Archive for May, 2010

Sell in May & go away?

May 28, 2010

Among old Wall Street sayings, “Sell in May and go away” holds special attraction. A strategy for a worry-free summer, a way to reduce risk amid seasonal doldrums, a vacation from busyness.

Ahhhhhh …

For investor relations, alas, “go away” doesn’t completely apply. There is, of course, second-quarter reporting. A few meetings. Always the potential crisis. Maybe a slow August. But while some investors disappear, many are still cranking away at their models, trades or questions.

So settle in, makes plans to enjoy some time away, and prepare for what could be an interesting summer. And right now, have a great holiday weekend!

Websites – not the only channel

May 27, 2010

Nearly two years after the SEC issued guidance on use of company websites for disclosure, a survey of investor relations professionals by the National Investor Relations Institute (NIRI) reports few have changed their web disclosure practices.

In August 2008 the SEC – before the near-meltdown of our entire financial system captured its full attention – issued an interpretive release on use of web-based media to fulfill Regulation FD disclosure responsibilities. (Read SEC guidance here.)

The essence of the SEC guidance, carrying out then-Chairman Chris Cox’s agenda to bring disclosure methods into the 21st Century, was to let companies know they can establish their websites as the place for investors to find material news. That set off speculation (and some advocacy) that companies would stop issuing press releases and possibly abandon other channels of disclosure. It hasn’t happened.

According to NIRI’s survey of about 200 senior IR people, 93% have not changed the role of their websites – and only 7% have – since the SEC guidance. NIRI adds, “the 7% who did make changes … are using more channels, not fewer.”

To be sure, more companies are encouraging investors to visit their websites – building the email alert lists through the sites, putting the web address on all materials, issuing advisory releases to direct people to the sites, and the like.

About 90% of the respondents file 8-Ks and issue news releases through paid wire services to get material news out to the market. (The IROs reported median annual cost of $25,000 for issuing press releases.) After those two channels come conference calls, email alerts, RSS feeds and social media.

A few companies are pushing the envelope. Google created ripples in the IR community by reporting Q1 earnings on its IR website in April – and not providing a detailed release through a newswire. A 3-sentence alert through a newswire did point market participants to the website posting:

Google Inc. (NASDAQ: GOOG) has released its first quarter 2010 financial results. Please visit Google’s investor relations website at http://investor.google.com to view the earnings release. Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.

Google’s move stirred some controversy. Reuters clucked that this “unorthodox” approach “raises questions.” Dominic Jones of IR Web Report sprang to GOOG’s defense and went after Reuters. I’ve heard other IR people give varying opinions.

My feeling? Google can do whatever it wants, of course. I view company news more from a communication standpoint than a legal one. For most companies, the goal should be to reach as many investors and other stakeholders as possible with earnings or another announcement. I would add channels, not cut them off.

At this stage, having your press release feed automatically into Bloomberg screens, Yahoo! Finance and all those other channels (even Google search) seems desirable. Transparency includes making it easy to find your information. Requiring an investor to visit your website, adding clicks to the process, or pushing more people to read news filtered through reporters for Reuters or Bloomberg, seems limiting.

I’m all for robust websites. As I’ve said before (see “The website: your front door”), IROs should view a company site as the potential investor’s entry point to engage the business. We should evaluate the experience a person has approaching that front door – and benchmark how we do providing information, creating impressions and inviting interaction. Ease of use and transparency should characterize a website. But the site isn’t the only channel.

What’s your opinion on the place of websites in good disclosure? Comment below.

© 2010 Johnson Strategic Communications Inc.

It’s not about ‘flash crashes’

May 20, 2010

Well, that kind of day in the market takes your breath away!

The Dow down 3.6%, broader indices like S&P 500, NASDAQ or Russell 3000 off even more. Not much fun today in investor relations – or capital markets as a whole. We’re officially in “correction” territory now, though not a bear market.

The analysts, pundits and politicians will have much to say. Let me just offer this perspective: Life is about the long haul, not the “flash crashes.” I would suggest three applications of a long-term view:

  • The practice of IR has less to do with today’s market price – especially when your company is caught up in a market stampede, up or down – than it has to do with your company’s performance in the next year, or two, or five. Be energized and on top of everything, but keep your eye on the horizon.
  • Investing isn’t really about the short term, either – although some fortunes are no doubt gained or lost on days like today. Investing is still about putting money to work in businesses with the knowhow and guts to create value … long-term. The lemmings are charging headlong one direction or another, but the wiser heads will survive and even thrive in the long run.
  • Regulation of the markets shouldn’t be about a “flash,” either – whether it’s the May 6 “oops” market or the May 20 “we’re really worried” sell-off. Short sellers, or even trading glitches, don’t do much permanent damage – an economy full of fear does. The focus in Washington should be on fostering an environment that encourages the capital formation that, in turn, fuels economic growth. Flogging investment bankers or hauling fat-fingered traders before Congressional committees, while entertaining, doesn’t really help anyone. Ensuring an honest, free, liquid market that enables new and existing companies to raise capital should be the focus of legislation and regulation.

We live in a world dominated by instant media, politicians and analysts eager to jump in front of a TV camera, opinions driven by Internet chatter – so we see a lot of breathless proclamations of one instant “crisis” or another.

Let’s take the long view.

© 2010 Johnson Strategic Communications Inc.

Should your CEO do social media?

May 10, 2010

George Colony, tech guru and chief executive of Forrester Research, packs an interview on Mashable with common-sense advice on how a corporate CEO should relate to social media. (Mashable is a news and opinion site devoted to Web 2.0.) The Forrester interview is a good read for investor relations staff and counselors.

Three factors are working against CEOs embracing social media, Colony says:

  • Age – the typical CEO grew up back when people talked
  • Regulatory constraints – the risks remain fuzzy around Reg FD and new media networks like Twitter (ignore Mashable’s mistake in transcribing SEC as FCC in the text)
  • Time – or the lack of it.

The Forrester chief paints this picture of what keeps most CEOs from engaging:

If you go to a CEO and say — and this is sort of conventional wisdom around being social — “We want you to make between five and six 140-character statements a day” — that’s 30 a week. “Then we want you to make one large statement per week — about four or five paragraphs.” And most CEOs would say, “There’s absolutely no way I could do that.”

There are two problems here: one is time. Calculate the time behind this and it’s about five or six hours — that’s a lot of time for a CEO. The second is that model — which has become almost an accepted model if you want to build followership — that model is unsustainable if you want to sustain quality. In other words: There’s not enough to say. There’s not enough wisdom in the world for one person to be wise over all those statements to fall over a year. That’s 1,500 short statements a year and 50 large statements a year.

Colony favors what he calls “social lite” – a focus on quality rather than quantity. A CEO might aim to post significant messages 6 to 8 times a year on a blog, and perhaps comment every 2 weeks or once a month on a short-message platform like Twitter. So when the CEO does speak, it’s a more notable event.

The Forrester chief also says CEO posts should not be written by PR people – but by the CEO. That’s the point of social media, after all – to engage personally in the conversation. To fake it isn’t authentic, to use another social media buzzword. And a CEO doesn’t get the benefit of listening if he or she isn’t even in the room.

My feeling is that public company CEOs wading into social media should get a quick review of posts from other members of the team – say, the CFO, IRO or Legal. The idea is not to scrub the humanity out of the CEO’s words – no “writing by committee” allowed. But we should bring in a second set of eyes to check facts and grammar – just to protect to CEO and the company’s brand in the marketplace.

For most businesses, I favor something more like a company presence in a blog or on Twitter and Facebook – blending voices from marketing and corporate, either funneled through a single person whose job is “telling the story” or coming from several contributors writing on different aspects of the company and its products.

Colony estimates only about 10% of CEOs are ready to do social media now. In the next 10 years, that may grow to 50%. But he urges companies not to rush it:

I would say if you’re interested, explore — but do not force it. If you do not have the proclivity to communicate, to be a little bit honest, a little bit controversial, then I wouldn’t do it. I wouldn’t force it.

That view jibes with where most companies are now on social media – especially firms that are not in the tech business or that have small cap resources. It’s time to listen, explore, develop skills and resources – and “go social” as you are ready.

What’s your feeling on CEOs and social media? (Click comment line below.)

© 2010 Johnson Strategic Communications Inc.

Investors, golf, cancer & social media

May 7, 2010

Two communication folks from American Century Investments, a mutual fund firm with about $60 billion under management, gave a great talk today at the Social Media Club of Kansas City on an online campaign building the company’s brand.

As investor relations and corporate communication people at many companies are exploring social media – dipping our toes in the water – I thought I’d share some lessons from the American Century experience. They’re privately held, but dealing creatively with interactive new media in our highly regulated financial world.

Brent Bowen and Jamie Needham of American Century gave a case study on the American Century Championship celebrity golf tournament at Lake Tahoe – and what the company does to promote its brand through social media from the event.

Of course, the event starts with some advantages. This is golf, with a network TV audience that also can be online. The tourney draws celebrities ranging from Charles Barkley to Ray Romano. They’re playing because the event is a benefit for Lance Armstrong’s LIVESTRONG campaign against cancer. And golf is somehow woven into the DNA of many investors – American Century’s audience.

So it’s a natural. But the American Century team did a nice job with social media approaches that I think would fit for small or large companies – even firms that can’t bring Michael Jordan to their event. A video is available here (uncut, so fast-forward to ~12 minutes to skip Social Media Club housekeeping stuff).

My own interpretations from the American Century experience:

  • An event helps ignite the online conversation. To get people you’re not paying to start posting on Twitter or their Facebook pages, you’re best to tap into their interests with something that’s happening. Could be an earnings announcement, but don’t expect that one to go viral. Social media focus most easily on events that build corporate brand awareness or help launch products. IR is a smaller part of the picture – but should be present.
  • A feel-good cause gives momentum to a social media campaign because people get excited about doing good more than about a company making money. American Century wisely put all the emphasis on LIVESTRONG and helping cancer patients – all except, of course, that the event is called the American Century Championship. People who are online get excited about supporting cancer patients in the battle of their lives. Or about their favorite sport. Or an art show or concert. Or defeating hunger or disease.
  • Listening comes first. American Century started with “no social media presence – no Twitter account, no Facebook account” – Brent says. They began by searching out 20 to 25 key words in the online interactive space. What are people out there saying about us, our cause and our partners? They asked people in the industry what they want to hear – and the answer was, in addition to just investment products, to learn what makes the company tick. Investment people asked for that softer side, in other words.
  • Plan the content. As Brent says, “Content plan, content plan, content plan.” Sure, tweeting looks all spontaneous. When people post to Facebook it’s personal and folksy. YouTube videos capture those wacky moments. But the corporate message comes through because it is planned. Spontaneous stuff comes from being flexible in addition to following the plan.
  • Legal can get comfortable with social media. American Century puts on webinars in which its investment officers help the investing community understand what’s going on in the markets. The communications team decided to “live tweet” a webinar – which means giving a series of 140-character messages summarizing what the speakers say, as they say it. Anyone who follows @AmericanCentury gets the tweets in real time. The “story behind the story” is that a compliance officer sits next to the person doing the live tweeting – it’s real-time compliance review. Hey, IR could do that.

If you’d like more, watch this morning’s video or explore American Century’s golf tournament site. Congrats to this Kansas City company on a cool national event.

© 2010 Johnson Strategic Communications Inc.

Inside the Google IPO

May 4, 2010

Eric Schmidt, chairman and CEO of Google, tells a good story in the May 2010 issue of Harvard Business Review – taking us behind the curtain of the initial public offering for the cyber-giant that is everywhere in our lives.

Investor relations practitioners will enjoy this tale (“How I Did It: Google’s CEO on the Enduring Lessons of a Quirky IPO” – available free on the HBR site).

Schmidt dwells on the Google culture that was determined to be different. This IPO was different … from the decision to do a modified Dutch auction offering … to an unusual letter from the founders in the registration statement (“An Owner’s Manual” for Google’s Shareholders) … to the Playboy interview during the quiet period, which Google added to its S-1 to cure the selective disclosure issue … and – especially – those values Google holds dear (“Don’t be evil” and the like). See the registration statement here. You don’t have to buy it all to appreciate the story.

Somehow it worked out, despite a so-so market in Summer 2004. Schmidt recalls:

We flew overnight to New York to watch our shares start trading on the Nasdaq on Thursday, August 19. We showed up in the morning, bleary-eyed. That day the Wall Street Journal had run a front-page piece with the headline “How Miscalculation and Hubris Hobbled Celebrated Google IPO,” and CNBC commentators were talking us down all morning. I remember thinking as we headed down to the Nasdaq trading floor, We’re screwed.

Just before the trading started, there was a countdown on the floor: 5-4-3-2-1. We watched the first trade, but it wasn’t at $85 [the agreed pricing with the investment bankers]—it was at $100, an 18% increase over our IPO price. … The volume was huge.

All day long the stock price never went down. It closed at $100.30.

We were now public. Thrilled and exhausted, we flew home to California.

The investor communications effort back in ’04 was unconventional, and Wall Street naysayers said GOOG wasn’t going to make it out of the IPO starting blocks.

But Google raised $1.67 billion on that August day, selling a minority of its shares and establishing a market capitalization of $23 billion. Today, the market value is $161 billion. It’s been a pretty good ride for the Googlers, wouldn’t you say?

© 2010 Johnson Strategic Communications Inc.