Arthur Andersen (1913 to 2002) spent decades as a leading accounting and consulting firm. Founded in 1913, it was once a member of the "Big 8" accounting firms, which later became the "Big 5." Andersen was the accountant for MCI and Worldcom. Even though it's been dead for six years, it left one offspring -- it spun off its Andersen Consulting unit in 1989. The renamed Accenture (NYSE: ACN) went public at $14.50 in July 2001 -- the share price is up 176% since then.
Andersen's downfall was its role as Enron's auditor. It used its credibility to bless Enron's special purpose entities and a whole host of illegal accounting. In 2002, the firm voluntarily surrendered its licenses to practice as CPAs after being found guilty of criminal charges, resulting in the loss of 85,000 jobs.
The lesson is to resist the lure of big money to pull you away from your values. Enron's pile of cash was irresistible to Andersen's leaders. And their lack of moral fiber cost a storied and proud firm its existence.
It has been a rocky year for Wall Street, but even amid the uncertain market conditions there are some companies that are playing with a lot of cash. In addition, they know how to wisely use their funds, which makes them strong enough to beat any challenge.
One important factor that determines the stability of a company is its corporate cash flow. CNNMoney is looking at stocks with both healthy cash flow and a surplus of cash, which helps them avoid tough situations where they may need to raise their capital (check out its slideshow of these five picks). Another element that CNNMoney takes into account when picking companies is their ability to reinvest cash in ways that assure them a nice profitability.
Let's look at some of the companies that CNNMoney likes:
While at the recent Digital Hollywood conference, I heard much talk about online video. And the main question was: How can you make money from it?
Well, Accenture (NYSE: ACN) is trying to find some ways. In fact, this week, the company agreed to purchase Origin Digital (the amount was not disclosed).
The privately-held firm calls itself a "global video applications service provider." That is, the company helps with the key elements of managing, syndicating and reporting digital content – across various platforms, such mobile, VOD, IPTV, broadband, and so on.
Accenture already has a Digital Media Service division. But, with Origin Digital, there will definitely be much more heft as well as opportunities for cross-selling.
All in all, this seems like a good fit for Accenture. After all, Corporate America realizes that online video has many benefits in terms of obtaining customers, education, and branding. Yet, it's a process that does require some deep domain expertise.
David Fried is a leading authority on corporate buybacks, focused exclusively on companies that are involved in repurchasing their own shares.
One of the latest 'buys' in his aptly-named The Buyback Letter, is consulting and outsourcing firm Accenture (NYSE: ACN). Here's the advisor's review.
"Accenture is a global management consulting, technology services and outsourcing company, collaborating with clients to help them become high-performance businesses and governments.
"They use industry knowledge, expertise and technological capabilities to help worldwide clients enter new markets, increase revenues in existing markets, improve operational performance and deliver their products and services more effectively and efficiently.
The identification of new business trends and the subsequent implementation of strategies based on those trends is vital to corporate growth. When firms need help along those lines, they often turn to a Hamilton, Bermuda consultant that currently works with two-thirds of the Fortune Global 500.
Accenture (NYSE: ACN) is the world's largest management and technology consulting firm. It offers clients enterprise integration, human resources, strategic planning and supply chain management services, across 18 industry groups. The company operates from more than 100 offices in 49 countries. It has established business alliances with a variety of sector leaders, including Hewlett-Packard (NYSE: HPQ), Oracle (NASDAQ: ORCL) and Reuters Group (NASDAQ: RTRSY).
Last week, the firm reported fiscal Q1 EPS of 60 cents and revenues of $5.67 billion. The Street had been expecting 56 cents and $5.46 billion. Management also guided Q2 revenues to $5.50-$5.70 billion ($5.31B consensus) and FY08 EPS to $2.36-2.41 ($2.26 consensus).
MOST NOTEWORTHY: Staples, Office Depot, GlobalSCAPE and CytRx were today's noteworthy initiations:
Jefferies initiated shares of Staples Inc (NASDAQ: SPLS) with a Hold rating and $22-$24 target. The firm finds the current valuation fair given the increased risk of excess store growth in the industry, increased promotional activity and deceleration of employment growth.
Jefferies expects shares of Office Depot Inc (NYSE: ODP) to trade sideways given the company's accelerating store growth, greater promotional activity and execution issues. The firm resumed coverage with a Hold rating and $22-$24 target.
Soleil started shares of GlobalSCAPE Inc (AMEX: GSB) with a Buy rating and $12 target, as they believe the company has the opportunity to grow revenues around 35%-40% annually and is an attractive acquisition candidate for suitors who address the corporate networking infrastructure marketplace.
Cytrx Corporation (NASDAQ: CYTR) was initiated with a Buy rating and $6 target at Oppenheimer, as they are optimistic regarding the market potential of arimoclomol in amyotrophic lateral sclerosis and sees several catalysts approaching over the next 12-18 months.
U.S. stock futures were lower this morning ahead of several economic reports today indicating a weaker start for stocks. Comments by former Federal Reserve Alan Greenspan saying that the odds on the first U.S. recession in six years have increased due to the housing slump and its effect on consumer spending, didn't serve to improve investor sentiment either. Greenspan said the chances of a recession are now "less than 50-50." Investors will also stay tuned to speeches from Atlanta Federal Reserve President Dennis Lockhard and St. Louis Federal Reserve President William Poole are planned.
Yesterday, U.S. stocks closed higher despite weak data on the housing market. The Dow Industrial Average added 34.8 points points or 0.25%, and the S&P 500 and the Nasdaq Composite each closed 0.39% higher.
A barrage of economic news is scheduled for today: - At 8:30 a.m. personal income and spending for the month of August is due. Income is seen growing 0.4% compared to 0.5% in July, while spending is expected to rise the same as last month, 0.4%. - Just after the market opens, Septemeber Chicago purchasing managers' index is due and is expected to tick down. - At 10:00, the consumer sentiment index from the University of Michigan for September will be reported as well as August construction spending.
While weak reports lately have been seen as a sign the Fed will further cut rates, at some point the question will be asked if the Fed acted too late and the economy might still be headed toward a recession. A decline in consumer buying power could cause bearish sentiments to flare up again. This will be in focus as we are headed into earnings season next month and some see profit growing at the slowest rate in more than five years for some U.S. companies this quarter. The current forecast for earnings of Standard & Poor's 500 Index members may rise an average of 3.2% from a year earlier, breaking a 20- quarter streak of gains exceeding 10%.
Overseas, Asian markets finished mixed and European markets are mostly lower.
Alcatel-Lucent (NYSE: ALU) Chief Executive Patricia Russo has been given a month to devise an emergency restructuring plan for the board following the third profit warning earlier this month. ALU shares are up 4.6% in premarket.
Accenture Ltd (NYSE: ACN) reported lower quarterly earnings on higher taxes, but its shares rose as revenue beat analysts' estimates. Net income fell to $316.8 million, or 50 cents per share, from 497.2 million, or 56 cents per share, a year earlier. Revenue before reimbursements grew 29% to $5.11 billion from $3.97 billion.
Accenture Ltd. (NYSE: ACN) is expected to report earnings per share (EPS) on September 27th.
The Bear Stearns Companies, Inc. (NYSE: BSC) has an outperform rating on ACN. Bear Stearns says "we expect management to reiterate their 9% to 12% constant currency revenue growth guidance for fiscal-year 2008." BEST goes on say "ACN has long been a candidate for inclusion in the S&P 500, but has never been chosen. That said, when First Data-FDC goes private, there is a chance that ACN will be selected." ACN October option implied volatility of 34 is above its 26-week average of 26 according to Track Data, suggesting larger price fluctuations.
Renewed and unconfirmed chatter is circulating that Motorola Chairman and CEO Edward Zander may step down. RBC Capital Markets says "We're upgrading MOT to Outperform based on our view MOT is displaying firming trends in its once beleaguered handset division." RBC Capital Markets has a $21 price target on MOT. MOT call option volume of 27,010 contracts compares to put volume of 8,124 contracts. MOT October option implied volatility of 30 was near its 26-week average of 29 according to Track Data, suggesting non-directional risk.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.
Celebrities -- they're more than superior human beings, they're money-making machines. If these celebrities were stocks, which would be the shrewd buy?
Tiger Woods, unarguably the world's greatest golfer, or David Beckham, the world's best-know soccer player -- in which would you invest?
The industry that is Tiger has shown consistent growth in earnings, with PGA winnings in his first 13 years as a pro exceeding $70 million. His presence in a golf tournament boosts television ratings by 50% or more. He almost single-handedly established Nike in the golf equipment world. He holds the #5 place in Forbes' Celebrity 100 and was #2 in press clippings in 2005. Nike (NYSE: NKE), Buick (NYSE: GM), American Express (NYSE: AXP), Accenture, Electronic Arts (NASDAQ: ERTS) and Tag Heuer are among the companies that shovel buckets of cash his way in return for his endorsement.
David Beckham is no slouch in the cash category, either. The Times estimates the soccer star brings in a cool $40+ million for endorsements, including Adidas, ESPN, and Motorola (NYSE: MOT). Even in soccer-lite America, he has 51.9% recognition, more than twice that of NBA MVP Tim Duncan of the San Antonio Spurs.
Goldman Sachs keeps a list of the Top Five Tech Value Stocks. The list includes big tech companies like Microsoft (NASDAQ: MSFT) and Symantec (NASDAQ: SYMC). To make room for Intel (NASDAQ: INTC) and Cisco (NASDAQ: CSCO), IBM (NYSE: IBM) and Accenture (NYSE: ACN) were pushed off the list.
Intel was added to the list because Goldman thinks it will beat Q2 earnings. Cisco was added because it falls into the "top quartile on both growth and value lists" at the investment bank.
The problem with these lists is often that, for shareholders, they are a look into the rear view mirror. Wall Street has already caught on to the fact that these are promising companies, a fact that may already be priced into their shares.
Over the last year, Intel's shares are up nearly 40%. Most of the concerns about it continuing to lose market share to AMD (NYSE: AMD) are now gone. Cisco's shares are up about 50% over the same period. The market's perception that its router business will benefit from cable and telco upgrades to handle more broadband traffic have pushed the shares relentlessly forward.
To say that there is something wrong with Intel or Cisco would be to get on the wrong side of Wall Street's perception. But that does not mean the shares are going higher.
With the market being propelled upward due to private equity and corporate acquisitions, investors should not stay on the sidelines. Rather, they should target private equity's next frontier -- IT services. Of the companies in this sector, Unisys Corp. (NYSE: UIS), Perot Systems Corp. (NYSE: PER) and Ingram Micro, Inc. (NYSE: IM) may be worth examining.
A few months ago, I suggested several sectors and companies that private equity could target next. On Friday, TheStreet.com reiterated one of those sectors -- IT services. Here's how much seven such companies have gone up or down since my March 29th post along with their market capitalizations ranked by their Price/Earnings to Earnings Growth (PEG) ratios:
The identification of new business trends and the subsequent implementation of strategies based on those trends is vital to corporate growth. When firms need help along those lines, they often turn to a Hamilton, Bermuda consultant that currently works with two-thirds of the Fortune Global 500.
Accenture Ltd. (NYSE:ACN) is the world's largest management and technology consulting firm. It offers clients enterprise integration, human resources, strategic planning and supply chain management services, across eighteen industry groups. The company operates from more than one hundred offices in forty-nine countries.
Last week, Accenture reported fiscal Q2 EPS of 47 cents and revenues of $4.75 billion. The Street had been expecting 42 cents and $4.68 billion. Management also guided Q3 revenues to $4.9-5.1 billion ($4.87B consensus) and FY07 EPS to $1.88-1.93 ($1.87 consensus). Six brokerages subsequently declared the stock a "buy".
MOST NOTEWORTHY: Citigroup (C), Altria Group, Inc (MO), and TreeHouse Foods Inc (THS) were today's notable upgrades:
Bank of America upgraded Citigroup Inc (NYSE: C) to Buy from Neutral with a $58 target to reflect the low valuation and the company's opportunities to increase earnings growth over the next year.
Altria Group (NYSE: MO) was added to Goldman Sachs' Conviction Buy List. The firm believes shares, excluding Kraft (KFT), could reach $76 over the next 12 months. Goldman also thinks Altria may announce a spinoff of its Philip Morris International unit this summer.
MOST NOTEWORTHY: Circuit City (CC) and Best Buy (BBY) were the most notable upgrades today:
JP Morgan upgraded Circuit City Stores Inc. (NYSE:CC) to Overweight from Neutral, telling clients it is taking advantage of more realistic expectations and valuation; they also see some positive catalysts in 2008 that may include product introductions, such as Microsoft Corp.'s (NASDAQ:MSFT) Vista and the availability of the PS3 from Sony Corp. (NYSE:SNE) and Nintendo Ltd.'s (OTC:NTDOY) Wii.
Credit Suisse upgraded Best Buy Co. Inc. (NYSE:BBY) to Outperform from Neutral with a $59 target, telling clients the focus on the electronics retailer has moved too much into the slight shortfall of Q3, which undervalues the solid growth through 2007 as well as the strong balance sheet the company enjoys.
OTHER UPGRADES:
Darden Restaurants Inc. (NYSE:DRI) was upgraded to Market Perform from Underperform at Raymond James.
Accenture Ltd. (NYSE:ACN) was upgraded to Sector Perform from Underperform at RBC Capital Markets, and believes that strong demand for consulting, solid outsourcing visibility, and strong financial fundamentals are likely to offset the negative impact of offshore labor cannibalization in the near-term; Baird also upgraded Accenture, to Outperform from Neutral with a $39 target, following strong first quarter earnings and guidance.
Deutsche Bank is positive on Publicis Groupe (NYSE:PUB) acquisition of Digitas Inc. (NASDAQ:DTAS) and upgraded the acquirer to Buy from Hold.
Research in Motion (NASDAQ: RIMM) was upgraded by ThinkEquity to Accumulate from Sell, citing the execution and improved product road map for the upgrade. ThinkEquity also raised RIMM's target from $45 to $115. In addition, RIMM was upgraded by Deutsche Bank to Hold from Sell and their target was raised to $80 from $55.
Needham upgraded Accenture Ltd (NYSE: ACN) to Buy from Hold after the company resolved their dilutive NHS contract and reported an inline quarter. Credit Suisse also upgraded Accenture to Outperform from Neutral on the news.
OTHER UPGRADES:
Piper Jaffray upgraded Acorda Therapeutics (NASDAQ: ACOR) to Outperform from Market Perform citing the company's small market cap and Fampridine-SR's broad clinical benefits.
Raymond James upgraded Delta Petroleum (NASDAQ: DPTR) to Strong Buy from Outperform citing upside from their current exploratory prospects and valuation.
This post is part of a series on some of the most memorable companies that have disappeared.
It has been a rocky year for Wall Street, but even amid the uncertain market conditions there are some companies that are playing with a lot of cash. In addition, they know how to wisely use their funds, which makes them strong enough to beat any challenge.
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U.S. stock futures were lower this morning ahead of several economic reports today indicating a weaker start for stocks. Comments by former Federal Reserve Alan Greenspan saying that the 
Accenture Ltd.
Celebrities -- they're more than superior human beings, they're money-making machines. If these celebrities were stocks, which would be the shrewd buy?
Anheuser-Busch (BUD) sues InBev, what's next?
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