A Winter of Discontent?
There were some other nuggets in this call. BearingPoint (BE) has retained the restructuring firm AlixPartners. Moreover, BE is replacing its CFO with an AlixPartners person. Again, we quote from the earnings announcement:
“The Company has also appointed AlixPartners managing director Kenneth A. Hiltz as BearingPoint's chief financial officer effective November 11, 2008. Hiltz will replace BearingPoint interim chief financial officer, Eddie Munson, who will continue to serve on BearingPoint's Board of Directors and resume his duties as a member of the Audit Committee of the Board of Directors.”
This CFO appointment is really noteworthy as it marks the seventh CFO the company has had since 2003. I’m not sure if this is a record in publicly traded firms but it has to be close to one. A few months ago, I wrote about BE appointing its sixth CFO. I knew this was probably a short-term fix but BE needs a strong transactional CFO now.
After reading this earnings recap and the writeups by Wachovia and others, I conclude that BE:
- will be sold in whole or parts
- has issues with its shares being traded on the NYSE
- has material debt obligations that must be refinanced soon
- has attrition issues (see prior post)
AlixPartners was a good call for BE to make and this situation is right up their alley. Service firms, though, are tougher to turn around as they are people and reputation based. They lack the physical plant & equipment that a manufacturer may have and they rarely own any great intellectual property (e.g., patents) that other firms would covet.
Good luck to Ed Harbach and the BE team. This is going to be a really interesting Winter for BE.