As treasurer, Misner had distinguished himself by managing volatile bottom-line expenses, from aviation fuel costs to gyrating insurance premiums. But now the problem was revenues. "For a supposedly deregulated industry, we've got lots of regulations affecting the cost side and none affecting the revenue stream, where the real financial challenges are," Misner says. "This is a very low-cost business to get into. You pick up old aircraft for less than it costs you to buy a nice house in Seattle, and then you simply wreck the pricing by charging discount fares. Not that all these start-ups last long. But, once they're gone, guaranteed two more will take their place."

Of course, the start-up argument could be used against Continental, a company that twice has filed for bankruptcy, allowing it to abrogate labor contracts and begin anew with a clean slate. But it has been 10 years since Continental last emerged from Chapter 11 protection, and Misner says the company's near-bankruptcy in 1995, the year he hired on as treasurer, taught him a valuable lesson. "I learned that the key to success in this business is the revenue stream," he says. "Instead of excessive cost-cutting to reduce expenses, you must be focused on making your airline the most customer-friendly flier around. This is not a commodity business–there are differences among the providers."

From the start, Misner and his mentor Lawrence Kellner, Continental's president and Misner's predecessor as CFO, made a difference at the company, particularly on the theme of customer satisfaction. "When he and Larry signed on, they insisted that Continental modernize its fleet," says Vivian Lee, airline industry analyst at New York-based asset management firm Alliance Capital Management. "The airline was saddled with many older planes inherited from acquisitions. Think of the maintenance issues alone. So Larry and Jeff sold them off and built a modern, fuel-efficient fleet."

Today, Continental has the youngest fleet of the nine majors, with planes that average 5.2 years in age. But the airline also invested in the expansion of several hub terminals and splurged on customer amenities and comfort, such as 16 jets with new first-class seats costing $26,000 each. "Continental has got a real team in [CEO] Gordon Bethune, Larry Kellner and Jeff Misner," Lee concludes. "These guys know how to focus on productivity and profitability. So when they say they're not going to offer labor a contract they can't afford, you believe them. They're faring better than most competitors, and it's not just because they had an unfair advantage from bankruptcy."

Moving forward, with Misner, Continental has a CFO with hands-on experience in the areas that could be the trickiest for Continental in the next couple of years. "Jeff gained invaluable experience in areas like cash management, insurance, fuel hedging, aircraft financing and taxes," says Continental's president Kellner. "It made him a jack-of-all-trades."

Innovative Cost Cutting and Controls

A former numbers-crunching tax partner at Ernst & Young LLP, Misner is an admitted quant freak. "I like to run lean and mean and have put together small teams that constantly measure our results against the industry and against our past performance," he says. "These teams are fed reams of data from divisional controllers for forecasting and modeling purposes. If you don't know where you are in the grand scheme of things, you're lost."

The cross-functional teams were put to the test in the immediate wake of 9/11. "By midnight on Sept. 11, we had completely rebuilt the models governing our P&L and cash flow forecasts," Misner says. "We re-ran those models every day for weeks, tweaking the forecasts where necessary. We're running them every third day now."

In 2001, Misner also advised merging the company's insurance program with Northwest Airlines' insurance program to lower both companies' premiums. "By aligning our program with theirs, we've been able to buy less expensive aviation insurance because of larger economies of scale," he explains. "Those savings are still there, although in absolute dollars our premiums and everyone else's in the industry are higher post-9/11."

He took an ax to Continental's cash management system, which operated on the basis of a cash forecast prepared each month. Misner didn't like not knowing what revenues were on a day-by-day basis or if revenues were trending downward daily. "We never knew if cash flow was low because revenues were low until the month was up," explains Diane Dayhoff, Continental staff vice president of finance. "Jeff spearheaded a program to implement customized technology and new personnel processes, so we literally know by noon of each day our cash situation. If we've projected, say, $10.3 million for the day and we're off by $200,000, that's not a problem since we can be over that amount the next day. But if there is a sequence of days where we're off by that amount, then something unusual is happening and the revenue forecast is wrong. Overall, this allows better decision-making."

Pension management was yet another area Misner changed, replacing internal management with outsourced management. Dayhoff says Continental had difficulty managing pension performance internally to its stated benchmarks. "We were doing horribly against benchmarks like the S&P 500," she notes. "Making sure a pension fund is diversified to balance risk with reward really requires outside expertise and broad data, someone whose bloodline is this exclusively." Since outsourcing pension management to the Frank Russell Co., Continental has met or exceeded all pension benchmarks.

Misner, Treasurer Gerry Laderman and the treasury department also built good relations with their bankers, says Dayhoff. "The airline industry has a tattoo on its head when it walks into a bank," she jibes. "Jeff knew that bankers don't like to be caught unawares by any company and are particularly skeptical about airlines, whether you're making money or not. So he's very frank and open, unlike other CFOs who may prefer to play cards close to the vest."

And nowhere has his skill been more apparent than in his ability to raise capital at a time when much of the industry is facing its worst ever financial crisis. Three recent examples of his capital market prowess: the sale of a minority stake in Continental's ExpressJet regional airline subsidiary, a $200 million debt financing secured by spare parts and Continental's successful equity offering post 9/11, the only major airline to pull off that feat. "Under Jeff's leadership, Continental has been very opportunistic and successful in raising capital at relatively favorable terms," says Michael Linenberg, an airline analyst with Merrill Lynch & Co. "With geopolitical concerns looming, maintaining ample liquidity could be a challenge. That's the biggest concern we see facing Continental–a five-month campaign versus a five-week campaign in Iraq would be devastating for all airlines, including Continental." –Russ Banham

David FitzPatrick,Tyco International Ltd.

With both its former CEO L. Dennis Koslowski and its former CFO Mark H. Swartz under indictment on charges of looting the company of some $600 million for personal gain, Tyco International Ltd. needed nothing less than a Boy Scout to restore confidence within the investment community. So it went out and found one: David J. FitzPatrick, former Boy Scout and CFO at United Technologies Corp., where he scored many brownie points for his straightforward style.

"I don't normally comment about individual corporate executives," says Joseph Campbell, who follows United Technologies for Lehman Brothers, "but you don't see many guys like FitzPatrick. In this business, you meet lots of people in corporate suites who are smart and charming, but you don't meet many who are both talented and humble. FitzPatrick is simply a decent, talented guy. At UT, he ran everything on the level and in the open and always was willing to answer your questions."

There will be plenty lobbed his way as FitzPatrick attempts to navigate Tyco's financial future. With investigations of its finances still underway by the Securities and Exchange Commission and an internal legal team, troubled Tyco is far from out of the woods. At least with FitzPatrick, it appears to be making headway on the trust issue.

In September, Tyco hired FitzPatrick away from United Technologies where, as the defense conglomerate's CFO since 1998, he was widely credited with introducing cost-cutting measures that helped boost the enterprise's return on invested capital from single digits to about 12.5% in 2001. Analysts also praise him for UT's clear accounting, which they say contrasted favorably with the frequently obfuscatory practices that prevailed at many defense industry competitors. And analysts say that his work before United Technologies, at Eastman Kodak Co. and General Motors Corp., showed the same kind of integrity and business expertise.

While FitzPatrick declined to be interviewed, saying through a spokesman that he is "too busy" working on issues at Tyco and "trying to get his arms around the challenges" at the company, analysts familiar with his work at United Technologies say he is the perfect man for the job. "He's low on pizzazz," says Lehman's Campbell, who admits that FitzPatrick didn't have the kind of clout or profile at UT that he will have to assume at Tyco to be successful. "For Tyco, which I think it is fair to describe as a troubled company with a troubled history of leadership, low on pizzazz is probably just what they need." On the technical side, FitzPatrick's experience at United Technologies, which like Tyco is a global conglomerate, should help prepare him for the mundane M&A, tax and operational questions that a global company in many businesses faces. Yet, his biggest challenge will be restoring confidence in Tyco, not just among investors and creditors, but among employees, customers and suppliers, too. The company's stock is down about 50% from its high of $33 a share in early 2002, though it has recovered somewhat from its worst days last summer, when it closed at a low of $8.25.

The First Test

A critical test for both Tyco and FitzPatrick will come this February, when the company has to refinance some $3.9 billion in bank debt. A total of $11 billion of the company's outstanding $22 billion in debt comes due by the end of 2003.

Moody's Investors Service analyst George Meyers notes that Tyco has a $6.5 billion cash cushion that should help cover those refinancings. But he says, "FitzPatrick and Tyco management also have to make sure the company's core operations generate the kind of cash flow that will restore investor confidence."

"FitzPatrick has made a positive impression so far," says Standard & Poor's analyst Cindy Werneth, "but I've heard mixed reports about how they introduced their yearend numbers. We got information we needed, but I think some folks wanted more disclosures and detail."

Some analysts were reportedly dismayed that the internal review of the company being conducted by attorney David Boies had not been completed by the time of Tyco's last quarterly earnings report, and there were complaints that the company had provided only sketchy information about what Boies was turning up.

After so much bad news coming out of Tyco, there are concerns that even with the shakeup of the company's management, and with a new CEO and CFO, there could be more bad news yet to come.

While praising FitzPatrick, even Lehman's Campbell expressed some concern at FitzPatrick's and the company's current unwillingness to talk with the media. "You just don't know whether Tyco's past problems were just a matter of overstatements and a failure to meet inflated expectations or whether the company had real problems that are still going to come to light," he says.

"FitzPatrick remains to be tested in many ways," says Campbell. "At United Technologies, he walked into a well-run company making its numbers. I don't now how he'd handle things if he found himself in a mess at Tyco. Being the kind of guy he is, he might just walk away."

No sign of that. In fact, by all appearances, FitzPatrick is settling in, bringing over as treasurer former Lucent Technologies Inc. Treasurer Martina Hund-Mejean, a former colleague from GM who helped straighten out Lucent's financial morass even if she couldn't fix the company. But as any good Boy Scout knows, it always pays to be prepared.

–Dave Lindorff

Rajiv Dutta, EBay Inc.

Rajiv Dutta got a good piece of advice from his wife back in June 1998. As the well-paid worldwide sales controller for semiconductor equipment maker KLA-Tencor Corp., Dutta was pondering an offer from a group of geeky entrepreneurs to join them (at a huge cut in pay) as CFO of a whole new kind of online auction business. "I remember," he says now, "she told me, 'You have to go with what makes you happy.'." And he did.

Today, he's CFO of eBay Inc., arguably at $20.9 billion in market value (double the size of Amazon.com Inc.), one of the biggest success stories of the Internet revolution. "I don't know what she was thinking when she said that," he says. "Maybe she was just hoping I'd be less cranky at home, but it was the best career advice she ever gave me."

The move certainly has propelled Dutta, a relatively untested finance executive, into the big leagues as far as finance managers go. The question now: How will Rajiv Dutta handle the inevitable hard times, when eBay, which continues to expand and grow as if the Internet bubble had never burst, finally hits a speed bump?

Dutta acknowledges that it might appear that his entire career has been spent working at successful companies. But he cautions that doesn't mean he doesn't know how to handle a crisis. "In reality, in any business, no matter how successful, one handles adversity every day of the week," he explains. At Bio-Rad Laboratories Inc., a bio-tech equipment company at which he was director of finance for Asia/Pacific operations from 1989 to 1991 and later country manager in India until 1996, he says he always faced "incredible odds and competition" from bigger and better-branded competitors. In his next job at KLA-Tencor, a maker of equipment for semiconductor manufacturers, he always faced the possibility that an expansion cycle in a very cyclical business might be coming to an end. Of course, he switched horses in each case well before the tech and bio-tech industries saw any sign of real weakness.

But success at eBay was hardly a slam-dunk, particularly since the high tech meltdown in April 2000. Dutta concedes that pressure from analysts and investors has been nothing short of relentless. "As a new business model, eBay has always been held to a higher standard," he says. "We're like this infant on a high-wire act. We're subject to intense public scrutiny from both the investors and the public. It's challenging, but also very positive for the company."

Keeping Profits A Priority

One key difference between eBay and many other dot-coms: Dutta and eBay management kept their wits about them even as the company was enjoying stunning revenue growth. "Numbers count and profitability matters," says Dutta–a phrase you never would have heard uttered by most dot-coms or the analysts that followed them since the Net companies never had profits. "When we're deciding on a strategy or an acquisition, we always have to decide first on what constitutes a reasonable return." Given eBay's high numbers, he explains, "we can't use standard measures, so we set a higher internal bar. Instead of looking at the weighted average cost of capital, we look at the relative return of various internal alternatives when we're considering any investment."

For example, he says, those calculations led the company to pull out of Japan, a huge potential market, but one in which eBay faced stiff competition from Yahoo Japan. To win, eBay would have had to invest considerably for each dollar of revenue. Instead, Dutta and the management team decided to focus on other international markets and make additional domestic investment. "We are blessed with an enormous amount of opportunities, but there are only a few smart ones," he says. "We are always making a choice about how to use what are always strained resources."

Analysts agree that Dutta has been a good fit for eBay. "Rajiv knows every nook and cranny of this business," says Jeetil Patel, an analyst with Deutsche Bank Alex. Brown. "He has kept the company from overspending and has been truly conservative in his P&L statements."

The big challenge for Dutta and eBay, analysts agree, will be continuing to expand a finance operation that has to handle the complexity of operating in 18 markets around the globe, each with its own separate taxation system, and responding to any major slowdown in the consumer markets–as might occur if war in Iraq were to lead to global economic disruptions.

"Up to now, eBay has been a well-performing company, but it's essentially been running on autopilot," says Safa Rashtchy, a research analyst with US Bancorp Piper Jaffray. "Dutta has not had to steer the ship in difficult times. Eventually, the company will have to figure how to keep it growing after growth has reached its maximum."

For now, Dutta says he has tried to keep the company prepared for any harder times by keeping a lid on fixed costs. "The safest way to protect yourself is not to allow costs to expand beyond your revenue growth, and we have done that," he says, noting that eBay has been cash flow positive in almost every quarter since inception. "We never want to get ahead of ourselves."

–Dave Lindorff