More Regulations. More Layoffs. An Opportunity?

During the Davos conflab, Angel Gurria of the Organization for Economic Cooperation and Development (OECD) called for “better regulation, better supervision, better corporate governance and better coordination” to restore trust to the financial markets. http://www.usnews.com/articles/news/2009/01/28/economy-hot-docs-geithners-new-tough-bailout-rules-consumer-confidence-slides.html

The likelihood of new regulations relevant to financial transparency approaches death and taxes in terms of probability. They will also come at a time when many firms have smaller budgets and less manpower to deal with them. Software can help understaffed firms deal with increasingly complex responsibilities and that bodes well for vendors whose biggest rival has been in-house labor – not each other.

NYC-based RiskMetrics (NYSE:RMG, http://www.riskmetrics.com/) provides risk management analytics to financial firms and rates companies financial governance systems on behalf of institutional investors. Credit Suisse analysts believe the Company will benefit from capital markets turmoil and increasing worldwide regulation of risk. The stock closed at $12.78, less than half its 52-week high of $26.43, but its services may be considered a need more than a want by investment pros whose decisions will be under increased scrutiny and thus, it could have more near term upside than firms offering more discretionary fare. 

Management of Dublin, Ireland-based GRC (Governance and Risk Compliance) software firm Trintech Group plc (Nasdaq: TTPA, http://www.trintech.com/) has a similar outlook,  though its shares closed at $1.19, off more than 60% from a 52-week high of $2.94.  Trintech knows that layoffs of accounting personnel result in loss of institutional knowledge and leads to comments like “Joe was in charge of that” “Where did these numbers come from?” when it is time to close the books on the quarter. Its software provides a dashboard view of a company’s finances along with action plans and control hierarchy that make sure the right people are doing right things at the right time.

Take a look at the next corporate press release announcing layoffs. There will likely be a mention that departing employees will be provided outplacement services such as job development skills.  Nashua, NH-based SkillSoft (Nasdaq:SKIL, http://www.skillsoft.com/) is an e-learning company that last month introduced a software package for clients looking to ease the layoff process. It helps clients with such soft skills as interviewing, resume writing, and communication effectiveness. SKIL closed Friday at $7.12, down about 5% on the day, and with a 52-week high of $11.42.  Shares trade well, with average shares per day at 415,000+.

from the splash page of American Public Education's website

from the splash page of American Public Education's website

Returning military personnel, aided with the GI Bill, represent a possible catalyst for Charles Town, WV-based American Public Education Inc (Nasdaq: APEI, http://www.americanpubliceducation.com
), a provider of online post-secondary education focused primarily on serving the military and public service communities.  Shares of the $702 million market-cap company closed Friday at $39.14, up $0.25, with a 52-week range of $27.56 to $53.24, and average volume of 307,000 shares.

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