Bearing Point

By Baselinemag  |  Posted 2006-02-07 Print this article Print

The consultancy, touted as a Sarbanes-Oxley expert, failed to report earnings for 18 months and may be de-listed from the Big Board. One reason why: missteps implementing a financial software system.

s End Game.">
Even its once thriving public-services business took a big hit when the U.S. Department of Interior fired it from a big financial consolidation initiative last October. As for new business, forget about it-at least for the time being.

"The company's precarious situation doesn't drive confidence among potential clients, and that's not going to change until BearingPoint gets its financials in order," says Richard Schroth, a fellow at Katzenbach Partners in New York who has held CIO-level positions at Marriott and other companies.

And BearingPoint still has to deal with a formal SEC inquiry.

On Dec. 23, 2005, BearingPoint issued an 8K form announcing that its deadline for filing a 10K financial statement for 2004 had been extended by its creditors, a banking consortium that had loaned the company $150 million, until Jan. 31, 2006.

BearingPoint had also asked for and received a three-month extension from the NYSE in filing its 2004 10K with the understanding that if it fails to file by March 31, the NYSE will move forward with the initiation of suspension procedures.

At least one brokerage concern viewed the announcement as a positive step in BearingPoint's recovery. "Although we understand why some investors may be frustrated by another apparent delay in the 10K filing, we believe this could actually be a prelude to the end of the drama," UBS Securities said in a report issued within hours of the 8K filing. "We think there could be a silver lining some may overlook." Of course, UBS Securities had better reasons than most to hope for a turnaround: It is a subsidiary of the bank from which BearingPoint had gotten most of the $150 million.

Other analysts agree that the company seems to be emerging from its perfect storm. "I think the worst is over for them in terms of their issues with the financials and Sarbanes," says Jefferies & Co. analyst Vafi. "The jury is still out, however, as to how strong they'll be as a competitor in the future."

In fact, there may not be a future for BearingPoint as we know it. At the end of January, rumors abounded on Wall Street and in the restaurants of McLean that You intends to sell off the company or even take it private-reports BearingPoint denies. His strategy should unfold over the next few months.

And, oh yes, Rand Blazer, under whose watch the OneGlobe problems surfaced, was just hired by SAP to serve as president and general manager of SAP Public Services. He'll be competing, of course, with BearingPoint.

BearingPoint Base Case

Headquarters: 1676 International Drive, McLean, VA 22102
Phone: (703) 747-3000
Business: A global consulting company that provides application services, technology solutions, systems integration and managed services to corporate, government and military clients.

Chief Business Executive: Harry You, CEO and interim CFO

Chief Technology Executive: Chas White

Financials: The company has not reported financials for any period since its second quarterof 2004.

Challenge: Align business processes that employees use for the OneGlobe financial systemto ensure maximum benefits and gain Sarbanes-Oxley compliance.


  • Generate revenue, which came in at $3.1 billion in fiscal 2003, of between $2.7 billion and $2.85 billion in the current fiscal year.
  • Increase operating income from $114 million in fiscal 2003 to between $180 million and $250 million in the current year.
  • Improve cash from operating activities from $154 million in fiscal 2003 to between $280 million and $350 million this year.
    Source: Company statements; financial report for fiscal year ended June 30, 2003

    QUESTION: For year three of Sarbanes-Oxley, do you expect to spend more or less time on documenting your internal controls? Tell us at baseline@ziffdavis.com.

    Story Guide:

    Main Story:
    Compliance: How BearingPoint Lost Its Way

  • What Went Wrong?
  • Born Using Someone Else's Infrastructure.
  • I.T. Designed for Growth
  • Danger: Old Boys and SOX
  • Recovering From a Hasty I.T. Rollout.
  • Ironically, Accounting Was a Big Problem.
  • BearingPoint's End Game.

    Player Roster: BearingPoint
    BearingPoint's PeopleSoft Roadblock: Training-Resistant Consultants
    Timeline: KPMG's Long Evolution into BearingPoint
    Base Technologies: BearingPoint
    Sage Software: A Friendlier Face Balancing the Books
    Planner: Calculating Costs of Sarbanes-Oxley, v. 2.0

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