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

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The Boston Business Journal recentlyy hosted four area CFOs for an involved discussio n that touched on issues ranging from the rising cost of healtuh care to concerns over thebanking industry. The participants in the Bostohn Business Journal roundtable wereDarlene Deptula-Hicks of in Plaistow, Louise Mawhinney of Ikonisys in New Conn.; Kevin Walsh of in Boston; and Stevd Wasserman of in Waltham. The BBJ wouls like to thank these executives for taking time out of theirt busy schedules tojoin us. We’x also like to thank the Massachusetts chapter of for its assistance in setting upthe discussion.
Boston Business Journal: What on earthn happened in the lastsix months, and how does it affecf you in your day-to-day life? What do you say to folks What do you say to your mother when she asks you what’sx going on? Deptula-Hicks: These are very unprecedentee times. I’ve never seen anythiny like this before, and I thinkm it brings a whole new host of challenges in this I know forus particularly, last year was a gangbustee year — we broke We put record Q2 results on the we beat it with a record Q3, and we thought we were goingv to put a record Q4 on the table. And the botton just sort of dropped out.
While I think we had a respectabl e fourth quarter because we had a lot of thingx going on in the it just became a very different I think what we can look forwar to this year is a great level of uncertainty because of these sort ofunchartecd waters. We’re having difficulth understanding where the business is goinfg to end up forthe year. Have we hit bottom ? Clearly we’re a strong company, so we’ll be able to weathe r this fine, we’re not worriesd about that. But we’re really sort of forecastintg what is this year going to looklike It’s a very big question.
I don’t remember this much uncertainthy inan economy, and I’mm old enough to remember other I’m knocking on wood — I’mk with Constant Contact, we offer a very low-pricew for a high-value proposition, and it’s a very under-penetrated so we’ve guided Wall Streety revenue growth this year in the mid 40 percenr range. Now having said that, we are changingh things. One of the things we’re doing differentlhy is we’re changing our marketing messaging — how to help smal businesses prosper in apoor economy.
BBJ: It strikez me that no matter what kind of businesseyou run, you’ve probably all had to make a starjk assessment of your cost structure. Talk about what kindzs of thinking is goinginto Deptula-Hicks: I think we’ll be successfu this year, I’m not too worrierd about a decline in revenue, I thinok we’ll still be cash-flow positive. We’ll be able to see our way to the otherr sideof this, we will continue to investg in research and development, maintain our cash base and come out on the othet side of this a stronger company in a position with a broader breadth of product than My hope is that this quarter is the worsyt quarter in the year.
I could be totallyt wrong, but typically in our businessa we have a strongfourth quarter, and the first quarter is a lower quarter I’m feeling encouraged about the second quarted with what we see now, so I think if we hunkerr down, we conserve our cash and we invest in our R& program, we do everything to maximize our continue our partnerships with we’ll come out on the othefr side of this.
Walsh: Our cost structurd is very heavily weightedf towards people andreal estate, we’re constantly evaluatingh our cost structure — making sure that our needs are met, looking at ways to improvee efficiency, our use of technology — and real estate is a huge part of that too. We recentlt moved to 53 Statew St. from the Hancock In doing so, we created a different type of space that allowsa us to share ideas more easilyu and bemore transparent.
The building is set up to be more collaborativsin nature, which we think drives Mawhinney: Our company has an automated digital microscope, so we have customerxs who buy that, and we also have commercial lab for diagnostic tests, so the challenge for us is we’ve got to keep the commercia arm and we’ve got to support the instruments we have out in the field. We’re growinfg our lab, and we have three majord projects that we need to move The second big thing is to use our the digital microscope that can look for that one cell in a to detect circulating tumor And the third area isour non-invasive test for fetal abnormalities.
Sl moving all three of those forward, plus keepinf our Ikoniscope customers happy and growint the lab is the challenge. BBJ: A recen t Duke University/CFO Magazine poll indicates most CFOs plan to raise salariexsthis year. What’s your take on that Wasserman: We expect to give normal raises. ... We get approximatelyu 35 percent of our new employees through referral. We want to keep our employeed basevery happy, so we continue to have employeexs referred to us.
And I know from anothef CFO group I belong tothat it’s split there are a few companies doingf what we’re doing, there are some companies that are goin g to zero, and there are some companieds that are going in the middle. Walsh: I would be shockedc if we saw lots of companiexs approve raisesin 2009. I know ther are a lot of companies who already came out and said theree are going to be cuts or We haven’t figured out yet what we’re goinvg to do, but I’m pretty confident it will not be to the extent that it was last I think it’s importanr to realize that top talent is always in and you need to protect top talent because that’s what generatesz the best ideas and services our needs.
We’re actually using this time to look at acquiringgtop talent, because we are doing pretty well,anrd it’s a rare opportunity to build for the BBJ: What would you consider to be the biggesft cost drivers for your company? Deptula-Hicks: Our big variabls yearly is centered around our products’ clinical We just completed most of the trials a couple of weekws ago and that cost us $1 million, and the reasobn we had to do that is the FDA is changingg their guidelines, so that’s becoming a larger cost driver. So we’lp have about a six-monthu reprieve and then we’ll have another product going throughclinicapl trials.
And it’s becoming more and more difficult to get productsa throughthe FDA. BBJ: Is a lot of that cost legal?? Deptula-Hicks: No, it’s actually the cost of healtj care, the cost of the doctors, the gathering the data and statisticians andso forth. Walsh: For us, one cost driverd that I have not mentionex yet is healthcare costs. They continue to rise by high single-digi t or double-digit levels and there’s no end in sight.
We also face the challengse of being located in And no matter what study youlook at, Bostoj is always in the top five when it comesz to high cost of We’re seeing some breathin g room in that, housing costs are cominbg down, energy costs are coming down, but it’s stil l a costly place to live whichn impacts labor costs. BBJ: How do you grappls with healthcare costs?