Final Y2k review shows 94 large corporations mabe ill prepared for the milleniumgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
BW0067 DEC 20,1999 5:00 PACIFIC 08:00 EASTERN
( BW)(FL-WEISS RATINGS) Year 2000 Wire/Final Y2K Review Shows 94 Large U.S. Corporations May be Ill-Prepared for the Millennium
Business Editors & Technology Writers
PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--Dec. 20, 1999--Ninety-four of America's largest corporations received unsatisfactory Y2K ratings indicating they may not be ready for the millennium, based on their publicly disclosed Y2K budgets and expenditures, according to Weiss Ratings, Inc., the only publisher of Y2K ratings on the nation's Fortune 1000 companies. Among the 496 companies disclosing sufficient data in their third quarter 1999 filings, 25 companies, or 5%, received a Weiss Y2K rating of "Low," while 69 firms, or 13.9%, received a grade of "Below Average."1 Meanwhile, 175 companies, or 35.3%, received a Y2K rating of "Average," and 227 companies, or 45.8%, were rated "High." "This late in the game, it was widely expected that virtually all large companies would be ready for Y2K, but the data is telling us that may be far from the case," commented Martin D. Weiss, Ph.D., chairman of Weiss Ratings, Inc. "If many of America's largest firms aren't ready, what about the hundreds of thousands of small- and medium-sized companies that were widely expected to be lagging in their Y2K readiness?" The Weiss Y2K Ratings, based largely on each company's Y2K budget and expenditures, identify those that are believed most likely to be lagging or advanced in the remediation process. Companies rated "Low" include:
- Northwest Airlines, based in St. Paul, Minn., which reported a total Y2K budget of $55 million, but had spent only $37 million, or 67%, as of September 30, 1999.2 - Lear Corporation, a supplier of automotive interiors based in Southfield, Mich., which reported Y2K expenditures of $7 million, or less than half (47%), of its $15 million Y2K budget. - Schering-Plough Corp., based in Madison, N.J., which reported spending only $62 million, or 65%, of its $95 million Y2K budget. - Consolidated Natural Gas Co., based in Pittsburgh, Penn., which had spent only $9.9 million, or 62%, of its total Y2K budget of $16 million. - 3Com Corp., based in Santa Clara, Calif., which had spent only $8.6 million, or 53%, of its $16.3 million Y2K allocation. - Ameren Corp., based in St. Louis, Mo., which had spent $8 million, or 64%, of its total Y2K budget of $12.5 million. - Whitman Corp., based in Rolling Meadows, Ill., which reported spending $19.2 million, or 62%, of its $31 million Y2K budget.
Companies receiving a Y2K grade of "Below Average" include pharmaceutical giant American Home Products Corp., The Kroger Co., PacifiCare Health Systems, Inc., Dynegy Inc., Georgia-Pacific Corp., Sun Microsystems, Inc., and Ingram Micro Inc. "Some of the companies receiving poor Y2K ratings state in their SEC filings that they have either completed, or are substantially complete with, remediation and testing. However, they have failed to account for the large unspent portions of their Y2K budgets. Either these companies have not actually completed remediation and testing, or they have failed to accurately report their Y2K budgets and expenditures, as requested by the SEC," added Dr. Weiss. On the other end of the spectrum, many large companies reported significant progress in allocation of budgeted Y2K resources. Those receiving a grade of "High" include: Exxon Mobil Corp., Philip Morris Co., AT&T Corp., Sears, Roebuck & Co., The Proctor & Gamble Company, Merrill Lynch & Co., Motorola Inc., Compaq Computer Corp., The Home Depot, Inc., and AMR Corporation. The Weiss Y2K ratings are based on a proprietary model that compares publicly disclosed data on Y2K budgets and expenditures, over time and in relation to industry peer groups. "Low" and "Below Average" are considered unfavorable ratings, implying a warning to investors, while ratings of "Average" and "High" are considered favorable. Weiss Ratings also publishes financial safety ratings and Y2K readiness ratings on insurers, banks, and S&Ls. The accuracy of its financial safety ratings has been favorably reviewed by the U.S. General Accounting Office (GAO) as well as national consumer organizations. For more information, contact Weiss Ratings at (800) 289-9222 or visit the Weiss Ratings web site at www.weissratings.com.
1 The survey population is composed of the Fortune 1000 companies. Companies with sufficient data have disclosed material historical and estimated costs of remediation through the third quarter of 1999.
2 In its August 10, 1999 10-Q filing, Northwest Airlines stated: "The company now estimates that the total project costs will be less than the originally estimated $55 million." No updated total project costs are provided in the November 12, 1999 10-Q statement.
CONTACT: Yui & Co. Ellen Yui, 301/270-8571 firstname.lastname@example.org or Weiss Ratings Elizabeth Kelley Grace, 561/989-9855 email@example.com www.weissratings.com.
-- Homer Beanfang (Bats@inbellfry.com), December 20, 1999
There might be alot of companies that will fail and their might be ways to determine which ones, IN ADVANCE of the failure, but this "Weiss Rating" thing really gets to me.
The theory is that if they didnt spend all or most of their allocated funds for y2k remediation then they didnt fix their problems. Well I have worked with alot of small businesses and many did fix their computers Y2k issues well within or significantly under budget.
I just think its a goofy way to rate a companies y2k compliancy.
-- hamster (firstname.lastname@example.org), December 20, 1999.
Could it be that they overbudgeted and came in ahead of schedule and under budget? Wait, what am I saying? Forget it.
-- Powder (Powder@keg.com), December 20, 1999.
This obvious doom doesn't even effect me any more.I read it with a surreal sort of detachment.My preps are done.I'm not even buying any more buckshot for my trusty scatter gun.Whatever is going to happen will happen regardless of media hype or heroic last minuet corporate/government effort.
It seems like it'll be either a bump or a disaster with the "middle""5" "6" or "7" segueing into the "8" or "9" or even the dreaded Gary North "10" scenario where mohawked ex-yuppies do terrible things with pointed sticks and none of us have enough buckshot.
-- zoobie the nutbag (email@example.com), December 20, 1999.
Comparing actual spending versus budget is a valid analysis. Done in corporate finance all the time.
The explanation of WHY there is a large variance is more important. Weiss does not have access to inside information needed to complete their analyses. But actual spending at 50% of the budgeted level is a big concern. It seems that most Y2K budgets have been increased repeatedly.
I believe Weiss assumes Y2K budgets apply only to spending as of 12/31/99. But I suspect Y2K funds budgeted for 1st quarter 2000 are buried in the fiscal 1999 budget -- to better tie with the organization's public relations campaign ("we're 99.9% done in 1999"). Most people assume budgets are financial documents. They're really financial AND political documents.
Sometimes spending is way under budget and that is caused by an excessive budget -- but based on ten years of experience in corporate finance, I'd say that's rare.
-- Richard Greene (Rgreene2@ford.com), December 20, 1999.
And we are all suppose to swallow the Government is 100% Ready!!!
-- d----- (firstname.lastname@example.org), December 20, 1999.