Thursday, August 26, 2010

Public Companies Shifting Investor Relations Tactics to be More Social and Transparent

As earnings season comes to a close it’s become increasingly apparent that public companies are focusing more heavily on their investor relations (“IR”) efforts. What explains this phenomenon? With so much volatility in the stock market, fear of another crash, and so-called “experts” proclaiming the death of “buy and hold”, management teams are experiencing a more challenging environment in which to appeal to the much coveted long-term oriented institutional investor. But while public companies’ more aggressive IR efforts are understandable the strategy being employed is somewhat surprising.

With all the talk of social media in IR circles one would expect that enhanced IR efforts would involve new outreach on platforms like Twitter, Facebook and LinkedIn. And, in fact, some companies are doing just that. Others, however, are returning to the basics. They’re instead focused on making better use of tools they already have -- hoping to reach investors in more effective ways.

For example, public companies are increasingly using their corporate IR sites to provide more substantive financial content, establish greater transparency, and engage investors by soliciting questions and providing feedback. Furthermore, companies are adjusting the format of their earnings calls not only to provide more time for questions and broader discussion but also to drive home their agendas. Examples from recent investor calls follow below:

1. Urban Outfitters (URBN) (Transcript)

Glen T. Senk - CEO:
Before I begin today, I'd like to introduce Oona McCullough, the Company's newly appointed Director of Investor Relations. I'll ask Oona to take a brief moment to share her objectives and review some of the changes we've made to our investor communications policies since she's joined the team.
 Oona McCullough - Director, IR:
URBN is a Company that I have long admired as a consumer equity research analyst at BlackRock and especially as a customer. Our Investor Relations objective is simple, to provide clear, comprehensive, timely and insightful communication within the guidelines of the regulatory framework. To that end we've made the following changes.

For the first two-third quarters, we will report sales and earnings simultaneously on the third Monday following quarter's end. We will continue our tradition of reporting holiday sales in early January and will report fourth quarter sales and year end earnings on the first Monday in March. Our sales and earnings release, along with a detailed management commentary will be posted to our corporate at 4.00 PM Eastern Time on the day of our release. The management commentary will address many of your housekeeping questions, so that during the earnings call you may focus your attention on more strategic issues.

Our earnings call will take place at 5.00 PM Eastern Standard time on the day of the release. We will begin to report sales at a brand and channel level and will post historical comparisons on our corporate website for your reference. The earnings call will close sharply at the end of the hour so our one question rule will be strictly adhered to. In the event you have additional questions, feel free to follow-up with me after the call. Finally, as usual, the text of the conference call will be posted on the corporate website immediately following the call.
2. Seagate (STX) (Transcript)

Stephen J. Luczo - Chairman, President and CEO:
Beginning with today's call we are implementing a new format for our quarterly results announcements. As you've hopefully already seen, we have posted supplemental information about the quarter on our Investor Relations website. The majority of the information that Dave, Bob, and Pat have previously conveyed verbally on our earnings conference calls is in that document, which we posted about two hours ago in order to give investors and analysts time to review it. Our goal with this format is to give all of you more time with the basic factual information about the quarter in a form you can download yourselves, and then focus the call on topics and issues that are most important to you.

At the end of my prepared remarks, we will address a few questions of particular interest to our investor and then open the call up for questions.
3. Gilead (GILD) (Transcript)

Susan Hubbard - IR:
We issued a press release this afternoon providing results for the second quarter 2010. This press release is available on our web site at, as are the slides that provide much more detail around the topics discussed today on this call.

Based on outreach to you and feedback from our investors we're introducing a new earnings call format today. Our prepared comments on the call will be significantly briefer to allow more time for your questions.
4. Molson Coors (TAP) (Transcript)

Peter Swinburn - President and CEO:
So now, before we start the Q&A portion of the call, just a quick comment. Our prepared remarks will be on our website for your reference within a couple of hours this afternoon. Also, at 2 pm Eastern Time today, our Investor Relations team led by, Dave Dunnewald, will host a follow-up conference call. It’s essentially a working session for analyst investors who have additional questions regarding our quarterly results. This call will also be available for you to hear via webcast on our website.
5. Flowers Foods (FLO) (Transcript)

George Deese - Chairman and Chief Executive Officer:

Today, our discussions will be different from our past conference calls. You have the details of our fourth quarter and fiscal 2009 in our news release. Our discussions will focus on six questions that we believe are the most important for our company and for our investors.

First, what about pricing and promotions? Second…..

Allen and Steve will briefly discuss fourth quarter and fiscal 2009 results.

More importantly, they will tell you about our strategies for addressing the issues presented by the six questions that I have just discussed. Then, I will weigh in on the issues and our strategies before we open the call for your questions.
Growing Importance of Earnings Calls for IR

What can we learn from these changes? A growing number of management teams are looking to maximize the effectiveness of their investor calls. They’re doing so as part of a more comprehensive effort to show greater transparency and accessibility. This is in response (among other things) to the overwhelming competition for investor attention. The explosion of online financial content and the continued decline of sell-side analysis have made reaching investors a more challenging task. One way of getting attention is by making management and resources more available.

Some companies are specifically focusing on changes to investor calls for at least two important reasons: (1) investor calls remain one of the few public forums currently used by companies to get their messages out to the masses; and (2) calls typically occur during earnings season when investors are likely to be more heavily engaged in anticipation of the release of quarterly results.


For now, public companies are focused on bolstering their corporate IR sites and improving the Q&A portion of their investor calls. They’re clearly looking for new ways to engage and interact. The problem with this strategy is that it fails to get management teams in front of “new” or potential investors. That’s why some IROs and IR firms are experimenting with social media platforms like Twitter and Facebook in an effort to spread their message to new investor audiences. Of course the issue with Twitter and Facebook is that both are largely populated by retail, not institutional investors. And retail investors are not what public companies are typically looking for.

It’s conceivable that LinkedIn will one day fill this void and serve as a platform for management teams to interact with new audiences of sophisticated investors online. I’ve heard this suggestion from numerous IR firms of late. But the more likely platform will be a dedicated investor site.

Unfortunately for pubic companies an online institutional investor platform with the necessary IR tools has yet to emerge. But it will. And, when it does, John Jacobs, CMO of NASDAQ will be proven correct when he said: “the future of investor relations will almost certainly play out in the social media space".

Related Posts:

Investor Relations & Social Media -- A Bust?
Investor Relations 2.0 -- Is SeekingAlpha the Answer?
Is StockTwits a Useful Social Media Platform for Public Companies?

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