Skip to main content

Brazils Globo Cabo Unleashes SWAT Team

Rio De Janeiro, Brazil-Globo Cabo S.A., Brazil's leading cable and broadband Internet-service provider, has put together an internal task force to improve the company's financial performance.

The so-called SWAT team will be overseen by Globo Cabo chief financial officer Leonardo Pereira and led by Guilherme Cavalcanti, who formerly worked at Globo Cabo's parent company, media giant Organizaçoes Globo.

One of the team's first tasks will be to implement a new performance-measuring accounting methodology, known as the economic-value-added system. Pereira said EVA is scheduled to be fully introduced over the next 12 months. "It is a new way of showing the value of a company," he added.

Globo Cabo will continue to issue quarterly reports based on traditional accounting methodologies, as all public companies are required to do. When the EVA system is fully implemented, that information will be included in the quarterly reports, Pereira said.

The SWAT team will also be in charge of a benchmarking effort. Team members will study the performance of selected pay TV operators around the world in order to learn from others' success, Pereira added.

"These management programs aim to cut costs and boost revenues. The company has attracted top financial-market executives. The fact that they are moving in this direction is good news. But those are long-term efforts, and they will not have an immediate impact on the company's share prices," said Petronio Cançado, an analyst for local investment bank Banco Pactual S.A.

According to Cançado, the performance of Globo Cabo's shares on the short term will depend on international market sentiment, rather than on the company's financial foundations.

Globo Cabo's shares trade on the Sao Paulo Stock Exchange and in New York as American depository receipts. On May 1, the company's shares became part of Brazil's main stock index.

Furthermore, Pereira said, in an estimated period of 60 days, the company's stock will begin to be negotiated at Latibex, the Madrid, Spain-based stock exchange created to attract shares of Latin American companies.

Globo Cabo shares have surged over the past year from about $2 each to $17.31 May 1. They had reached as high as $25 before a general retreat of stocks-especially those on the NASDAQ, where Globo Cabo ADRs trade.

"When the market calms down, people will again look at Globo Cabo's fundamentals, which have significantly improved in the third quarter of last year. For a while, though, the share prices will depend on the fluctuations of the international market," Cançado said.