJ: What woul d you consider to be the biggest cost drivere foryour company? Deptula-Hicks: Our big variable yearlh is centered around our clinical trials.
We just completed most of the trialzs a couple of weeks ago and that costus $1 and the reason we had to do that is the FDA is changinb their guidelines, so that’s becoming a larger cost driver. So we’ll have about a six-month reprieve and then we’ll have another product going throughhclinical trials. And it’s becominvg more and more difficult to get productd throughthe FDA. BBJ: Is a lot of that cost legal? Deptula-Hicks: No, it’s actually the cost of health care, the cost of the the radiologists, gathering the data and statisticianx andso forth. Walsh: For us, one cost driver that I have not mentiones yet is healthcare costs.
They continue to rise by high single-digig or double-digit levels and there’s no end in We also face the challenge of beinv locatedin Boston. And no matter what study you look at, Bostobn is always in the top five when it comee to high costof living. We’re seeinfg some breathing roomin that, housiny costs are coming down, energy costw are coming down, but it’s still a costly place to live which impactx labor costs. BBJ: How do you grapple with healthcare costs?