A survey of 100 technology CFOs by consulting company BDO found that the executives are much more confident about their organizations' revenue outlooks and strategy.
Chief financial officers at technology organizations are
much more optimistic about the outlook of their business than they have been in
years past, according to the results of a research report released Feb. 2.
A majority of the CFOs said they expected revenues at their
organizations to go up in 2011 in the survey, according to BDO, an accounting
and consulting organization based out of Chicago. The fourth annual "BDO
Technology Outlook Survey" surveyed 100 CFOs at "leading technology companies"
in January and asked about mergers and acquisitions, initial public offerings,
and company performance.
"The CFOs overall had a great deal of higher sense of
optimism," Aftab Jamil, partner and national leader of the technology and life
sciences practice at BDO, told eWEEK.
After 2009 and 2010 where everyone was "hunkered down" just
trying to weather the storm, the change in attitude was a welcome change,
according to Jamil. While "we are not out of the woods yet," the optimism
indicated there would be more activity and focus on growth in 2011, he said.
A majority of the 77 percent of CFOs expect
revenues to
increase in 2011 by an average of 10.37 percent, said Jamil. It was "great to
see" such a positive outlook, Jamil said, noting that only two percent thought
revenues will go down. The remainder expected revenues to stay about the same,
according to the report.
CFOs have increased sense of confidence in their strategy,
where the business is going, and are willing to execute on various plans and
projects, according to Jamil. CFOs tend to be very conservative and are more
likely to commit to new investments if they see a
potential for growth, rather
than "just making do with what they've got," Jamil said.
About 78 percent of the CFOs said they expect an increase in
mergers and acquisitions activity in the technology sector in 2011. The numbers
are actually pretty similar to 2010, where about 81 percent expected an
increase in
M&A activity. The CFOs also indicated that M&A will be more
likely to be offensive, in that organizations will be looking at acquisitions
as a way to gain market share, increase revenues, or gain technology, Jamil
said. A defensive strategy would mean companies were looking at mergers to just
survive or retain market share, he said.
These executives felt that
software companies and telecommunications organizations were likely to see the most M&A activity in 2011,
according to the report. Hardware companies were expected to see the least,
followed by clean technology and biotechnology.
A majority of the company CFOs had a sense of having better
access to capital even though there was still a lot of economic uncertainty,
Jamil said. The capital could be through financing, venture capital, or IPOs, he
said. While most, at 57 percent, of the executives said they didn't anticipate
looking for new capital in 2011, about 59 percent felt better about the chances
of the company raising funds, according to the report. About 43 percent
indicated they were likely to look for private equity.
Only a third of the CFOs are willing to take on additional
debt as a way to get more cash, Jamil said.
About 68 percent of the survey participants felt there will
be more
technology IPOs in 2011, while 25 percent thought it would remain about
the same, according to the report.
"The stock market is doing well and that always has a
wonderful impact on the psyche," Jamil said.
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