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Finance Lessons from Abbottabad?

Roy Harris | May 5, 2011
Some things for CFOs to ponder in the wake of the weekend's anti-terror offensive.

FRAMINGHAM, MA, USA, MAY 3, 2011—Corporate finance lessons from the dramatic turn of events in Abbottabad, Pakistan, may be few and far-between this week. But among the reports from the tech-based IDG network of publications, as well as from Bloomberg News, are numerous articles that should have more than passing interest for CFOs.

Hitting hardest, perhaps, are reports about what impact the killing of Osama bin Laden will have on global travel and business, and how the already-tumultuous Middle East political picture could affect fuel supplies and prices—already the greatest concern registering on CFO surveys. Experts interviewed by say they don't see strong disruption in global travel ahead.

Not far behind are concerns about any rise in the physical threat level posed by terrorism, overseas and at home. Who can forget the precautions forced on companies–and their cost–in the fallout from the 9/11 terrorist attacks a decade ago? Disruptions abroad, and possibility at home, are a prime consideration for finance, of course. And reports this week will shed more and more light on what steps need to be taken in that light.

How Wall Street Reacted
And what about Wall Street? Well, the stock market surged at its opening yesterday, based on the late-night Sunday news. But then it quickly fell back, with the S&P 500 slipping 0.2 percent, to 1,361.22 after its early advance.

"The killing of Osama bin Laden is not a material event for the stock market," Andrew Ross, partner and global equity trader at First New York Securities LLC, told Bloomberg News. "It's a great day for the country, but the market impact should prove to be limited," he added, noting that concern may shift to "some sort of violent response by al-Qaeda."

Indeed, declines among energy and raw materials producers overshadowed the news from Abbottabad. Producers of energy and raw materials led declines among industry groups in the S&P 500. And mergers and other corporate news–from the US$3.4-billion Arch Coal cash deal for International Coal Group, to the patent-infringement settlement between Dish Network and Echo-Star Corp. over TiVo technology–all had their own impacts on trading.

Tech Under a Microscope
There were, however, some peculiar wrinkles in the technology world worth noting.

One had to do with the vulnerability of the Internet itself to crushing news—a vulnerability that could impact more and more companies dependent on online sales and cloud-based systems.

Then, there was the viral rise in Internet scams related to the sudden interest in this news event.

According to a post from Randy Abrams, Director of Technical Education, Cyber Threat Analysis Center, ESET North America, black hat SEO manipulators know all too well that big headlines mean people will search for news, and they also know how to make their malicious sites show up early in the search results. Cyber criminals also use a slew of social engineering and phishing techniques to lure people into malware traps.

"Always stick with well known sites for your news information," advised Abrams. "You can go to sites you haven't heard of before, as long as they are coming recommended by friends and you know that your friend actually did recommend them. That means a simple email, IM or Facebook post doesn't cut it& you don't know if your friend's account was compromised. You need to have a dialog with your friend." CSO Magazine.

And for those in finance who are watching social-networking trends, with the idea of including them in the corporate plan, there's even some insight about the role Twitter in the universe. According to Twitter, Sunday night the site had its highest sustained rate of tweets ever. From 10:45 p.m. to 2:20 a.m. (US) Eastern time there were an average of 3,000 tweets per second, with this "microblogging site" peaking at 5,106 tweets per second and at 11:45 p.m., when President Obama finished his remarks, there were 5,008 tweets per second.

To put those numbers in perspective, during a 20-minute period while this year's Super Bowl was being played, traffic rose above 3,000 tweets per second, peaking at 4,064.


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