Contact: Jim Gray, Duke-Fuqua, (919) 660-2935 or Chris Allen, FEI, (973) 898-4658

CFO SURVEY: Three out of four prefer Bush over Gore;

Only one in five would break up Microsoft


Interest rate increases have slowed consumer demand and economic growth


DURHAM, N.C., July 6 — A new poll of 221 companies indicates that business leaders have a strong preference for Republican presidential candidate George W. Bush. 74 PERCENT SAY BUSH WOULD BE BETTER. (37% of CFOs say that Bush would be much better for their company's overall business operations and another 37% say that Bush would be a little better). Only 1% say that Gore would be much better and 6% say Gore would be a little better. The remaining 20% say there would be no difference. These numbers are from the latest Financial Executives Institute/ Duke University Corporate Outlook Survey, conducted the week of June 14, 2000.

"Gore is apparently not getting much credit for the past eight years of economic prosperity," says John Graham, a finance professor at Duke University's Fuqua School of Business and the director of the survey. "Even in the high-tech industry, an industry that Gore thought was in his pocket, one-third of the CFOs say Bush would be much better and only 8% say Gore would be much better. Among banking and finance execs, 47% like Bush much better."

What should be done about Microsoft?

Only 20% of CFOs say that Microsoft should be broken up in response to anti-trust allegations. Another 8% say that the company should be regulated. The overwhelming majority, 72%, say that Microsoft should be left alone. "It is interesting that 29% of high-tech executives say that Microsoft should be broken up, 21% say it should be regulated, and 50% say Microsoft should be left alone," notes FEI President and CEO Philip Livingston.

Stock market predictions

The business leaders expect the S&P 500 to return 8% over the next 12 months. "This represents a market 'risk premium' of only about 2% over the yield on Treasury Bonds, which is much lower than the historical risk premium of closer to 7% over T-bonds," notes Graham. On average, the CFOs think that there is only a one-in-10 chance that the market will return 15% or more during the next year, and a one-in-10 chance that it will return 2% or less. Over the next 10 years, the stock market is expected to return about 10% annually.

Interest rates causing economic slow-down

26% of CFOs say that interest rate increases have caused consumer demand for their product to decrease. 37% of executives in the construction and mining industry note a decrease in product demand, in comparison to less than 10% of communications/media and high-tech executives.

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CFOs expect to raise the prices of their companies' products by 3.5% during the next year, up from an expected increase of just 2.2 % six months ago and about 1% a year ago. Price increases will be the largest in the transportation and energy (8.8%) and high-tech (3.6%) industries.

Health-care costs, wages, and employment

Wage increases will fuel inflation's fire. The CFOs expect wages to increase at a mean rate of 5% during the next 12 months in response to the tight labor market. Wage increases will be largest in the high-tech (8.3%) and banking/finance (7.2%) industries.

55% of firms would like to increase employment during the next year, with a 3% median increase in the number of employees. Last quarter 64% of companies said they would increase their number of employees, and two quarters ago 77% said that they would like to hire more workers.

Health-care costs are expected to increase at an 8% rate during the year, further adding to inflationary pressures.

Earnings and productivity

Even with the return of inflation, CFOs remain optimistic about the bottom line for their firms. Earnings growth is expected to average 18.4% during the next year (median growth of 10%).

The continued growth in earnings is possible, at least in part, by continued strong growth in worker productivity. The median firm expects output per employee to increase by 4% during the next 12 months. This is an increase from 3% productivity growth expected last quarter and is very strong by historical standards. High-tech firms are leading the way. High-tech CFOs expect productivity to increase by 6.2% in the next year.

Capital expenditures, M&A, R&D

Capital spending is expected to increase 7.1% during the next 12 months.

One-third of firms expect to be involved in mergers and acquisitions during the coming year, up from the 20% that experienced M&A activity during the past year. M&As are especially prevalent among communications/media and transportation firms, where approximately half of the firms expect to experience M&A activity.

Research and development spending will slow during the next 12 months. During the next year, 26% of firms will increase R&D spending, compared to 32% of last quarter's respondents that expected to increase R&D spending.

About the Survey

The survey is conducted quarterly by FEI and Duke University’s Fuqua School of Business. Each survey polls a cross-section of CFOs from more than 4,000 U.S. companies. The current survey was conducted during the week of June 14, 2000. Complete survey results are available on the Internet at

About FEI and Fuqua

Financial Executives Institute is the leading advocate for the views of corporate financial management. Its 14,000 members hold policy-making positions as chief financial officers, treasurers and controllers at 8,000 companies in the U.S. and Canada. For more information, visit

The Fuqua School of Business at Duke University was founded in 1970. Fuqua’s mission is to educate thoughtful business leaders worldwide and to promote the advancement of business management through research. For more information, visit