2009 Earnings: Some Tips From Two Big Brokers

We’ve already seen a scattering of 2009 interim results from some of the small listed investment companies, while a lengthening line of companies have lowered their interim earnings guidance in the first weeks of the New Year.

Now the local interim earnings season starts this coming week in a fairly low key way. It won’t be as dire as the US where forecasts have shifted lower with each week.

Analysts at both Citigroup and Goldman Sachs JBWere have taken a stab at some of the themes and what to look for in what will be the most important reporting season for some time.

Citi analysts looked at some of the themes for 2009, as did GSJBW analysts, who then linked them to the about to stat reporting season.

Citi analysts amusingly talked about ‘despair’ being ahead of us. After the past year, I’d say despair has been with us for a awful long time.

Citi analysts said they saw the key themes of 209 as being “timing the turn (in the market overall and in banks and industrial cyclicals in particular); economic momentum (especially the second derivative); credit spreads; earnings and dividend pressure; over- and under-owned stocks; re-regulation risk (especially financial and environmental); the housing cycle dilemma; the outlook for style investing (size, momentum, fundamental); and we contemplate the possibility of a sharebuying panic emerging late in the year.

The Despair Stage Could Still Lie Ahead — If sharemarkets “rise on worry, peak in euphoria, fall on hope and bottom out in despair”, we believe that the “despair” stage still lies before us – potentially in the June or September quarters.

Consensus is still worryingly sanguine.

We expect major index swings through the year – our central case is for an indecisive battle between poor momentum and good value.

Against that backdrop, our S&P/ASX 200 year end target of 4,500 for year-end 2009 requires the year to finish on an upward zig, not a downward zag.

Second Derivative Crucial said: For the economy and profits, the path is likely to be downward all year. More interesting is whether the rate of deterioration accelerates or ameliorates.

We are confident enough of good value to be buying the dips in 2009, but wary enough of poor momentum to be selling rallies.

Goldman Sachs JBWere said the ratio of stocks our analysts believe which have downside risk to earnings this reporting season “outnumber the upside risk by 7.8 to 1 (only 1.4:1 this time last year) and highlights the pervasive negative sentiment now across the market.

“The percentage of companies that we expect to provide no guidance this reporting season has increased from 40% this time last year to over 50%, highlighting the limited earnings visibility in the current environment.”

“This highlights the negative sentiment (and no doubt the reality) which is currently pervasive across the market”.

“The stocks which our analysts believe have upside earnings risk during this reporting season include:

- AIX, ANZ, AUB, GNC, IRE, NUF, TOL, WBC, WPL (of these ANZ, NAB, WBC and GNC have September balance dates and will not be reporting till late April/May).

- Of these stocks onlyAUB, IRE have recently experienced positive consensus earnings revisions.

Stocks which our analysts believe have downside earnings risk and where recent consensus earnings revisions have exceeded -20% are: AAC, WSA, AXM, BBI, MGX, TIM, PNA, ABY, MRE, AVG, CEU, IGO, PLA, TEN, IPL, NFK, FKP, SEV, HVN.”

Goldman Sachs said the “Key themes investors will be focusing on include:

1. Balance sheet/Refinancing Risk
2. Asset Impairments/Write downs
3. Dividends
4. Currency/Oil price impact
5. Revenues.

Balance sheet/Refinancing risk – with tight credit markets continuing to be a major focus of the market, investors will be closely watching balance sheet strength and the potential requirement for companies to deleverage.

We also expect that companies might take the opportunity to raise equity during this reporting period having provided the market with their most recent trading numbers, an updated balance sheet and potentially some comments on the trading outlook.

Asset Impairments/Write downs – given the sharp pull back experienced in the market over the last 12 months we expect companies will be examining the carrying values of recent acquisitions intangibles/goodwill).

While the majority of companies will be reporting interim results during this reporting period and therefore potentially delaying any asset impairment until the June year end, it could well feature over the next 4-5 weeks.

In times of poor results we also expect companies to take the opportunity to announce restructuring programs/costs (if the market is expecting the worst, why disappoint?).

We expect companies would treat any restructuring charges as “one off” and to strip them out. We remain cautious on this treatment given the potential for restructuring to be an ongoing feature for the next 2-3 reporting periods.

Dividends – another key focus for investors will be dividends and their sustainability.

Investors are currently pricing the ASX300 Industrials on a prospective FY09 yield of 7.1% (73% franked). This represents a grossed up yield of 9.3%; a +500bps positive spread over the current RBA cash rate.

This spread is unprecedented and not sustainable with our yield forecasts being too high or the market too cheap (we suspect a combination of both).

Currency impact – a potential positive outcome for companies during this reporting season is the impact the currency will have on translated earnings.

The AUD has averaged around 78¢ during the 6 months to the end of Dec’08, compared to 87¢ during the p.c.p. (-10%).

Industrial stocks (reporting in AUD) which have the highest level of positive earnings sensitivity to the AUD/USD exchange rate include: PPX, CTX, IPL, BSL, CSL, CSR, RMD, BLY, ANN, WOR, ALL, AMC, AXA, and SGM.

The negative side of the currency fall is not expected to become apparent until the Jun’09 half given the hedging we believe was in place leading up to the Christmas period.

This is expected to be an issue, for retail companies in particular which import the majority of their COGS, and will experience a significant increase over the next 6 months. Outlook comments will potentially focus on this issue during this reporting season.

Falling oil prices – in a similar theme to the AUD, there could also be a small positive impact from lower energy prices, reflecting the sharp correction in the oil price since July 2008.

Again we expect this will be more apparent during the Jun’09 half given the timing of the fall (oil averaged US$88/bbl during the Dec’08 half compared to US$84/bbl in the pcp).

Stocks which have the greatest cost sensitivity to oil prices include: VBA, QAN, AIO, AMC, TOL, CRG, GWT, JHX, SPT, BLD, TPI, ABC and CCL.

Revenues – Earnings will be most leveraged to declining revenues and we expect investors will be very focused on trends emerging in this area.

Historically slowing revenue growth has been difficult for analysts to forecast, particularly at key inflection points.

While the revenue figures for the Dec’08 period could well prove more resilient due to the fiscal stimulus packages from the Government prior to Christmas, this wi
ll remain a key risk for companies in the current operating period.

While outlook comments are expected to be thin on the ground, any comments around revenue expectations will be closely scrutinised.

IMPORTANT: AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before making any investment decisions.

Australasian Investment Review

Dynamics Gp Consultant Newsflash: Reasons to Upgrade Great Plains

If you have Microsoft Dynamics GP implemented in your organization and you are currently on one of the older versions: 8.0, 7.5, 7.0, 6.0, 5.5, 5.0 4.0, older versions often come with Pervasive SQL and Ctree databases, or even archaic Great Plains Accounting for DOS 9.5, 9.2 or 9.0 – you may have a reasonable question – why you would need to upgrade Dynamics GP to current version?  In this small publication we would like to give you typical answer and technology highlights:

1.       Computer platform obsolescence.  This is the biggest concern, when you are on the version, which is 10 years old or even older than that – GPA for DOS is good example.  Great Plains Accounting was dedicated for Microsoft Windows NT 4.0 Server and old Btrieve.  There is the trick to move it to Windows 2003 Server on Pervasive SQL 2000 DB – but nobody would guarantee that it will be 100 percent compatible

2.       Business Portal.  Great Plains BP became strong and popular with recent Dynamics GP versions: 9.0 and especially 10.0.  In GP Business Portal the most popular modules are: Electronic Document Delivery, HR and Employee Self Service, Requisition Management, Order Management with catalogues.  Business Portal is Sharepoint web based application, and BP user license is cheaper than regular GP user (around $40 per user)

3.       eConnect.  For earlier versions of Great Plains Dynamics and eEnterprise you had Great Plains Dexterity as popular customization and integration tool.  However Dex is proprietary and not easy to acquire for generic software programmers.  eConnect was introduced for ecommerce developers and we personally think that eConnect became ready for production deployment with version 9.0.  With Great Plains Dynamics GP 10.0 eConnect installs automatically and you can use eConnect runtime for your Microsoft Visual Studio C# or VB.Net development projects

4.       Client Installation Package and Publishing Automatic Updates.  In the past you have to deploy each GP workstation individually, following strict installation procedure.  With GP 9.0 and 10.0 you can create so-called Client Installation Package, where you can even force GP Reports, Forms, OLE Notes and Letters (collection for example) to be stored centrally on the UNC path.  Plus you can force automatic updates, such as chink CNK files (Dexterity add-ons) and GP Service Packs (MSP files)

5.       SQL Server Reporting Services predefined reports for Dynamics GP.  In the past, Great Plains recommended Crystal Reports, where you had to purchase CR design license.  With SSRS you are getting web based reporting tool free

6.       There are other advantages, such as Great Plains Workflow, Web Services for Great Plains, non-for profit modules

Andrew Karasev

How A Business Consultant Can Help You Grow Your Business

Most people mistake professional business consultancy as a troubleshooting exercise that a company undertakes to manage crisis. Even the business owners, especially the small and relatively inexperienced ones, have similar notions and avail of their services only in cases where management looses control. However, services offered by professional consultants need not be bound by such limitations. Business consultants, in fact, are third party experts who influence how businesses, as well as governments and institutions make decisions.

Business consultancy services must be availed to look at issues related to business in a broader perspective. Consultants, helped by their expertise in a particular field, as well as being from outside the company, can see things from a point of view which the owner or the top management may fail to see, because of their being deeply involved in the business. Here, business consultants would weigh the pros and cons of the strategy and the situation, often with a fresh perspective, and advice accordingly.

Often staying out of the main picture, business consultants provide resources, which the clients may not be in a position to provide for them. Usually, this resource is expertise, which may come by experience, knowledge, creativity or special skills. Time and workforce are other resources, which the client might not be able to spare, which can be provided by business consultants. Business consultants are either management consulting firms or Technical consulting firms, with expertise in their respective areas. Management consulting firms advise on various aspects of corporate operations such as marketing; finance; corporate strategy; assembly line or other manufacturing processes; information systems and networks, data processing; e-commerce; and human resources.

On the other hand, technical consulting firms provide technical advice relating to non-management activities, including compliance with various safety and health regulations, technology application, and scientific knowledge in fields like biology, chemistry, and physics. There are many large consulting firms which provide expertise in more than one area.

Many small and medium enterprises feel that consultancy services are only meant for large organizations and are really not suited to smaller companies. Many also feel that it might not really be worth appointing consultants as they are a costly affair and that increased revenue as a result of their services would not be at par with the costs involved. Nothing could be further from truth, as big as well as small and medium enterprise benefit from business consultancy and there are many consultants who are more than happy serving smaller clients.

Business consultants advice on business start up, help make business plans, formulate marketing strategies. These are the services related to business management and it directly affects the bottom line of the company. Apart from these, there are scientific and legal consulting services, which help firms follow the legal aspects of the business that are required to be followed by law. For example, a manufacturing or utilities firm might hire environmental consultants to assess whether the firm is meeting government emissions standards, in order to avoid penalties before government regulators inspect the property in question. Necessary changes can hence be made before a potential problem arises.

Thus, instead of shying away from appointing consultants, what is required is to identify the right consultant which would help the business and who would have the correct expertise required in that particular case. This would not only help the company to focus on their core activities, but would also ensure smooth operations which will ultimately reflect on the profits as well as the overall growth of the company.

Kris Koonar

Iq Consulting Services As Channel Partner

Scott Smith, President and Chief Executive Office of TGI, said, “We are very pleased with the addition of IQ Consulting Services to our Platinum Partner program. IQCS’s experience in the plastics industry and in WMS software solutions will truly compliment our partner program and will add a significant amount of knowledge to our sales and implementation teams.”
Technology Group International (TGI), a leading software solutions provider, today announced the addition of IQ Consulting Services to TGI’s channel partner program.
IQCS’s team specializes in providing manufacturing and distribution related consulting services for the automotive, plastics, and life science vertical markets. The company has significant consulting expertise in areas ranging from lean manufacturing and business process reengineering to data collection, ERP and WMS implementations. IQCS will serve as a Platinum level partner for TGI and will manage a territory within Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, eastern Pennsylvania, and Vermont.
“We set out to find an ERP solution to support order to cash integration, and specific industry requirements for small to mid size companies said Steve Crapser, President and Chief Executive Officer of IQCS. After careful review, TGI was our clear selection. We thought TGI offered the best price performance value to their client base. The system offers Enterprise level functionality at a price geared to our market segment. We are excited to be able to offer these same benefits to our client base.”
About Technology Group International, Ltd.
Founded in 1990 and headquartered in Toledo, Ohio, Technology Group International is a proven technology leader delivering Tier 1 application software functionality at a price performance level that can be readily accepted by organizations of all sizes. Specializing in software solutions for small and mid-market manufacturing and distribution companies, TGI’s integrated Enterprise Series software suite is a complete business process management solution. The product offering includes Enterprise Resources Planning (ERP), Manufacturing Resource Planning (MRP), Supply Chain Management (SCM), Warehouse Management System (WMS), Advanced Planning and Scheduling (APS), Decision Support System (DSS), Business Intelligence, Manufacturing Execution System (MES), and eCommerce. TGI implements, maintains, enhances, and supports its packaged distribution and manufacturing software solutions directly and via its channel partners.
About IQ Consulting Services
IQ Consulting Services is a solution provider headquartered in Holliston, Massachusetts and has been providing technology expertise for small to mid size businesses since 1999. As a total technology solution provider, IQCS helps their clients’ plan, design, install, integrate, and implement ERP, warehouse management systems, supply chain management, bar code and EDI Solutions. IQ Consulting Services adds value through their real world experience and in-depth knowledge of technology solutions.

Thomas Cutler

Introduction for E-commerce Web Hosting

e-commerce is also known as Electronic commerce and EC. It mainly consists of distributing, buying, selling, marketing, and servicing of products or services over electronic systems such as the Internet and other computer networks. It can involve electronic funds transfer, supply chain management, e-marketing, online marketing, online transaction processing, electronic data interchange (EDI), automated inventor management systems, and automated data collection systems.

Historical development of e-commerce web hosting:

electronic commerce when introduced actually meant meant the facilitation of commercial transactions electronically, usually using technology like Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). electronic or e in e-commerce or e-business refers to the technology/systems which are often used in it companies. The other forms of e-commerce web hosting are the credit cards, Automated Teller Machines (ATM) and telephone banking. from the 1990s enterprise resource planning systems (ERP), data mining and data warehousing have been included. In the “dot com” era there were a few activities included such as Web commerce” — the purchase of goods and services over the World Wide Web via secure servers (note HTTPS, a special server protocol which encrypts confidential ordering data for customer protection) with e-shopping carts and with electronic payment services, like credit card payment authorizations.


As there goes a saying without probems there is no success. 1. Failiur to understand the competitive situation is something that is a common mistake. Lack the capability to compete. 2. Failure to understand customers, what they buy and why they buy. If the producers and retailers do not understand customer habits, expectations, and motivations then even a small product can fail to be sold. 3. Predict environmental reaction: inability to do this can prove very fatal. There should be so many questions arising such as What will competitors do? Will they introduce competitive brands or competitive web sites? Will they supplement their service offerings? Will they try to sabotage a competitor’s site? Will price wars break out? What will the government do? 4. co-ordination is very important in any field. 5. obtaining of senior management commitment is also lacking. 6. employee commitment: fail to give employees the whole picture and not able to explain their strategy well to employees. 7. plan: this is something that every person needs to have. initial planning can help from going into losses.


People have accepted the e-commerce web hosting business model less readily than its proponents originally expected. electronic shopping has developed slowly. 1. There is always a lack of instant gratification is another thing which companies need to work on. 2. Security: not using of credit cards is because of on line theft and credit card fraud. 3. When it comes to on line shopping social reward side of retail therapy does not exist. 4. There are some eCommerce web sites which are Poorly designed, bug-infested which frustrate the shoppers.


1. E-Commerce-induced Change in Logistics and Transport Systems- Georg Erber, Peter Klaus und Ulrich Voigt. 2. Electronic Commerce: A Need for Regulation?- Stefan Bach und Georg Erber. 3. “Information Rules: A Strategic Guide to the Network Economy,”- Carl Shapiro and Hal R. Varian. 4. “Blueprint to the Digital Economy: Creating Wealth in the Era of E-Business,”- this has been edited by, Don Tapscott, Alex Lowy and David Ticoll, Associate Editor: Natalie Klym. 5. “Electronic Commerce: Technical, Business, and Legal Issues,”- Nabil R. Adam, Oktay Dogramaci, Aryya Gangopadhyay and Yelena Yesha. 6. “Improving Data Warehouse and Business Information Quality: Methods for Reducing Costs and Increasing Profits,”- Larry P. English.

People offering services to e-commerce practitioners: Software:

1. ATG. 2. Cubecart. 3. ECommerce Shopping Cart. 4. eMeta Corporation. 5. Ingenta. 6. NetSuite Inc. 7. osCommerce. 8. Shop-Script. 9. Zen Cart. 10. Microsoft Commerce Server.

Entities using electronic commerce:

1. Amazon.com 2. eBay 3. exostar 4. MercadoLibre.com 5. Newegg.com 6. Nuvvo 7. Overstock.com 8. Quixtar.com 9. rediff.com 10. Smarthome 11. Uship


1. iBill 2. Moneybookers 3. PayPal 4. WebMoney 5. Yahoo! 6. Google Checkout


Employee Retention Strategies Drive Revenue Growth at Sears

Employee satisfaction is essential to any effective employee retention strategy – any good HR manager knows that. However few managers think of the impact that employee satisfaction has on their customers and ultimately company profits. One can assume that happier, more productive employees will make more sales, treat customers better, and ultimately make more money for the company, but few companies have analyzed this assumption to the extent that Sears, Roebuck and Company has. Sears has put this common assumption to the numbers test and the results are intriguing to say the very least.

1992 was the worst year on record for Sears, losing almost 4 billion dollars on over 52 billion dollars in retail sales. The early and mid 1990s were truly trying times for the retail giant and tested the will and resolve of managers and employees alike. During this time the company was in near shambles, morale was low, revenues were suffering, and the bottom line was hemorrhaging red ink. This was in stark contrast to nearly a century of stellar results that Sears had comfortably enjoyed. For Sears, something needed to be done, and fast!

Sears began their turnaround by identifying three key objectives: Creating a compelling place to work, a compelling place to shop, and lastly creating a compelling place to invest. One of the tools used to establish these objectives was the employee-customer-profit chain. The employee-customer-profit chain is essentially a flow chart that diagrams revenue creation starting with employee attitudes and satisfaction, followed by its effect on customer satisfaction, and ultimately the effect on revenue and bottom line profit generation.

One thing Sears realized it needed to do was exert a greater effort focusing on the customer. This is often times easier said than done for many organizations. However Sears took an innovative approach to increasing customer focus. Based on the employee-customer-profit chain, it realized that it could not better focus on the customer without first focusing on its employees.

For Sears 70% of its workforce was part-time status and turnover among its part-time workforce had become alarmingly high. Sears suspected that low morale and poor employee attitudes towards the company were to blame. Sears began a rigorous process of measuring employee attitudes and satisfaction via a 70 question employee survey. The results of this survey were then juxtaposed to customer satisfaction surveys and ultimately compared to revenue and profit trends for the company. The correlations drawn from the data were greater than Sears could have ever imagined.

Undoubtedly Sears expected to see some positive correlation between employee and customer satisfaction and ultimately revenue and profit generation; however they were amazed to see just how great an impact employee satisfaction levels had on the bottom line. The data revealed that for each five point improvement on the employee attitude scale, there was a subsequent 1.3% improvement in customer satisfaction, and a 0.5% increase in revenue growth.

A 0.5% increase in revenue might sound miniscule, however when it is based on revenues of over 50 billion dollars it adds up quickly and significantly. For Sears this would equate to a 250 million dollar increase in revenues a year! This revenue increase does not require investments into advertising, new facilities, or improved operations, only an investment into the satisfaction and happiness of employees.

There are also cost savings that can be attributed to improved levels of employee satisfaction. It should come as no surprise that happy employees stay in their jobs longer than unhappy employees. By focusing on increasing employee satisfaction Sears was able to concurrently increase revenues and reduce the costs associated with employee turnover. Sears was also able to determine that employees with greater levels of satisfaction and a favorable attitude towards the company were more likely to speak positively about the company and recommend shopping there to friends and family members. By increasing employee satisfaction Sears was able to generate free word of mouth advertising spread by its employees, thus in a way reducing the reliance on paid advertising to generate revenue. Sears realized the importance of its employees and their levels of satisfaction and made it a corporate goal to increase levels of employee satisfaction throughout the company.

Sears feels that employee satisfaction levels are so important to the company’s health and vitality that it treats attitude and satisfaction numbers the same as “hard” financial numbers. Sears is so committed to these numbers that it has them audited by an accounting team to ensure validity and reliability just as it does with all of its internal financial measures.

For Sears its turnaround did not take place overnight. It took several years of hard work and dedication from managers and employees at all levels. Improving levels of employee satisfaction was not the sole contributing factor to Sears’ remarkable turnaround. However it is fair to assume that without the focus on the employee as a base to better focus on the customer the turnaround at Sears would not have been as quick or amazing as it was.

As business leaders we should all pay careful attention to the approach that Sears took to improving its bottom line. The urge to drastically cut costs through outsourcing, layoffs, reducing benefits, and streamlining operations might well be overly complex solutions to a relatively simple problem. In lieu of cost cutting initiatives to preserve profit margins, a customer focused approach might be a better solution. As we can learn from Sears focusing on the customer ultimately begins by focusing on the employees who serve the customer. Give it a shot, your employees, your customers, and ultimately your shareholders will thank you for it!

At The Rainmaker Group we are committed to helping your organization maximize possibility through its most valuable assets – its people. We have the tools and techniques to help you improve levels of employee satisfaction. From selecting and retaining great employees, to coaching existing employees to realize their full potential we have what it takes to create a work culture that employees enjoy and appreciate. Your employees and customers will thank you. Give us a shout today!


Chris Young