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February 16, 2004
Dell CFO Discusses Changing Roles of Corporate Finance
By Amy Corenblith
The function of the chief financial officer in today’s company is a far cry from that of yesteryear, said Jim Schneider, CFO of Dell, as he spoke to students Feb. 16 as part of the MBA Executive Speaker Series at The University of Texas at Austin’s McCombs School of Business.
Initially, CFOs began as comptrollers, known for sitting in cramped back offices with green eyeshades recording the numbers, Schneider said. Their primary purpose was to deal with finance.
Next came the “strategist” era, which created some of the problems of Enron and WorldCom.
“You had Andy Fastow of Enron and Scott Sullivan of WorldCom trying to be profit drivers in their own right” rather than simply recording the operations numbers, Schneider said. There was a lot of pressure to make the numbers, so the CFO-strategists would do everything in their power to push up profits.
“It’s more fun to be a strategist rather than just the comptroller,” but it carries a much greater responsibility, said Schneider.
Now the industry has reached the “integrity” period. Being trustworthy, candid and honest have become hallmark characteristics that companies seek in CFOs and employees. “If you don’t have integrity, everything else kind of falls apart,” Schneider said.
New regulations on the accounting departments, like the Sarbanes-Oxley Act, did not create sweeping change at Dell, Schneider said. Integrity was always important to the organization.
“If I put out a target, there’s incredible pressure to fudge the numbers and make up for it next quarter,” which is what got other companies in such deep financial trouble, the CFO said. “None of this stuff is ever worth it. As you go through your business career always keep that in mind.”
Other Notable Soundbites
On Dell in the marketplace
“Lots of our competitors are gone now. The whole landscape has changed so
much.”
“We do a lot of research and development, but only when we know there’s
something there. We’re very cost conscious.”
“We’re really the only ones in the business that really make any money.”
“Since I started in 1996, I have to sell three times as many units to get the
same revenue. It was actually easier back then to generate revenue because
computers cost so much more.”
On Dell’s stock
“We don’t give dividends now. It depends on what you want. Microsoft started giving dividends for five or ten cents. We use our money to do buy backs. I wouldn’t be surprised if at some point we give dividends. It’s an ongoing strategic issue. Right now, the interest rate is so low, it’s better use for our cash to buy shares back.”
On Sarbanes-Oxley
“We’ve always had regulatory organizations—FASB, EITF, SEC. There were hundreds of rules. It wasn’t like we didn’t have a lot of laws. Now it just makes it easier for [lawbreakers] to go to jail.”
For information on specific programs at the McCombs School, consult our contacts page. For media information, contact the Communications Director by phone at 512-471-3314 or by email at CommunicationsDirector@mccombs.utexas.edu.
