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Tag: Spin
Big 4 Performance Analysis Will Probably Come as a Huge Shock to CNN
You may remember a little rant we (and others) went on not so long ago about CNN buying what the Big 4 were selling re: growing business in shrinking economy.
Well! The gang over The Big Four Blog have put out a performance analysis (PDF can for download: big4_media_kit.pdf) for the firms’ 2009 revenue and their conclusions tell a different story.
From the Exe ckquote>2009 was a difficult year overall for the Big Four accounting firms: Deloitte, Ernst & Young (E&Y), KPMG and PricewaterhouseCoopers (PwC), as their financial performance was affected by tough external conditions, slow global economic growth, cost-conscious clients and sluggish merger and acquisition activity.
After an extraordinary period of continuous revenue growth from the early 2000s to 2008, combined revenue for the four firms in fiscal 2009 did fall by 7% from fiscal 2008 in US dollar terms. Revenue decreases in US dollar percentage terms ranged from negative 5% for Deloitte to negative 7% each for Ernst & Young and PricewaterhouseCoopers to negative 11% for KPMG.
One of the more interesting tidbits was presented in the chart below:
After a growth in employment of over 10% in 2008, the rate dropped to 2% for 2009 and judging by the firms’ expectation to offer less internships this year we’d expect that trend to continue.
It’s worth noting that even in the rebuilding year, the firms’ combined revenue was $94 billion so no one is starving but, as BFB pointed out, the firms near decade long run of growth has now come to a screeching halt.
With all the new information, CNN might consider a follow-up story. We’d be happy to take a look at it. Or they may just leave it there:
| The Daily Show With Jon Stewart | Mon – Thurs 11p / 10c | |||
| CNN Leaves It There | ||||
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KPMG Global Revenue Drops 11.4%
The wait is over Klynveldians. Your firm’s revenue results are out and — not to put fine a point on it — they’re disappointing.
The press release has the typical spin that we’ve come to expect from the Big 4 bigiwigs as Tim Flynn focuses on the, ‘high growth markets’ and the opportunities that arise out of ‘a markedly changed regulatory environment’ (code for: “Democrats are in power”).
These “opportunities” are noted but the numbers speak for themselves. As Big Four Blog notes, “A drop in revenue was expected, the surprise was the magnitude of the drop, which was higher than other Big4 firms.”
From the press release:
KPMG, the global network of professional service firms providing Audit, Tax and Advisory services, today announced member firm combined revenues totaling US$20.11 billion for the fiscal year ending September 30, 2009, versus US$22.69 billion for the prior fiscal year, representing an 11.4 percent decline in U.S. dollars.
“While overall revenue results for the 2009 fiscal year reflected the global economic downturn, we were pleased that our continued investments in high growth markets resulted in continued growth in those country member firms,” said Timothy P. Flynn, Chairman of KPMG International.
The drop in revenues breaks down like this:
• Audit – $9.95 billion in FY09 versus $10.69 billion in FY08, a 6.9% decline in U.S. dollars.
• Advisory – Revenues of $6.07 billion in FY09, versus $7.27 billion in FY08, a 16.6% decline in U.S. dollars.
• Tax – $4.09 billion in FY09 compared with $4.73 billion in FY08, a 13.4% decline in U.S. dollars.
The numbers certainly speak to the tough year that KPMG professionals have witnessed through many rounds of layoffs and several shake-ups that appear to be part of major restructuring in the U.S.
So now that the 2009 earnings season has come to a close, all the firms can focus on making 2010 less crappy. That should be breeze. We shall see. If you’ve got thoughts on the Radio Station’s year, or want to talk about how psyched you are for 2010, discuss in the comments.
KPMG reports 2009 revenues of US$20.1 billion [Press Release]
See also: KPMG 2009 Revenues of $20 B Drop 11%, Most Among Big Four Firms [The Big Four Blog]
BDO Announces Global Revenues, Reminds Everyone of the Entity Structure
BDO
International Global Coordination B.V. announced their global revenue results today of just a smidge over $5 billion. This represents a drop of 4.5% compared to the firm’s prior fiscal year end of September 30.
Newman:
“Our revenues have been affected by difficult market conditions – particularly in the economies of our largest member firms – and the significant reduction in transaction-based activity. Our results have also been affected by currency movements and, in particular, the weakening of many currencies against the US dollar and the euro. We are therefore extremely pleased that overall revenues in euro have grown and that there is only a modest reduction in overall fees when expressed in US dollars,” said Jeremy Newman, CEO of BDO International. “It is particularly pleasing that at a time when many other accounting networks are showing a decline in fee income that our underlying revenues, excluding the effect of currency movements, have increased by almost 5 percent.”
A little less spin from J. New than other Global Chiefs but still the standard optimism. We can’t wait for his blog post. Hopefully he gets more candid but we’re not holding our breath.
On more of a liability note, we were especially impressed with the firm’s “about” section:
BDO International is a world wide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity in its own country. The network is coordinated by BDO Global Coordination B.V., incorporated in The Netherlands with its statutory seat in Eindhoven (trade register registration number 33205251) and with an office at Boulevard de la Woluwe 60, 1200 Brussels, Belgium, where the International Executive Office is located. BDO is the brand name for the BDO International network and for each of the BDO Member Firms. The combined fee income of all the BDO Member Firms was $5.03 billion in 2009. The global network has 1,138 offices in 110 countries and more than 46,000 people provide advisory services throughout the world.
Of the six sentences in this paragraph, four seem to be meant to remind everyone that the U.S. firm is on the hook for the $521 million owed to Banco Espirito. Any chance the non-U.S. firms are passing around a basket to help the good old US of A? Anybody? Maybe they’ll think about it? It’s the holidays for crissakes.
Anyhoo, we’re just waiting on KPMG for last major firm to give us the BIG NEWS about their 2009. Maybe it drops tomorrow during the bear manufacturing? Stay tuned.
BDO International Network Announces Revenue Results for 2009 [Press Release]
Earlier GC Coverage of Firm Revenue Results:
The Grant Thornton ‘Global Six’ Campaign Has Hit a Snag
PwC Global Revenue Was Down or Flat, Your Choice
E&Y Revenue Results: ‘Flat revenues certainly don’t tell the whole story’
Deloitte Is Super Proud of Their Presence on Linked In
CNN Says that Big 4 Business Is Blowing Up
That’s not necessarily verbatim but they’re definitely buying what the Big 4 bigwigs are selling.
If you saw the asinine CNN piece that came out on Thursday entitled “Accounting grows in shrinking economy“, you know what we mean.
The title itself should cause you to throw up in your mouth. Certainly the author of this gem, Kevin Voigt, isn’t talking about growth in revenues but he still manages to make a case for accounting industry stre trong>just that:
[T]he firms have emerged from the worst with balance sheets that would be enviable to most companies: Ernst & Young and Deloitte finished the 2009 fiscal year with flat growth, while PWC revenues were down 7 percent.
Getting nauseous yet?
Then there’s this:
[T]he Big Four firms continued to add to headcount through the recession. For example, PWC will end the year with 163,000 employees worldwide, an increase of “3 or 4 percent” from last year, Nally said. “There is a core element of what we do that continues regardless of the economy — public companies need audits, tax services need to be provided,” he said.
First, we notice that Dennis Nally conveniently left out that the ‘core element’ of services being provided is being done so with far fewer people. He makes it sound like that if you’re working in the audit or tax practices, your job is safe. We all know that’s not true.
Further, we’ll point out that E&Y did not add to their global headcount. That’s according to E&Y’s own press release for their revenue results.
It’s also interesting to note that the words “layoff” or “reduction in force” are nowhere to be found in the article. Voight manages to sneak it in with some subtlety:
Ernst & Young has kept hiring young college graduates, in part, because it wants to ensure an unbroken pipeline of talent after the crisis, Turley said.
“In a typical year, you would see 15 to 20 percent of our workforce hired away, not by our competitors, but by companies that need financial or tax or other financial talent … that process was curtailed this year because most in the marketplace weren’t hiring,” Turley said.
As a result, Ernst & Young and other Big Four firms have had selective culling of staff in some markets for performance-related issues. “We work in a high performance environment, and for those whom that environment doesn’t fit we’ve encouraged them to leave,” said Quigley of Deloitte.
“Culling of staff”? Interesting choice of words. Then Jim Quigley lies says that Deloittians were “encouraged” to leave the firm. That’s rich. Any former Deloitte people out there that would describe their experience differently?
The article also hints that — because Jim Turley said that typically, ’15 to 20 percent of our workforce hired away’ — the Big 4 had no choice to but to engage in the “selective culling of staff…for performance-related issues.”
To top it all off, Tim Flynn wasn’t even interviewed for this piece. In fact, KPMG is only mentioned ONCE in the whole article but Voight refers to the “Big 4” throughout. From the sounds of it, TF wasn’t in Singapore for the APEC and thus, probably not available (probably caddying). Just as well, if we were T. Flynn, we wouldn’t want our name included in this travesty anyway.
So gives us your thoughts on the latest Big 4 campaigning in the MSM. They make everything sound like it’s business as usual but as the discussion in our Exodus post indicates, the people on the front lines probably have a different opinion.
Accounting grows in shrinking economy [CNN]
Also see: CNN Lies: Accounting Industry Stronger Than Ever, Explosive Even [JDA]
BDO’s UK Managing Partner Has a Strange Definition of ‘Solid’
BDO’s managing partner Simon Michaels is emphatic. Fee income might be down 5% and profits down too, but underlying performance has been “solid”.
“When you look across the international networks, and across domestic firms, that is a pretty solid performance. Our national turnover has seen a modest contraction over the past year but that is purely as a result of lower levels of transactional and other one-off assignments.”
Plus there’s this: “In the end the firm made 10% of partners redundant [i.e. laid off] and around 8% of the UK workforce.”
Still going with solid?
Deloitte Is Super Proud of Their Presence on Linked In
Oh, and they finally released their global revenue numbers.
Deloitte ended the suspense today, issuing their global revenues for fiscal year 2009 and issuing their “annual review”. For the past couple of months, we were speculating about the holdup since they have historically been issued much earlier.
Most of the comments at that time were taking the under on the revenues and they were right, as Deloitte came in at $26.1 billion. This was down 4.9% but the firm kindly reminds everyone that in local currency, there was actually growth of 1%, thankyouverymuch.
This, despite all the charts on Deloitte’s website showing the drop of 4.9%. Jim Quigley, Global CEO, and going with the local currency figures:
“Achieving positive growth in this exceptionally difficult economic environment was the result of close attention to the needs of clients and a strong commitment to professional excellence by our member firm professionals. Despite the tough economy, we remain focused on our vision to be the standard of excellence and will continue to invest in pursuit of this vision”
In addition to JQ’s assessment, an explanation of revenues by functional area continue to refer to growth while the chart shows decreases in revenues when compared to the prior fiscal year:
Consulting was the fastest growing function at 7.3 percent. Reflecting the challenging economy, both audit and tax were relatively flat against the prior year. Financial advisory services decreased by 6.1 percent from the prior year, primarily due to substantially decreased merger and acquisition activity.
On the chart, consulting was shown to only grow 2%, tax decreased by 5.5%, audit by 6.4%, and financial advisory by 13.8%. So, yeah, a little confusing. Not to mention that all of the charts present this information in what appears to be Enron Beezlebub.
Deloitte presents a whole bunch of additional information that is much larger, including how awesome the firm’s social network presence is:
• Over 75,000 members on Linked In
• Over 11,000 fans of their Facebook page
• Over 2,000 followers on their Twitter feed
And since they knew you were wondering, Deloitte uses 2.59 MWh of electricity per person, which amounts to carbon emissions of 1.31 Mt CO2 per person. Again, since this information is in much larger font, we’ll go out on a limb and assume that it positive news.
Seems like the typical spin, so we’ll take it for what it’s worth. Discuss your thoughts on Deloitte’s numbers and what it’s Facebook status might be in the comments.
Mavericks Need Not Apply at Ernst & Young
FINS has a short chat with E&Y’s Director of Experienced Recruiting, Maureen Kelleher, discussing, well, jobs at E&Y.
Highlights that you might enjoy find interesting:
Getting ahead: “It’s about being a team player — to take leadership responsibility but to not be a maverick.”
Salaries: “We’re staying the course, as it were. We have extremely competitive salaries. We reward for performance. Granted, our firm is not immune to the economy, so the proportion of all that is probably not as great as it has been in the past.”
Layoffs: “We’ve been watching our costs, and that’s about as much as I’ll say about that.”
“Staying the course” may simply be another way of saying, “It’s fair“. Also, the “watching costs” response? We feel Ms. Kelleher could have answered better here but maybe Big 4 rhetoric isn’t our strong suit.
Check out the whole interview over at FINS, and feel free to discuss your non-mavericky firm in the comments.
Maureen Kelleher: Ernst & Young [FINS]
Since When Do They Let Accountants on CNBC?
What were these guys really saying? Other than accountants are NOT to be blamed for anything. Discuss. And for crissakes Jim, learn how to tie a Windsor knot.