Finance 2.0

Crisis Investor Relations in the Age of Social Media

2011-12-07T22:00:00.000-08:00

So often lately, public companies have been under attack. Most of these attacks have been directed at Chinese companies publicly-traded on US stock exchanges.

When these attacks started they were largely ignored. No one was surprised that a handful of small-cap Chinese companies were frauds.

But when the attacks exposed some mid-cap companies that were core holdings of institutional investors and had been taken public by US bulge bracket investment banks, people started to pay attention. And now, whenever equity research reports or financial blog posts are published claiming fraud, public companies and their investor relations teams are forced to respond in an effort to stem what can be steep share price declines.

So how are public companies responding to accusations of fraud?

The most common practice has been to simply issue a press release addressing the allegations. This is what New Oriental Education (EDU) did. So did China Medical Technologies (CMED).

But Focus Media (FMCN) took it up a notch. Faced with a comprehensive report from research outfit Muddy Waters, Focus Media issued not one but two press releases rebutting the accusations. They also conducted a lengthy conference call open to the public, announced certain recommendations to their audit committee, and confirmed their intention to continue purchasing shares under an existing stock buyback plan. On a personal level, Focus Media’s CEO sat for an interview with the China Business News, took to his Sina Weibo account (China’s Twitter equivalent) to denounce the research report, and purchased a significant amount of stock in a block trade. Since then the stock has largely recovered.

While these recent research reports have focused on Chinese companies traded on US exchanges, there’s little doubt that non-Chinese companies will be targeted at some point, too. As a result, public companies of all sizes must be prepared especially in this era of social media where information travels fast. Companies have little choice but to take online equity research seriously and be prepared with a game-plan for how to respond. To date, Focus Media appears to be the best example of what to do when under attack.

But there’s a larger point to be made here. Despite the growth of social media over the last many years, public companies still have few options in which to respond to accusations or even initiate discussions with investors online. At present, Twitter and StockTwits remain the best platforms companies have to respond quickly and effectively. One can imagine that StockTwits will become an even more important platform for public companies and their investor relations teams once they announce a much-rumored Yahoo! Finance collaboration that will allow companies to speak directly to investors on the most trafficked finance website.

But what about online platforms frequented by long-term investors? Wouldn’t those be better platforms for public companies looking to target investors with a specific message especially in times of crisis? As we know, long-term investors are what public companies most desire.

Over the years (since departing my IR product development role at SeekingAlpha and now as a portfolio manager), the most promising platform I’ve seen for public companies looking to engage long-term investors online has been Motley Fool. They've held some incredibly substantive community-driven Q&As with public company executives. Unfortunately, their efforts seem to have been abandoned.

My gut tells me StockTwits will be the big winner in the near term. They've been aggressively courting investor relations professionals who’ve been waiting patiently for years for a great social media platform to reach investors. Just look at the number of companies that have signed up for StockTwitsIR in such a short time. It clearly shows the pent-up demand I’ve been discussing for many years.

But that still leaves a void for public companies seeking a platform to reach long-term investors online. If such a platform existed today companies like Focus Media would have another place to reach current shareholders, engage them, and communicate their side of the story to counter the allegations against them. And once the current crisis subsided, Focus Media would have a platform to pitch their story to new investors – something they can’t do on conference calls, through press releases or via their website.

Warren Buffett Reveals New Twist to his Optimal Investor Relations Strategy

2011-10-10T21:03:00.000-07:00

During the Q&A portion of last week's Business Wire event, famed investor Warren Buffett discussed his investor relations strategy as CEO of publicly-traded Berkshire Hathaway (BRK-A). While much of his strategy is well known, he did recommend a novel approach that would complement traditional IR communications efforts. Here are some key quotes from the event:

ANNUAL SHAREHOLDER LETTERS:

...the most efficient way to communicate with hundreds of thousands of people which we have at Berkshire is through the written word. And I try once a year in an annual report to tell them (investors) what I would want to learn if our positions were reversed.

I have two sisters Doris and Bertie. They have significant percentages of their net worth in Berkshire (stock). They're smart but they're not spending all their time reading financial reports or the financial pages. I pretend that they've been away for a year, they've come back, and they've written me a letter saying "Warren, what's going on?". And then I write a letter saying "Dear Doris & Bertie...". And I tell them. And when I'm through I take off the "Dear Doris & Bertie" and then I mail it out to shareholders. In my view that's what should be done.

Those people (investors) are our partners. I want them to know.......what my partner Charlie Munger and I, who run the place think is important. I don't want to give them so much information that obfuscation sets in. I want to talk to them about what's important, what I'm thinking. I think every company should do that.

EARNINGS CALLS:

...I think that if you want to have some continuous dialogue for the year, most companies have investor calls and that sort of thing. I read those things like crazy, spend a long time reading them.

NEW ONLINE COMMUNICATIONS STRATEGY:

...But if I were to institute something beyond what we're doing I would probably say "send along questions". And every Saturday, Saturday morning, because I'd want the market to have the maximum time to digest any new information. If any of those questions were the kinds that I'd expect from my sisters, that would be important to shareholders, then I'd put the questions and my answers up on the Internet where everyone has a couple of days to digest the answers (before the market opens).

Any information that I've miscommunicated and I should have communicated earlier.....I would try to give the same answer to everybody at the same time.

The best way to do it, in my view, is to put it up (on the Internet) on a Saturday morning. We try to release all important information after the close on Friday because that gives people a maximum amount of time to read sometimes complicated information, our 10-Q for example, before the market opens on Monday....and if people want to blog about it or anything else.

EQUAL ACCESS:

...They (investors) should all get the same information, they should get it at the same time, they should get it with the same degree of candor regardless of the number of shares that they own.

WANTED: LONG-TERM INVESTORS:

...We want to get owners who want to buy our stock and expect to own it for the rest of their lives.....We don't want shareholders who are buying because they think they're going to sell for more next month.

Buffett's vision for more frequent communication between public company executives and equity investors -- especially online -- is nothing new. We've seen glimpses of what's possible in this area over the last 5 years (click links for articles highlighting Motley Fool and Seeking Alpha).

The high volume of financial content available online has made courting investors a more challenging effort. As a result, Buffett's suggestion is ever more compelling and would no doubt draw investor interest.

Watch the entire clip here.

My latest blog posts at IR Web Report.

Will Netflix CEO Hastings usher in a new era for online finance, investor relations & social media?

2011-08-02T11:49:00.000-07:00

Netflix CEO Reed Hastings is a remarkable entrepreneur. He founded a DVD-by-mail business in the late ‘90s that now boasts 25+ million subs and is disrupting the media and entertainment industries.

But similarly impressive and yet possibly overlooked is how he’s provided a blueprint for the future of online finance, investor relations, and social media. It’s not farfetched to conclude that Hastings’ latest actions will be the catalyst for a new way in which public companies court investors online.

Over the years, Netflix has experienced intense scrutiny especially as its stock price has appreciated. In response, CEO Hastings has been the model of transparency and accessibility. He regularly updates a PowerPoint presentation detailing Netflix’s strategy and future challenges and pens a lengthy shareholder letter after each and every earnings announcement. Hastings also broke with tradition and opened his quarterly earnings calls to all investor questions regardless of their source. Questions are submitted via email and earnings calls are Q&A-only in order to provide for more interaction with the sell-side, buy-side and retail investor communities.

In an even more dramatic move, Hastings went on the offensive recently in response to a critical presentation by a prominent value investor short Netflix. Instead of following the Patrick Byrne playbook of disparaging short sellers, Hastings responded respectfully and diplomatically by submitting a persuasive blog post to an investor site. He also conducted a lengthy and incredibly informative interview with former Merrill analyst Henry Blodget at Business Insider. Hastings was rewarded for his efforts as reflected in his stock’s subsequent move higher.

Like any CEO, Hastings values his time. He chose to target large online networks of engaged investors to deliver his message. And it worked. So why aren’t other CEOs following a similar playbook, especially small-cap CEOs who are typically starved for attention? Clearly Hastings’ methods aren’t rocket science.

The simple answer? Except for StockTwits and Motley Fool, the current group of financial content websites (i.e. TheStreet, SeekingAlpha, Minyanville, Benzinga, etc.) has done little to pursue public companies and their pent-up desire for a social media presence to complement their IR websites. Instead, massive amounts of valuable investor content sits largely undisturbed on predominantly little trafficked IR websites. Furthermore, CEOs like Netflix’s Hastings who have loads of strategic and actionable investor information to communicate (within the parameters of RegFD) have yet to be unleashed online.

The fact that financial content sites aren’t paying attention to public companies and their pent-up desire for a social media presence is truly mystifying. With so much competition in the financial content space, little differentiation, and the endless pursuit of exclusivity and revenue, it’s difficult to understand why they’re not pursuing this massive opportunity. The traffic potential of public company CEOs actively engaging on investor sites is enormous.

StockTwits’ IR service and Motley Fool’s periodic community-driven Q&As with public company CEOs are the obvious exceptions. They provide public companies the opportunity to reach investors who may not otherwise be visiting corporate IR sites. Most important, StockTwits and Motley Fool provide public companies a platform to reach “new” or potential investors. The ability to reach “new” or potential investors is exactly why public companies need a social media presence to complement their corporate IR sites.

My friend David Collins, who runs NYC-based investor relations firm Jaffoni & Collins and was an early proponent of using social media for investor relations, puts it this way:

“I find the most valuable thing an IR effort can do is to help a company get discovered! Having great content on a site that they (investors) don't know of and aren't visiting - is not a good strategy. Social media is a great way to get in front of new investors and leverages whatever you are doing or not doing online. It also allows you to traffic in data that is not a press release - and point out articles and research and background that pertain to your client. Companies should be doing it…..“

Going forward, one of two things will happen -- either public companies will pursue creative Reed Hastings-type strategies and proactively target investors online OR financial content sites will follow the lead of StockTwits and Motley Fool and roll out services to tap the pent-up desire public companies have for a social media presence.

Once one of these two scenarios plays out all public companies regardless of size will finally have a voice, investors will enjoy vast amounts of additional actionable information and greater access to management, and the promise of social media for investor relations will finally come to fruition.

NOTE: Those financial content sites seeking ideas for services they could provide should look no further than my own experience at SeekingAlpha, discussed here.

Public Companies Continue to Embrace Social and Transparency

2011-02-09T11:46:00.000-08:00

As earnings season comes to a close, public companies continue to demonstrate an increasing focus on using their earnings calls to be more social, interactive, and transparent. The following are some recent examples:

1. Allotting More Time for Investor Questions:

Ex. 1: "Based on the feedback we've received from many of you that you prefer the approach we introduced last year with more abbreviated prepared comments, we will again keep them brief to allow more time for your questions." (Link)

Ex. 2: "Today's call features shortened prepared remarks in order to spend more time on questions-and-answers segment of the call." (Link)

Ex. 3: "We're going to try to use maybe somewhat shortened management presentation so we have little more time for Q&A." (Link)

2. Making it Easy to Submit Questions / Allowing More Investors to Participate:

Ex. 1: "During the call, interested parties may participate live by following the instructions that will be provided by our call Moderator Shona, or you may email questions to investor.relations@prosperitybanktx.com." (Link)

Ex. 2: "During the question-and-answer segment, those of you listening via the Internet will be able to ask questions. Please submit your questions via email to hpatton@noof.com." (Link)

3. Earnings Call Consisting Solely of Q&A:

"As is our standard practice, this call will consist solely of Q&A, and we are going to conduct the Q&A via e-mail. Please e-mail your questions to ir@netflix.com." (Link)

(Comment: It's well and good that companies are making more time for questions. But many companies continue to suffer from lack of earnings call participation: (Ex. 1) (Ex. 2) (Ex. 3). Of course, some companies are taking proactive steps to address this issue.)

4. More Ways, Places to Access Earnings Calls:

Ex. 1: "A replay of today's call will be available for two weeks as a podcast on the iTunes Store, as a webcast on apple.com/investor, and via telephone." (Link)

Ex. 2: "Please note that this entire webcast, including Q&A, will be maintained on Polycom's website for 12 months from today for your convenience in replay. Also, a link to the call will be provided on Twitter, Facebook and LinkedIn at Polycom." (Link) (IR Web Report coverage)

5. Other Investor-Friendly Moves by Management Teams:

(a) From Netflix: "A shareholder letter and the Q4 financial results and the webcast of this Q&A session are all available at the Company's Investor Relations' website at ir.netflix.com." (Link)

(b) Commencing earnings call with company description: "Founded in 1996, 1-800-PetMeds is...." (Link).

Comment: This is a particularly smart move considering that earnings call transcripts are freely available on various Internet sites --- and, typically earnings calls demand some pre-existing company knowledge that potential investors researching stocks may not have.

Comment: What are you seeing?

Forget Twitter and Facebook! 3 Actionable Social Media Opportunities for IR Pros in 2011

2011-01-06T09:15:00.000-08:00

A couple of weeks ago, an investor relations pro wondered why IR has been slow to adopt social media and what can be done to “move things forward”. He exhorted the IR industry, saying, “for progress to be achieved in investor relations in social media, monitoring is not enough. Engagement is necessary — and all members of the financial community should take part.”

Over the past year, I’ve written extensively about IR and why it’s been slow to adopt social media (here and on my blog). In sum, I’ve argued that had an interactive investor platform with the right tools materialized, mass adoption of social media would have already taken place. There’s little doubt that the IR industry is ready.

The good news is that increased social engagement between IR and investors can occur without a third-party social media site. In fact, by using their own corporate sites as social platforms IR has both the means and tools to engage investors and thereby “move things forward”. Here’s how:

1. Earnings Call Questions & Answers

Consider Microvision (MVIS). This small-cap public company solicits investor questions on their corporate IR website prior to quarterly earnings calls. This allows them to engage investors and tailor their presentations to address areas of concern. The company then typically follows-up on its website to clarify statements made during their call. As you can see from the comments section investors are clearly participating.

A second engagement option is the IDT (IDT) model. Each quarter’s earnings call is limited to a presentation, without Q&A. During said presentation the company solicits investor questions and responds to some portion of them on its corporate IR site following the call. This exposes their message to a broader audience than just their earnings call participants. Again, investors, specifically institutional investors, are participating.

By consistently following either the Microvision or IDT model, IR signals to investors that they’re ready and willing to engage on their corporate IR site. This not only lays the foundation for increased investor interaction there but also potentially decreases the amount of time required to respond to follow-up phone calls from shareholders. And with corporate websites recognized as fair disclosure points there should be little concern about violating RegFD.

2. Investor Conferences

IR pros looking to increase social engagement with investors online should also consider investor conferences. While deemed an essential part of most IR budgets, investor conferences typically require significant time, effort, and travel. As a result, the return for management is often debatable.

But consider what investor conferences can do for companies if subsequently extended online. At conferences, management teams spend 15-20 minutes presenting their case. They typically do so under the protection of safe harbor provisions thus allowing for greater color on current and future corporate activities. This is exactly the kind of information both retail and institutional investors are looking for but to which they don’t always have access.

IR has the means to deliver management’s conference message to investors online and thus vastly increase its reach. They can do so by posting transcripts of management’s presentations (along with their PPT presentations) on their corporate IR websites. These transcripts can conceivably lay the foundation for online investor discussion and IR engagement.

There are hordes of savvy financial bloggers searching the Internet daily looking for new stocks to cover and invest in. Many of these bloggers enjoy mass distribution of their content through high-trafficked sites like the individual stock quote pages of Yahoo! Finance. Giving bloggers the tools they need to write about your company can go a long way toward influencing vast numbers of investors who may not be visiting your corporate IR website.

In sum, management is already sold on attending investor conferences. It’s already part of the typical IR budget. So they may as well make their conference message that much more accessible to the fast growing online population who research stocks by posting a transcript on their IR website.

3. Question-and-Answer Sessions

Finally, and possibly most compelling relates to a new opportunity from the Motley Fool. They’ve begun hosting question-and-answer sessions for public company CEOs to engage and interact with the Motley Fool investor community. I’ve written about this at great length here.

It’s conceivable that Motley Fool could lead the way in transforming IR and in doing so becoming the social platform of choice for public companies looking to reach new investors. This is an especially great opportunity for small-cap public companies who typically struggle to attract investor attention.

Conclusion

IR has a choice. They can continue to utilize traditional IR practices and wait patiently for investors to recognize their stories OR they can take proactive steps (as some companies are already doing) to engage the growing numbers of investors online.

If they choose the latter, there are many compelling opportunities to build awareness, seed discussion, and participate in substantive, interactive conversations online. I’ve proposed some of these opportunities above and welcome your ideas in the comments section below.

The Coming Social Revolution in Online Finance

2010-12-02T22:18:00.000-08:00

The online social media revolution of the last 5+ years has touched nearly every facet of society with one glaring exception: Open and direct online conversation between public company executives and equity investors remains minimal.

But as 2010 comes to a close, change is afoot. Public company executives are taking aggressive steps to improve and increase their online and offline investor engagement. They’re choosing novel ways of expanding the reach of their message, especially online.

These moves suggest that social media could finally play the transformative role public companies and investor relations reps have been anticipating for some time and thereby usher in a new age of transparency. This should be welcome news for investors.

Public Companies & Social Media – Pre-2010

For years, some public companies and their investor relations reps largely dismissed social media platforms as relatively useless for targeting investors. They were averse to non-traditional IR and were also concerned about potential legal liability. I encountered some of this reaction back in ‘07 while developing tools to help public companies target investors on my then-company’s website, SeekingAlpha.

But not all companies with whom I met shared this same aversion for social media. In fact, investor relations reps for many small-cap public companies saw “social” as a powerful new opportunity. It afforded them the chance to overcome their usual impediments --- limited analyst coverage, earnings call participation, corporate website traffic, and general attention from both institutional and retail investors --- and pitch their stories directly to a wide online audience of savvy, idea-hungry investors.

I partnered with many small-caps in ’07 to help them test the new online social landscape. Together, we went to great lengths to address disclosure concerns. At the time, there was no doubt SeekingAlpha was the right platform for companies due to the site’s large, savvy investor audience and tools to deliver their messages. And, sure enough, the results were tremendous (more details here). Everyone (public companies, IR firms, investors, SA community) was pleased with the outcomes.

Ultimately, though, SeekingAlpha went in a different direction.

Interestingly, I continue to hear from many of the same small-cap investor relations reps I worked with back in ’07. They’re as ready as ever to push traditional boundaries and test new social investor platforms. The challenge has been helping them identify credible options – most important, finding dedicated investor platforms that have the tools public companies need to achieve their goals (more details here). This has not been easy.

Recent Developments – Earnings Calls

Over this past year many public companies (most specifically mid and large-cap) have caught the social bug. Some have begun using Facebook and Twitter for investor engagement purposes with reasonable success. But, as I’ve written before, these platforms are not the solution. The solution for public companies that typically have limited investor relations resources is to focus their social efforts on dedicated investor platforms. Go where the greatest density of investors is.

But without suitable web 2.0 investor platforms to choose from, public companies have begun taking matters into their own hands. They’ve been revamping their earnings calls to be more social, and have spent substantially more time focusing on their Q&A sessions all in an effort to better engage analysts and investors and be more transparent. Undoubtedly, companies are also aware that due to the plethora of freely available earnings call transcripts on numerous sites online, their message has further reach. And Q&A is what investors find most compelling.

Recent Developments – Motley Fool Q&A

The second major development in the growing story of public companies becoming more social involves small-cap software company Ebix (EBIX). In early October, Motley Fool, the financial analysis and commentary site, hosted a fantastic community-driven question-and-answer session (similar to what I did for companies in ’07) with Ebix CEO Robin Raina. The questions were smart, answers illuminating, and the complex EBIX story is now clearer.

Ebix’s decision to conduct the community-driven Q&A, while remarkable in that it’s uncommon, makes perfect sense. The CEO had a story to tell and specific issues to clarify, and he couldn’t remain limited to his quarterly earnings calls and investor conference presentations to spread the word.

Motley Fool may have a quirky reputation. But it’s a dedicated investor site with reasonably consistent smart analysis, its traffic is substantial, and its audience engaged. And though CEO Raina was expansive in his remarks, he was careful not to reveal any non-public information.

Among IR pros with whom I spoke, Ebix scored strong points for tapping social media, building awareness and reaching new investors.

Conclusion

As public companies take proactive steps to be more social, engaging, and transparent a social media revolution in online finance could very well be on the horizon. The Motley Fool Q&A confirms that it’s a distinct possibility. Tapping the social web would undoubtedly do wonders for public companies everywhere looking to increase the reach of their message and to generate new investor leads.

Could Motley Fool lead the way in transforming the financial web or will companies be forced to continue creating social opportunities for themselves? Only time will tell.

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

2010-08-26T10:13:00.000-07:00

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 www.urbanoutfittersinc.com 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 www.gilead.com, 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.

Conclusion

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?

Investor Relations & Social Media -- A Bust?

2010-05-11T10:02:00.000-07:00

It's now mid-2010. And still, investor relations (“IR”) professionals are largely avoiding use of social media. Yet, the topic of social media has not only dominated IR discussion for what seems like an eternity but it’s also widely considered -- especially among IR pros -- an essential online tool for investor communications. Is there a good explanation for this -- so much talk and so much praise, but so little action?

To be fair, many IR pros are using investor websites like StockTwits and SeekingAlpha (both of which I’ve written about here and here, respectively) to monitor what’s being said about their companies online. Both sites are useful for monitoring purposes as they enjoy large readerships of active and opinionated sophisticated investors.

But, monitoring is simply employing one use of social media, “passive use”. By monitoring you’re essentially a spectator -- watching without getting involved. That’s where the bulk of public companies currently reside.

As for “active participation” in social media there’s only a small minority of public companies to be found. These companies are using a variety of platforms to push press and financial news releases and, periodically, to interact. Examples can be found on Twitter (example) and Facebook (example).

While these examples demonstrate that there exists some level of “active participation” by IR in social media, those interactions are largely isolated to answering basic questions from retail investors. But when it comes to interacting with the substantial numbers of finance professionals and sophisticated investors who use social media sites and blogs to research stocks there’s little evidence that any substantive or high level discussions are currently taking place.

Explanation

The most widely held explanation for the lack of “active participation” in social media is that public companies are concerned about violating RegFD (fair disclosure). But while RegFD may be a consideration, it’s hardly the only explanation.

If public companies were really enamored with the current scope of social media opportunities and wanted to protect themselves from potential RegFD violations they would simply apply the same policies they do to every other public appearance by management. Similar risks are present when holding earnings calls (especially now that transcripts are freely available all over the Internet), making investor conference presentations, and conducting one-on-one investor meetings. In fact, if companies were actually able to identify appealing social platforms on which to interact they could simply apply the same policies they already have in place for other public communications.

Why isn’t IR “actively participating” and engaging sophisticated investors using social media? Because there’s no single social platform that offers both the “right” community and the “right” tools IR needs to meet their daily needs. Not Twitter. Not Facebook. Not any of the investor platforms, either. (That’s why companies are increasingly turning inward and beefing up their own IR websites with increasing amounts of useful investor content.)

For at their core, Twitter and Facebook are news and social networks, not dedicated investor communities. And since most public companies (especially small-caps) devote limited resources to IR activities, they must be incredibly efficient. They don’t have the time to correct every article or respond to every rumor posted on every social network on the Internet. That strategy is simply unsustainable.

Instead, if public companies were able to identify a dedicated investor platform (or two) that offered the tools they needed to expand the reach of their message, they would have the perfect complement to their existing IR efforts. Most importantly, they would have a social extension to their corporate IR sites which would help increase their chances of reaching new investors -- an especially critical and challenging task at this point in time when sell-side research is on the decline and more public companies are competing to be noticed.

Conclusion

There will come a time when high-level, real-time conversations between public companies and sophisticated investors are commonplace online. We’ve already witnessed a glimpse of the remarkable possibilities. Of course, the real question now is where those conversations will take place.

Google’s (GOOG) ($GOOG) recent announcement (and Expedia's similar announcement) suggests that large cap companies are looking to increase their IR news distribution and social presence on their own corporate IR websites rather than letting those activities take place elsewhere. And, for large caps like Google, there’s no reason to think they won’t succeed.

But, many companies, especially small-caps, are not as fortunate as Google. They don’t enjoy a consistent stream of online traffic to their corporate websites. For them, a social investor platform as an extension of their own corporate IR sites is critical to reaching new investors.

So, don’t fault public companies for taking their time getting acquainted with social media. The fact is that the right combination of investor platform and tools that would allow companies to take full advantage of the opportunities social media has to offer doesn't currently exist. But when the two ultimately materialize in tandem IR outreach will be transformed, substantive, high-level online discussion will then take place, and those IR firms I regularly communicate with will finally have the social media platform they crave.

Related Posts:
Investor Relations 2.0 -- Is SeekingAlpha the Answer?

Is StockTwits a Useful Social Media Platform for Public Companies?

Individual Investors Play Crucial Role in Ares-Allied Merger

2010-02-24T12:07:00.000-08:00

From today's Allied Capital (Ticker: ALD) earnings call:

Penni F. Roll - Chief Financial Officer

We hope that by now you have received your proxy and if you haven't please let us know, or let your broker know.

For the merger to be approved an affirmative vote is required from two-thirds of Allied Capital shares outstanding. The majority of Allied Capital's 180 million shares outstanding are held by individual investors. Therefore it is crucial that all of our shareholders participate in this vote and we ask that you read the proxy statement and vote your shares.

Shareholders who abstain or simply fail to return their proxies will have the same effect as if they vote against the merger. So, your participation is extremely important. We have incurred approximately $6 million in expenses to-date in connection with the proposed merger with Ares, which will be incurred by our shareholders even if the merger does not close. In addition, we must pay a $15 million breakup fee to Ares if our shareholders do not approve the merger.

Because of the importance of this proposal, we have engaged a proxy source at our Georgeson to assist us contacting shareholders to solicit your vote. For the shareholders on this call, you may have already received and in the upcoming weeks may continue to receive calls from our Georgeson representative to solicit your vote or to assist you in voting your shares.

Given the number of retail shareholders that we have and the vote required. We believe this is the best way to ensure that has many shareholders vote as possible. Whether you hold 50 shares or 500,000 shares, you can see that your vote is very important.

Is StockTwits a Useful Social Media Platform for Public Companies?

Investor Relations 2.0 -- Is SeekingAlpha the Answer?

5 Ways Public Companies Can Take Investors Home

2010-02-18T11:20:00.000-08:00

With all the new opportunities they have to engage investors on various social media platforms (discussed here and here), public companies remain somewhat focused on driving traffic back to their own corporate websites.

Last week, online travel site Expedia (Ticker: EXPE) stepped up its efforts in this area by putting out an earnings release on Yahoo! Finance entitled “Expedia, Inc. Earnings Press Release Available on Company's IR Site”.

On Expedia's subsequent earnings call, SVP of Investor Relations, Stu Hass explained:

“You may also have noticed we have changed the way we are distributing our earnings release. Rather than put the release out over the newswire, we are pointing people to our IR site where they can pull down the PDF version. You should expect us to continue this practice going forward.”

Aside from the use of PDF, this move makes sense, and benefits Expedia in two ways. It brings investors to Expedia’s corporate site where a variety of shareholder resources are easily accessible and also provides the company with an audience it can potentially monetize.

Along with this move by Expedia, I see a number of other opportunities public companies have to drive traffic to their own corporate websites:

Provide your Corporate URL during Earnings Calls

While reading a substantial number of earnings call transcripts this quarter, I was surprised to find that many IROs fail to effectively identify their corporate URLs during their calls. This is somewhat puzzling considering that earnings calls are one of the few opportunities IROs have to publicly engage investors on a wide scale. Earnings calls provide a platform to promote the investor section of your corporate website, investor update email subscriptions, and any other investor related opportunities.

What I did see were many instances where corporate websites were referred to without their URLs being explicitly stated, instead using language such as “our investor relations website”, “our website” etc. In fact, some IROs didn’t even mention the existence of a website at all.

If you want investors to find you, always mention your corporate website URL (preferably a direct link to your investors page) during earnings calls --- even if it’s obvious. --- and, especially, if a transcript is being published on SeekingAlpha.com, the financial blog aggregator. It can only increase the number of visitors to your site.

Create a Dedicated Investor Website URL

While simply mentioning your corporate URL on your earnings calls is a no-brainer, some companies take it a step further. Consider the folks at Hospira (Ticker: HSP). They have a clear investor relations URL that doesn’t require you to click on multiple tabs and/or access multiple pull-down menus on their corporate website in order to find what you’re looking for. Rather than the typical variations i.e. ir.hospira.com, hospira.com/investors, investor.hospira.com etc., it’s simply, HospiraInvestor.com. Easy. And they make a point of consistently mentioning the URL on their quarterly earnings calls. Smart.

Leverage SeekingAlpha.com’s Earnings Call Transcripts

Each quarter, SeekingAlpha publishes thousands of transcripts of public company earnings calls. At times (see above), IROs introduce these calls by providing investors a place to find more extensive earnings related information –- their corporate website. However, rarely are these web addresses hyperlinked in the SeekingAlpha transcripts. This presents opportunity.

Whether or not you wish to have your earnings call transcripts in the public domain, the fact is they’re there and accessible. And, because SeekingAlpha has a substantial readership of both institutional and high net worth retail investors, it would make sense to leverage your transcripts by having them drive traffic back to your corporate site. SeekingAlpha should be able to help by hyperlinking any mention of your corporate website in your earnings call transcripts as they do periodically with other transcripts and thus drive traffic back to your site.

Give Out Your Contact Information

With the rise of social media, consumer expectations have increased dramatically. People expect companies to respond to their needs, and respond quickly. They also expect to interface with real people, not those hiding behind generic email addresses or Twitter accounts.

The same applies for investors. Of the many transcripts I reviewed this quarter, Tier Tech (Ticker: TIER) is the only company that seems to understand these concepts. At the beginning of their most recent call, the Tier Tech CFO said the following:

“We invite shareholders and analysts who wish to speak to management about the company and its performance to schedule a meeting by contacting our CFO, Ron Johnston, at 571-382-1333 or rjohnston@tier.com.”

Maybe this CFO is incredibly forthcoming because he represents a small-cap public company challenged by the lack of investor interest. Or, maybe he really understands the current environment where accessibility and transparency are key. He might also recognize that both institutional and high-net worth retail investors are increasingly reading financial blogs to research stocks on sites like SeekingAlpha and just might call him because they read his transcript, had some questions, and found him approachable because he made his contact info available. Not a likely scenario if he’d simply offered a generic email address like IR@tier.com!

Virtual Investor Relations Programs

Finally, I came across this seemingly novel IR program mentioned by CFO Mike Burns of Volterra Semiconductor's (Ticker: VLTR) during his company’s Q4 2009 earnings call:

"In addition to be the evidence we’ll continue our bimonthly virtual visit programs. We hold virtual visit 101 session investors who are either new to Volterra or who have not had contact with us in the past 12 to 18 months and we hold a virtual visit 201 sessions for investors that are more familiar with Volterra, but want to get caught up on more current topics and industry issues. Please contact Heidi Flannery, Investor Relations, at 510-743-1718, if you would like to participate in any of these events."

Thanks to SeekingAlpha's transcript service, Volterra was able to promote this online investor opportunity free of charge on a site frequented by substantial numbers of institutional and high net worth retail investors. Not bad!

Conclusion

In this age of social media, public companies have many valuable opportunities to engage investors on platforms all over the Internet (see my thoughts on using StockTwits and SeekingAlpha via the links below). And, for those still focused on making their corporate websites the central focus of their investor relations efforts, these very same social media platforms can be leveraged to your benefit too.

Investor Relations 2.0 -- Is SeekingAlpha the Answer?

Volterra CFO Discusses Virtual Investor Relations Efforts (VLTR)

2010-02-09T10:13:00.000-08:00

From Volterra Semiconductor's (VLTR) Q4 2009 earnings conference call:

Mike Burns - Chief Financial Officer

"In addition to be the evidence we’ll continue our bimonthly virtual visit programs. We hold virtual visit 101 session investors who are either new to Volterra or who have not had contact with us in the past 12 to 18 months and we hold a virtual visit 201 sessions for investors that are more familiar with Volterra, but want to get caught up on more current topics and industry issues. Please contact Heidi Flannery, Investor Relations, at 510-743-1718, if you would like to participate in any of these events."

Is StockTwits a Useful Social Media Platform for Public Companies?

2010-01-12T09:38:00.000-08:00

(Disclosure: I’m one of the core group who built SeekingAlpha.com. I launched the China Stock Blog in 2004 (now Seeking Alpha China Stocks) and subsequently worked on product development. I’m no longer affiliated with the company. All opinions are my own.)

There’s much talk in investor relations (“IR”) circles about the challenges of social media. But, as discussed in my recent post (Investor Relations 2.0 – Is Seeking Alpha the Answer?), and, as you’ll see below, the opportunities for public companies to engage investors online using social media are real, measurable, and shouldn’t raise any red flags with the SEC.

One of the latest and more popular real-time investor platforms is StockTwits.com (“ST”); think Twitter for investors. On ST, investors share investment ideas 140 characters at a time. The company has cleverly trained stock tweeting investors to include a “$” sign next to every ticker symbol (or public company) they write about. That allows the ST team to seamlessly organize all market related tweets in one place.

At first glance, ST seems like the “Wild West” with ideas coming from all directions. Some of the banter is similar to what one might find on a typical Yahoo! stock message board. But, in fact, ST is a remarkably useful platform for identifying successful short-term traders willing to share ideas either for free or through monthly subscription newsletters.

ST is also a surprisingly useful platform for investor relations officers (“IROs”) and public companies looking to engage investors.

As the ST team freely admits, their community is dominated by short-term oriented, retail investors. These investors focus largely on technical analysis and less on fundamentals in making investment decisions. These are not the types of investors public companies typically pursue. Most public companies prefer investors willing to purchase substantial positions and hold them for long periods of time in the hopes of limiting volatility and attracting other long-term oriented institutional investors.

That said, consider the plight of micro-cap and small-cap public companies. For them, attracting institutional ownership can be a challenge. Institutional investors typically won’t touch smaller public companies until they reach certain milestones such as share price, market cap and/or exchange. By default, these companies rely on retail investors to get them to the point of institutional consideration.

That’s where ST comes in.

ST is dominated by retail investors. Some of them enjoy substantial followings. A growing number are using ST’s various platforms (ST community blogs, StockTwitsTV, and Twitter/ST accounts) to share their ideas – not all of which are based on technical analysis. Like any investor, these traders are always looking for new ideas. IROs and IR firms might find it useful to contact some of these folks and present their stories. Assuming there’s an understanding that their message will be shared using at least one of ST’s various platforms, public companies can benefit.

Investor relations officers should also be interested in StockTwitsTV.

StockTwitsTV – Real-Time Market Analysis, Financial Education

StockTwitsTV (“STTV”) is ST’s version of a business and market focused television channel. It’s an online, interactive medium where ST community members talk stocks, take questions, educate, and pontificate. Of particular note, STTV enjoys great stock charting technology that allows hosts to effectively illustrate their technical ideas. CEO Lindzon has blogged that 2010 will bring a more regular lineup of STTV shows covering a wide variety of market related topics.

Once the STTV team solves their technical issues, they will have all the tools to become a valuable asset to investor relations. STTV can be a platform for public companies to present their stories just as they would at investor conferences. They can read the same scripts and present the same PowerPoint slides they would at conferences and thereby increase the reach of their presentations.

If they so choose, public companies can also take questions from ST community members similar to what IR vet and Sharon Merrill Associates President Maureen Wolff-Reid articulated recently on her firm's blog:

“Some IROs believe that participating in investor conferences where management delivers a standard 20-minute IR pitch is not the most effective use of their time, especially since most companies post their investor presentations on their IR websites. A better alternative is to attend conferences with a “fireside chat” format. Fireside chats are often more valuable for both management and investors because they facilitate an interactive dialogue."

With fewer opportunities to engage the investing public while still abiding by RegFD, this seems like a logical, new platform for public companies to leverage. Putting out a press release announcing an STTV appearance, reading an introductory disclaimer, and being careful about not disseminating any non-public information are obvious requirements. With many traders, money managers active in the ST community looking for new ideas, this seems like a no-brainer especially for micro-cap and small-cap public companies looking to appeal to the retail segment.

Questions for Earnings Calls

As discussed in my previous post on investor relations 2.0, public companies (especially micro-cap and small-cap) have suffered due to the decline of sell-side analyst coverage. Fewer sell-side analysts has led to fewer participants on public company earnings calls. As the Q&A portion of earnings calls is one of the few chances public companies have to speak candidly about their businesses, the lack of analyst participation has been and will continue to be a sizeable missed opportunity. Without analyst questions, there’s little chance for management teams to elaborate, go off-script, and/or provide greater color on their operational activities.

ST’s real-time platform offers IROs and public company executives a solution -- the opportunity to engage investors by taking their questions directly during the Q&A. If your earnings call has limited participation and you have a story to tell you might consider addressing questions through ST’s real-time platform.

Recently, Microvision (ticker: MVIS) used its blog to solicit questions for an upcoming earnings call (Note: They also used their Twitter account.). While the Microvision example took place during the week-long period prior to the company’s earnings call, the ST real-time platform could offer more relevant last-minute questions from those who’ve had a chance to review the actual earnings announcement.

For those concerned about violating RegFD, see the following from Microvision’s communications director in the comments section of the aforementioned blog post:

“Hi Madfgurtbn, we used all the questions provided above as the foundation for addressing the content in the conference call. If we missed something specific that you wanted addressed, let me know. However, please note, we can not answer any questions regarding sales forecasts, quantities of shipments, financial disclosures, or partnership details that are not already public through a broad distribution of a press release.”

Monitoring Investor Sentiment

Some IR firms have told me that they look to ST solely as a means of measuring investor sentiment. IRWebReport’s Dominic Jones made a compelling case for this late last year.

StockTwits Investor Conferences

ST is clearly a great platform for empowering the retail investor. I wouldn’t be surprised to see an ST-run retail investor conference for micro-cap and small-cap companies in the near future. Just as ST has been organizing offline meetups they can also leverage their community to organize investor conferences. Public companies with limited institutional ownership would undoubtedly benefit from this exposure.

Conclusion

There are a wealth of valuable, online opportunities for public companies looking to engage investors using social media. To date, most companies have failed to take advantage despite the fact that a substantial number of public companies have already paved the way with remarkable results.

As is SeekingAlpha (discussed here), StockTwits is well-positioned to respond to the social media needs of public companies. The ST platform is especially relevant for micro-cap and small-cap public entities looking to reach throngs of retail investors.

I can be reached at ezra dot marbach at gmail dot com

Investor Relations 2.0 -- Is SeekingAlpha.com the Answer?

2009-12-14T12:27:00.000-08:00

(Disclosure: I’m one of the core group who built SeekingAlpha.com. I launched the China Stock Blog in 2004 (now Seeking Alpha China Stocks) and subsequently worked on product development. I’m no longer affiliated with the company. All opinions are my own.)

SeekingAlpha.com (“SA”), the financial blog aggregator, recently launched its latest effort to target investor relations (“IR”) firms, their public company clients, and investor relations officers.

According to its November 9^th press release, SA launched a:

“social/business media pilot program exclusively geared towards the needs of companies and IROs. The new platform will clearly identify (and certify) a user as the IR representative of a company on the site, therefore allowing direct communication with investors.

By offering a set of tailored social media tools to IR professionals, Seeking Alpha is reducing the pain points of general social media tools by cutting out the static of general platforms and focusing exclusively on the business/investment community. Through tools such as StockTalks (a Twitter-like feature), Instablogs and Followers/Following, Seeking Alpha gives companies the chance to build and communicate directly with a loyal and valuable following.”

The message is clear:

(1) If you’re employed in IR, make SA your social media home.

(2) Forget Twitter. Use SA's real-time investor platform along with other serious investors.

SA’s renewed effort to become the social media home for IR would seem to make sense. A recent survey suggests that public companies are increasingly using Twitter for IR purposes. And, assuming these survey results represent a trend, this demonstrates a stark departure from IR’s history of doing little online outside of their own corporate websites. SA might be aware of this or is simply hoping to become the real-time investor platform of choice before Twitter (or StockTwits for that matter) gains too much traction in IR/investor circles.

From an IR perspective (assuming you have the resources), I’d suggest experimenting using all of these platforms. But, in general, there are so many things SA could be doing to benefit IR with a clearer ROI, it’s difficult to get excited about this so-called “pilot program”. I’m guessing that IR feels the same way since these SA tools have been available for quite some time, and few, if any, IR professionals seem to be participating.

What else is SA currently doing for IR?

Well, SA’s CEO has been courting IR for years (since my departure) as you can see here (sub req) and here (sub req). My guess is he started talking to the IR Web Report (a must-read for anyone in IR) after the editor penned a series on how useful StockTwits and StockTwits Desktop can be for IR professionals.

In his post on using SA for IR purposes, IR Web Report’s Dominic Jones recommends the following:

(a) Advertising;

(b) Contributor outreach;

While I wouldn’t recommend advertising (ROI unclear), Dominic’s suggestions for identifying bloggers who could potentially write about your company is a great idea and a no-brainer.

Similarly, I’ve always recommended that IR encourage their institutional investors to contribute articles to SA. Institutional holders know your story, they’ve done extensive research, they can articulate your stock moving catalysts, and, if they’re still standing post-credit crisis they might engender some respect from fellow SA readers. I have enough anecdotal evidence to suggest that contributions from institutional holders can lead to attracting new leads and in some instances new investors.

And, now, for some more ideas about what SA can be doing for IR:

1. Question & Answer Sessions – General Company Discussion

A couple of years ago, while at SA, I introduced Question & Answer sessions (Q&As) with public company IROs and CEOs in partnership with a number of forward thinking IR professionals including David Collins (Jaffoni & Collins), Jacob Eisen (Capital Insight Partners) and others.

Based on the number of questions received from the SA community (90+), the Q&A with Wave Systems (WAVX) CEO Steve Sprague was the most successful. The SA audience was engaged for three consecutive days peppering the CEO with questions about his business. David Collins of IR firm Jaffoni & Collins made sure that there were no violations of RegFD and we made ourselves available to remove any inappropriate comments (of which there were none). The high quality of questions posed was a testament to the SA community. IR Web Report called the Q&A session: "the future of IR".

After concluding the Wave Systems (WAVX) Q&A, I received an email from one of the company’s institutional holders employed by a prominent investment bank boasting about the results and boldly suggesting that this was the future of conference calls, especially for small-cap public companies. I continue to agree with his assessment.

For a variety of reasons the SA Q&As eventually lost steam --- but NOT because public companies weren’t interested. There’s no reason this service can’t be re-launched, assuming, of course, you have the proper partner at SA.

For those concerned about RegFD, issuing a press release announcing the Q&A, including a legal disclaimer, and acting as careful as you always are about not disseminating non-pubic information should be sufficient. But, checking with your legal counsel is an obvious move to cover your bases.

2. Question & Answer Sessions – Specific Issue Discussion

Question and answer sessions can also be useful for companies looking to address a specific issue. Shortly before I left SA, I was in discussions with an IR professional who wanted us to host a Q&A so his CEO could address negative rumors impacting his stock. Rather than hosting a conference call, he and I figured that exposing his CEO to the SA audience in an open (but controlled) environment of sophisticated investors would be a more effective and transparent course of action.

Q&As addressing specific issues should be especially appealing in the near future as shareholder activism increases (as is expected partly due to certain upcoming rule changes). While Target (TGT) was able to fend off Pershing Square’s Bill Ackman, by leveraging the consistent flow of shareholder traffic to its corporate web site, other companies aren’t so fortunate. Companies with limited site traffic will be forced to use other platforms to fight shareholder activists.

(While heavyweight Bill Ackman may be a far-fetched example for most companies, consider Ironfire Capital’s Eric Jackson who took on Yahoo! (YHOO) management despite owning fewer than 100 shares of stock. This could happen to you.)

Again, this is another case where SA can play a role in supporting IR by providing a platform to respond to shareholders.

3. Questions for Earnings Conference Calls

Many micro-cap, small-cap, and mid-cap companies struggle to attract participation in the Q&A portion of their earnings calls. This has become an ever-increasing challenge due to the decline in sell-side coverage. With few, if any, sell-side analysts participating on calls and most institutional investors avoiding them altogether so as not tip their hand, IR can be tempted to take live questions from investors who haven’t been screened properly. This can lead to a variety of problems as I’m sure many of you have already experienced.

Some companies are attacking this issue of limited earnings call Q&A participation by reaching out to investors online. According to the WSJ, “in March, digital display maker Microvision began using its corporate blog to solicit questions from retail investors for its quarterly call, in effect opening the call up to any interested party with a computer. Matt Nichols, the director of communications for Microvision, says that shareholders that frequented the company’s investor-relations blog had asked for a way to participate in calls”.

While Microvision was fortunate to enjoy an active investor base eager to participate, many companies aren’t so lucky. Many don’t have corporate blogs or they have blogs that don’t attract much traffic.

That’s where SA comes in. It should be easy enough for SA to appeal to its investor audience for questions prior to a company’s earnings call. SA has already demonstrated the ability to generate tons of high quality questions for Q&As. Questions for earnings calls should be no different. And, because SA is organized into individual sector sites, IR has the ability to target investors already interested either in their respective companies or companies in their space.

Taking this one step further, SA can also help public companies by soliciting questions for annual meetings. According to the WSJ, “In May, Intel Corp. became the first major company to allow shareholders on the Web to vote and submit questions as if they were on the floor of the annual meeting. Moreover, a handful of small companies, including furniture seller Herman Miller Inc. have saved money by switching to virtual shareholder meetings instead of renting halls…”.

4. Investor Conferences

As sell-side analyst coverage declines, investor conferences should become (assuming they aren’t prohibitively expensive) a more important outlet for public companies (especially micro-cap and small-cap) to tell their stories. The reasons to attend are obvious. But what most companies miss is the larger opportunity to capitalize on their appearances once their conferences have concluded.

While at SA, I introduced the investor conference transcript service. Having SA transcribe and publish a transcript of your company’s conference presentation drastically increases the number of investors exposed to your company’s story. And, thanks to Zack Miller (formerly in charge of business development), those transcripts not only show up on SA but also on Yahoo! Finance. The beauty of conference presentations is that companies tell their stories in a short, concise, and substantive fashion due to the limited time they’re allotted.

For investors looking for new ideas, this is exactly what they’re looking for. Investors are not likely to listen to a webcast of your conference presentation. They’re also not likely to really understand your business from reading one of your earnings call transcripts. But, they just might read a short transcript of your conference presentation if you make it freely available and accessible. And, who knows? If they’re reading SA they might also be a blogger (or, in fact, an SA contributor) looking for new ideas for companies to write about. And, soon enough, you might have bloggers writing about your company because you’ve given them a critical tool to do so --- your story in brief.

While at SA I partnered with a number of the afore mentioned IR firms and others including Zack Noory (Nexus Investor Relations) to have their conference transcripts show up on SA (and, of course, Yahoo! Finance). I also partnered with The Wall Street Analyst Forum to do the same for its public company attendees. Even if transcripts are delayed for a couple of days so as not to threaten the “sanctity” of the conference, public companies should expect this transcript service as required in this age of social media. With webcasting a traditional part of the conference package, so should online transcripts be too.

While I’m aware of many in IR still interested in this service, it no longer appears to be available through SA. With transcript providers on call (to transcribe earnings calls), SA should have no problem rolling this out once again.

5. Road Show Investor Meetings

As Dennis Walsh, social media guru of IR firm Sharon Merrill Associates pointed out in a recent interview:

“It is challenging for micro-cap companies to identify potential investors willing to take the time to meet with management and consider making an investment.”

This is yet another opportunity for SA to support IR. As mentioned previously, SA has a substantial readership of sophisticated investors, sector specific websites allowing companies to target investors interested in their space (if not their company), and, of course, geographic reach throughout the US and abroad. Thus, companies could promote upcoming investor meetings on SA and then carry out due diligence on those interested parties in order to determine those suitable to meet with.

While SMA's Walsh specifically cites “micro-cap companies” as being challenged in this area, no doubt many small-cap and mid-cap companies suffer from the same issue as well.

With a basic service SA should be able to help alleviate this problem.

Conclusion

While IR would love to use their corporate websites to fulfill all shareholder needs, the fact is that many sophisticated investors are found elsewhere. As a result, IR must explore new platforms to expand the reach of their message, build trust, address issues, fight activist campaigns, etc. Furthermore, the forward thinking IR professionals I mentioned above have already paved the way with remarkable results (without violating RegFD).

“Despite the challenges, Barbara Doyle, VP of IR for Lawson Software, recognizes the necessity of using social media. ‘As a $1 bn small-cap company, we need to consider every ... viable channel to get our message out. As a technology company, ... it’s a part of our culture. And our customers, employees and investors are increasingly using these channels to get information, so it’s simply not a choice, not an option,’ to ignore social media.”

(IR Magazine)

Soon enough, an investment site will step up and respond to the needs of IR. SA is doing some things to address this issue. But, as I’ve presented here, there are many more interesting things they can be doing with a clearer return of investment. While I believe that SA is best positioned to address the many IR needs, there’s no reason why another company in its space can’t step up and do so themselves.

I can be reached at ezra dot marbach at gmail dot com