|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
Subprime Woes Just Beginning, PwC Chief Warns, Nonfinancial companies will be hit next, says DiPiazza. And some, like Bristol-Myers, Ciena, and Lawson, are proving his point.
Stephen Taub
cfo.com. February 6, 2008
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EXCERPT: The next wave from the subprime mortgage crisis will flow past lenders and homebuilders and strike nonfinancial U.S. companies with forced write-downs, the chief executive of PricewaterhouseCoopers warned. Samuel DiPiazza, chief executive of the Big Four accounting firm, pointed out that many nonfinancial companies were exposed through securities in their own investment portfolios, according to a Reuters report. "It's not just in banks," DiPiazza said. "These securities sit in cash equivalent accounts of industrials; they sit in investment portfolios of pensions. We are having to deal with this with thousands of companies, not just a handful of big banks." Indeed, Bristol-Myers Squibb recently said that in the fourth quarter it took an impairment charge of $275 million on investments in auction rate securities (ARS), partially consisting of subprime mortgages. The company said it had $811 million of principal invested in ARS at year-end. Its estimated market value, however, was $419 million, reflecting a $392 million adjustment to the principal value. |
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