We expect to be profitable by the fourth quarter of this year,” confides Extensity Inc. CFO Ken Hahn as he loads one of his most popular presentations onto his laptop. Soon, a neat bar chart appears to illustrate the software company’s progress from a $7.8 million quarterly loss in early 2000 to the current quarter’s $2.7 million net loss.
Part of getting profitable meant laying off 23 percent of the staff last year, but Hahn insists the company’s growth prospects are still sound. “We didn’t sacrifice R&D,” he says, “and we’re being very careful about cash.” And about Extensity’s stock price, down to about $2 after trading at $8 last May?
“It’s just what the Street thinks about the sector as a whole, not us in particular,” Hahn says, noting that one analyst has just picked up coverage on the company, and several others are interested.
It’s the kind of story CFOs might expect to share with anxious investors, but in these uneasy days, Hahn finds potential customers clamoring for the pitch as well. Despite the improving profit picture, he says, “I’ve fielded more customer calls on our financial viability in the last two quarters than ever before.”
He’s not alone. Indeed, after a season of slumping revenues, many CFOs, particularly in the troubled tech sector, are being called upon to reassure potential customers of their companies’ financial health. Often, their mission is to convince customers the company will be alive and well a year from now.
“What they ask is: ‘What’s your background, where are you going as a company, and what can you do for us?’ ” says Bobby Kocol, CFO at $2 billion Storage Technology Corp., a data storage solutions provider. With revenues flat last year and concern about competing technologies, Kocol has become more active in building customer relationships.
As part of StorageTek’s new Executive-to-Executive program, he’s now calling on his share of the company’s top 50 clients, hoping to become a high-level liaison for them. “It’s a two-way street,” he says. “[Customers] get to see me and see where we’re going strategically, and I get to go right to the source and learn from them as well.”
In fact, if a potential customer has concerns about the viability of a company, the CFO is the ideal person to bring along on sales calls. “For the sake of credibility, it’s better to bring in the CFO than the CEO,” says Paul DiModica, founder of DigitalHatch Inc., which specializes in technology sales training and business development for high-tech firms.
CEOs, he says, tend to “get lost in the vision discussion.” CFOs, on the other hand, can back up the vision with facts, making customers more comfortable about the company’s future health. Of course, timing is key to making the group sales call work well. “I always teach salespeople not to bring in another executive until they have one or two meetings with the client,” says DiModica. “Otherwise, it looks like they’re too anxious.”