Comments on: Anatomy of HP’s Earnings Surprise

By: Neil Henry

Neil Henry — Thu, 10 May 2007 21:31:52 +0000

I’m not exactly sure which point you are trying to make. Is it this? The U.S. seems to be in the early stages of outsourcing capital formation to markets who have a less archaic – more rational approach to financial accountability. The London market requires a more thorough review of liquidity and systems — every six months. This would be an attractive option for many growth companies. I do not know the rules in Singapore but wouldn’t it be great if they involved caneing C-level officers who make misrepresentations?

By: Arun

Arun — Thu, 10 May 2007 03:53:42 +0000

Kevin,
The examples of Google or eBay are not an apples to apples comparison with enterprise systems. Don’t forget that in the case of corporates, there have been various systems that have been built at various points in time (as against a Google which has the benifit of poring over data which has a single interface – the WWW). It needs no mention that in most large corporations, many of their mission critical systems still run on IBM mainframes. So, you just have so much stuff residing in various islands running disparate technologies ranging from legacy to cutting edge that getting a single point of view for all that data is not easy. It takes time and effort to collate all that, verify, reconcile, make adjustments and release it into public. Also, a lot of the stuff like verifying tax computations, reconciling of statements, adjustments if any etc are still done manually. And with the likes of SEC breathing down your neck, you surely don’t want to be goofing up on anything. Cos would rather adopt a “better safe than sorry” approach and take a day more rather than releasing financial information in a hurry and come out later and say “oops, sorry but there was an error..”. Just presenting the realities from the other side of the fence.

By: Kevin Kelleher

Kevin Kelleher — Thu, 10 May 2007 01:03:26 +0000

Arun, you clearly have a lot more experience than I do in assembling all the data for a financial report, so I may be completely off here. But there are too many examples of companies that have used technology to organize data that on the face of it seemed impossible to organize: Google's search algorithms come to mind, as do Bloomberg's stock and bond analysis, and eBay's auctions. All of them take thousands if not millions of data points and keep them fresh and relevant in real time.

I would be surprised if there were no technological solution to financial metrics. To Jesse's point, the task is only as difficult as the company wants it to be. Yet I also think that the smarter companies must already be doing something like this already, monitoring their internal metrics on a daily basis, if not a real-time basis. Why can't they do the same for their financial condition?

By: Jesse Kopelman

Jesse Kopelman — Wed, 09 May 2007 19:50:17 +0000

Arun, you speak from reality which is good, but you miss the idea that companies report as often as they are forced to. If they only had to report once a year, their systems would be even worse. If on the other hand they were forced to keep open books, they would upgrade their systems and personnel accordingly. If public companies were forced to keep open books, a lot of this nonsense by the likes of Nortel and others would be avoided. Yes, it would cost individual companies a great deal in the short term, but would actually save them money in the long-term and meanwhile inject billions into the greater economy.

By: Arun

Arun — Wed, 09 May 2007 06:30:19 +0000

mystiq_elephant, All I can say is that you are expecting Utopia here. I have worked as an IT consultant in the past, and trust me, when you saw some of the systems in even the most reputed companies, you'd be shocked. Forget accounting systems, which cos anyway brush aside as secondary (or maybe even tertiary). Even such primary data as customer accounts, billing information, employee data etc, would all be scattered all over the place. In one company that I worked with, some purchase managers were actually maintaining their own personal excel files for some purchasing decisions they were in charge of! They felt that the current MIS they were using was too cumbersome and lacking on certain features for them to be using. Having a single view of the entire organization at any point in time is the holy grail for every CIO, but the fact is, we are not anywhere near that currently.

By: mystiq_elephant

mystiq_elephant — Wed, 09 May 2007 05:55:48 +0000

I do not understand this that one of THE largest company takes days to declare quarterly result? Why cant all the companies at least the ones which claims to computerize other companies declare the result very next day when quarter ends? So for Q1 results should be out on 1st April! If they cant do this that means that they are not fully digital or they are cooking numbers or preparing speeches to glorify their numbers irrespective of its direction!

By: Arun

Arun — Wed, 09 May 2007 05:18:10 +0000

Kevin, I really don’t get the point you are trying to make when you say “…companies still adhere to the decades-old practice of announcing financials once a quarter”. Are you suggesting that companies should be releasing financial statements more often? If so, I’m not sure you realize what kind of efforts it takes for MOST cos to consolidate their financial information from various MIS systems they run, have them validated internally and release them in a presentable format. In my previous workplace, I used to be located within the finance and accounting dept(though thankfully I didn’t work in their team), and boy did they dread those days when they were releasing the quarterly results. Late nights and working weekends were the norm and those folks used to breathe a huge sigh of relief after the release of results.
Of course, some of this may be attributable to some bad MIS systems and internal processes in this particular co, but then, how many cos have their processes in place anyway?

By: Kevin Kelleher

Kevin Kelleher — Wed, 09 May 2007 03:32:07 +0000

RT: Yes, the last thing H-P needs is another run-in with regulators. This kind of thing isn't that unusual, I mostly found it amusing that it wouldn't in any way hinder the usual quarterly kabuki show that surrounds earnings reports.

By: RandomThoughts

RandomThoughts — Wed, 09 May 2007 02:40:48 +0000

Kevin, HP had it on good authority (on tape actually) that a reporter got ahold of the numbers and was going to press, thats why they rushed out the numbers.

Just joking (maybe.)

Companies roll out their numbers as they have in the past in part because the rules of the market require it.