GROWTH

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Organizations look to acquisitions as an effective way to make a strategic pivot—and we don’t need to tell CFOs this, but there’s no shortage of reasons to embark on a strategic transformation right now.

The increasingly strategic remit of the CFO includes devising and executing the strategy side of such acquisitions, according to finance executives who spoke with CFO Brew.

“Traditionally, the CFO in any firm is looked at as the numbers [person],” meaning they’d be brought in on a deal to make sure the math works, David Carlino, CFO of architecture and design firm CannonDesign, told CFO Brew.

Carlino, the self-described “oddball in the room” among architects and engineers, said he tries to push the firm to think differently about its acquisition strategy. CannonDesign has acquired eight companies over the last two years and change. Four of the acquired companies were design firms, and the other four consultancies.

CannonDesign started acquiring consulting firms in 2019 as a way to expand its client services beyond solely building design. The firm wants to extend the length of a client relationship from three years to something closer to three decades, according to Carlino.

How Figure structured a deal to avoid taking on unwanted assets.—AZ

      

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TECH

IBM

One CFO’s capex shift is another CFO’s sales shortfall.

It seems IBM is a victim of companies’ shifting capex budgets amid the AI arms race.

In what the Wall Street Journal described as a “rare profit warning,” IBM CEO Arvind Krishna told investors in a letter last Tuesday that the company performed worse than expected in its second quarter.

Preliminary Q2 results show IBM recorded revenue of $17.2 billion, worse than the $17.9 billion analysts had projected, according to Bloomberg.

In his note, Krishna specifically called out a “performance shortfall” in its infrastructure and software divisions. Infrastructure revenue was down 7% YoY for the quarter, while software revenue increased 5%, after climbing 11% in Q1. Consulting revenue was flat.

June swoon. Infrastructure started the year strong, leading IBM to expect it “to decline low-single digits for the year, beginning this quarter,” Krishna wrote.

IBM clients are spending their capex elsewhere.—AZ

      

MARKETS

Morning Brew Inc.

SpaceX is already giving investors buyer’s remorse.

Elon Musk’s golden child fell 5.43% on Friday after the company called off a test flight for its highly anticipated Starship rocket at the last minute Thursday night. Today’s decline caps six straight days of losses for SpaceX—putting it well below its IPO price of $135, and roughly 38% below its June peak.

SpaceX raised $85.7 billion in the biggest IPO in history back in June, as investors who’ve long been fans of Musk’s intergalactic vision finally got a chance to own the stock itself. Retail investors weren’t the only ones glazing SpaceX, either: Wall Street pros have been resoundingly bullish, with 14 out of 15 firms that cover the stock issuing a Buy rating.

Yet now, everyone is waiting to see if SpaceX can meet the high bar investors have set for it. After all, with a record-breaking valuation, SpaceX has been running more on hype than on actual proven financial results.

Shoot for the stars. This isn’t the first time Starship flopped: Back in May, the rocket crashed in the Gulf of Mexico, triggering an investigation from the FAA.

The bearish investors may have a good point about SpaceX, Brew Markets reports.—LB

      

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market forces

Francis Scialabba

Today’s top finance reads

Stat: 14 days. That’s the length of the restraining order against Paramount and Warner Bros. Discovery from a California federal judge, which stops the companies from achieving their goal of closing their $81 billion merger before month’s end. (The Wall Street Journal)

Quote: “We’re seeing this strong-structure, multi-year demand, and we do not plan to leave any food on the table for anybody else.”—TSMC CFO Wendell Huang on the chipmaker’s efforts to accelerate capacity at its Arizona factory. (CNBC)

Read: The billionaire betting brawl. (The New York Times)

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