Meltdown of American Foreign Policy - What's gone wrong?
If you remember the Afghan - Russian War, you will recall the influence and impact of America's foreign policy and intelligence community. One will recall the strategic implications of the US siding with the Afghan freedom fighters. One will recall the significance of minimizing the spread of Russian influence and strength in the region. As such, the US made a calculated decision to support those fighting on behalf of Afghanistan. Looking back at history, one can conclude this was a smart and tactical decision that yielded the desired results. The Russians left Afghanistan without a win and America's enemy at the time was defeated.
Now we turn to the most recent Iraq - US war, which started post 9-11. Without denial, Saddam was a dictator and tyrant who deserved to be held accountable for his actions. I have no objections to his outcome, as during his Presidency, he was responsible for the killings on thousands of innocent people. But let's discuss the impact of America's intervention in this war? Before the war started, the American administration (at the time led by President Bush) must have had a vision for Iraq. Let's discuss these visions one by one:
1. To provide democracy for Iraqis: I don't believe this was the case at all. If democracy was the desired outcome and only desired outcome, why wouldn't America intervene in the numerous hot spots of the world, where democracy remains just a dream?
2. To have a direct impact on the control of Iraqi oil: I consider this to be one of the main reasons of the Iraq war. As China and India (both of whom account for almost 33% of the world's population) become more industrialized, their demand for oil will increase. As these countries transition from 3rd world status to 2nd and 1st world status, their needs have changed. For various Chinese and Indians, having a car used to be a luxury for a small percentage of society. As American jobs have been offshored to India & China(to please shareholders of publicly traded companies), those respective economies have grown, while ours remains stagnant, if not contracting. Imagine a world where the demand for oil was greater than the supply? Now imagine the US without access to this supply? Think of who the main oil producers are in this world: Venezuela (whom we have a rocky relationship with), Iran (whom we have a rocky relationship with) and Saudi (a country who suppresses a women's right to drive). If America lost access and control to Iraqi oil, gasoline could easily reach $10 per gallon (as is almost the case in many European countries).
3. To protect Israel's security: Many people will say this was a reason to justify the war, but I feel this argument is not as strong as item 2 above and item 4 below.
4. To minimize Iran's strength in the region: To me, this point has significance and merit. Unfortunately, it also shows how weak American foreign policy has become, as compared to our recent history. In brief, America intended to invade Iraq to weaken Iran's influence in the region. Unfortunately, the opposite has happened. Iranian intelligence, influence, military, and more now have a significant say in daily Iraqi affairs. Iran has infiltrated Iraq's key decision making body and has elevated its grasp and power in region.
If America is to once again become the leader in world affairs, it needs to plan, conduct, and wrap up its operations more strategically. It is time to revisit who are allies are and what they each independently represent.
Sunday, July 19, 2009
Sunday, July 12, 2009
Financial Statement Summary of Navigant Consulting (Ticker: NCI)
Segment Overview
The financials of Navigant Consulting are derived from four separate operating segments. These segments include consulting income generated from 1. North American Dispute and Investigative Services, 2. North American Business Consulting Services, 3. International Consulting Services, and 4. Economic Consulting Services. Within the past three years (2008 – 2006), almost 90% of revenues and profits have been generated solely based on activities pertaining to North American services.
Concentration of Revenues
Navigant’s revenues are reliant on a select basis of clients and thus create potential risk. During the past three 10K filings (2006 – 2008), almost 23% of total revenues were attributed to 20 clients. Furthermore, Navigant’s top 10 clients amount to 15% of total revenues in the same filing period. Between 2006 and 2008, there were no clients that accounted for more than 5 percent of total revenues.
Financial Data
Although Navigant has seen consecutive revenue growth each year since 2004, the last five quarters have produced opposite results. Since the 1st quarter of 2008 until the most recent 1st quarter of 2009, revenues have decreased in 5 consecutive quarters. Various red flags can be derived from the financial data associated with the past 5 quarters:
1. The company has added an additional 1.5% of staff, yet revenues have decreased by 12%.
2. Net income has decreased by 50%, yet billing utilizations have only decreased by 8%.
3. Cash and cash equivalents have decreased by 12%, yet company debt has only decreased by 2%.
4. Receivables have decreased by 9%, yet average days outstanding for receivables have increased by 5%.
In short, the last five reporting quarters of Navigant Consulting have been adversely impacted by the recent economic downturn. Although Navigant has acquired almost 10 reputable businesses since 2006, the financial returns have yet to justify this acquisition.
By: Mulham Shbeib
July 2009
Segment Overview
The financials of Navigant Consulting are derived from four separate operating segments. These segments include consulting income generated from 1. North American Dispute and Investigative Services, 2. North American Business Consulting Services, 3. International Consulting Services, and 4. Economic Consulting Services. Within the past three years (2008 – 2006), almost 90% of revenues and profits have been generated solely based on activities pertaining to North American services.
Concentration of Revenues
Navigant’s revenues are reliant on a select basis of clients and thus create potential risk. During the past three 10K filings (2006 – 2008), almost 23% of total revenues were attributed to 20 clients. Furthermore, Navigant’s top 10 clients amount to 15% of total revenues in the same filing period. Between 2006 and 2008, there were no clients that accounted for more than 5 percent of total revenues.
Financial Data
Although Navigant has seen consecutive revenue growth each year since 2004, the last five quarters have produced opposite results. Since the 1st quarter of 2008 until the most recent 1st quarter of 2009, revenues have decreased in 5 consecutive quarters. Various red flags can be derived from the financial data associated with the past 5 quarters:
1. The company has added an additional 1.5% of staff, yet revenues have decreased by 12%.
2. Net income has decreased by 50%, yet billing utilizations have only decreased by 8%.
3. Cash and cash equivalents have decreased by 12%, yet company debt has only decreased by 2%.
4. Receivables have decreased by 9%, yet average days outstanding for receivables have increased by 5%.
In short, the last five reporting quarters of Navigant Consulting have been adversely impacted by the recent economic downturn. Although Navigant has acquired almost 10 reputable businesses since 2006, the financial returns have yet to justify this acquisition.
By: Mulham Shbeib
July 2009
Financial Statement Trends of Navigant Consulting (NCI), a Publicly Traded Company
In May 2008, Navigant Consulting acquired Chicago Partners LLC for $73 million. Chicago Partners was a 90 person consultant firm focused on economic and financial analyses of legal and business issues principally for law firms, corporations and government agencies. As such, this acquisition led to the creation of Navigant’s fourth business segment, “Economic Consulting Services.”
In the 1st quarter of 2009, this new segment accounted for 8% of total revenues, even though it comprised only 5% of total staff. With an average billable rate of $343 per hour as compared to an average of $242 for Navigant's other three segments, the future for “Economic Consulting Services” appears to be filled with financial potential, continued growth opportunity, and bottom line results. Furthermore, this segment maintains a 96% billing utilization, as compared to an average of 76% for the other three segments. This newest segment is the only operation experiencing significant growth and as such, should positively impact Navigant’s financial statement trends.
In review of the financials between 2006 and 1st quarter 2009, a few prominent financial trends are worth noting:
1. Between 2006 and 2008, revenue increased almost 20%, yet net income decreased by nearly 25%. This is largely due in part to Navigant’s proactive acquisition strategy. With current economic conditions being less predictable and more challenging, Navigant will need to undertake cost savings initiatives in order to protect profitability. A few items presently being discussed include staff reductions, office space consolidations, and salary freezes.
2. Due to the current market situation associated with the world economy, Navigant’s total revenues, margins and profits are likely to be impacted by a significant decline. As the most recent 2009 10Q filing presents, significant challenges appear on the horizon. For instance, between 4th quarter 2008 and 1st quarter 2009; cash has decreased by 65%, while accounts payable has increased by 24%. As of March 31, 2009, Navigant had more accounts payable than cash on hand. Additionally, Navigant has now had 5 consecutive quarters of revenue decline.
3. Between 4th quarter 2008 and 1st quarter 2009, Navigant’s debt has increased by almost $30 million to $260 million. This 12% increase from the prior quarter presents significant risk to Navigant, as their present credit line is $275 million, with an option to increase to $375 million. As debt increases and revenue and cash decrease, management is obligated to make cost savings decisions.
In May 2008, Navigant Consulting acquired Chicago Partners LLC for $73 million. Chicago Partners was a 90 person consultant firm focused on economic and financial analyses of legal and business issues principally for law firms, corporations and government agencies. As such, this acquisition led to the creation of Navigant’s fourth business segment, “Economic Consulting Services.”
In the 1st quarter of 2009, this new segment accounted for 8% of total revenues, even though it comprised only 5% of total staff. With an average billable rate of $343 per hour as compared to an average of $242 for Navigant's other three segments, the future for “Economic Consulting Services” appears to be filled with financial potential, continued growth opportunity, and bottom line results. Furthermore, this segment maintains a 96% billing utilization, as compared to an average of 76% for the other three segments. This newest segment is the only operation experiencing significant growth and as such, should positively impact Navigant’s financial statement trends.
In review of the financials between 2006 and 1st quarter 2009, a few prominent financial trends are worth noting:
1. Between 2006 and 2008, revenue increased almost 20%, yet net income decreased by nearly 25%. This is largely due in part to Navigant’s proactive acquisition strategy. With current economic conditions being less predictable and more challenging, Navigant will need to undertake cost savings initiatives in order to protect profitability. A few items presently being discussed include staff reductions, office space consolidations, and salary freezes.
2. Due to the current market situation associated with the world economy, Navigant’s total revenues, margins and profits are likely to be impacted by a significant decline. As the most recent 2009 10Q filing presents, significant challenges appear on the horizon. For instance, between 4th quarter 2008 and 1st quarter 2009; cash has decreased by 65%, while accounts payable has increased by 24%. As of March 31, 2009, Navigant had more accounts payable than cash on hand. Additionally, Navigant has now had 5 consecutive quarters of revenue decline.
3. Between 4th quarter 2008 and 1st quarter 2009, Navigant’s debt has increased by almost $30 million to $260 million. This 12% increase from the prior quarter presents significant risk to Navigant, as their present credit line is $275 million, with an option to increase to $375 million. As debt increases and revenue and cash decrease, management is obligated to make cost savings decisions.
By: Mulham Shbeib
July 2009
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