Archive for August, 2011

Steady as she goes, IROs

August 16, 2011

A quote of the day for investor relations professionals, from National Investor Relations Institute President and CEO Jeff Morgan in his “IR Weekly” email and blog post under the heading “Market Mayhem”:

Market volatility reached new extremes last week as we experienced global market moves of positive to negative 5% from one day to the next. Most believe it is very unlikely these market moves were driven by fundamental analysis of companies, but instead by panic, margin calls and computerized trading. For IROs, these are the most challenging market conditions as they lack logic and rational explanation. Time and other actions outside our influence and control will bring markets back into check, as we continue to tell our story to investors.

I agree, although market mayhem may be more rational than we can see at the moment. However much we dislike “panic,” if the market performs horribly going forward, fear will seem logical in retrospect. Time will tell whether investors should “Hang on and weather the storm” or “Batten down the hatches and go to cash.”

Certainly for IR professionals, whose individual companies may be doing fine even as the market goes crazy, it’s sound advice to hold the wheel … steady as she goes.

© 2011 Johnson Strategic Communications Inc.

Jamie Dimon: Cheer up, America!

August 10, 2011

While the markets are going crazy, Jamie Dimon, chairman and CEO of JPMorgan Chase & Co., is out visiting bank customers and employees on a bus tour in California – and giving an interview today with CNBC. His core message: Cheer up, America! That’s not bad advice for investor relations folks, either.

Dimon doesn’t mince words about shortcomings in European finances, US policy making, even the state of banking. But he comes back to a bedrock optimism:

Confidence is like a secret sauce. … Here’s what I would say to the American public in total. When you go to sleep at night think about the following before you get depressed and you see the market down 500 points: This nation is still the greatest nation on the planet. It was the first democracy on the planet. We have the best military on the planet, and God bless our veterans all around the world, those who have served and those who are serving today. We have the best universities on the planet and the best businesses. Those things that I just said – best military, best rule of law, most innovation, the hardest working ethic of all – those things are going to be here for decades. They’re not going away. The strength in the system is going to blow your socks off when it gets out of this malaise we’re in. Those things are there.

It’s good to see an executive smiling. Regardless of what you think of Dimon or big banks, he’s expressing the spirit that drives American business. It’s worth watching both pieces on CNBC. Just to feel better on another day of, as they say, volatility.

By the way, in 2008 I shared 10 ideas on doing IR in a bear market. These apply today, too, for investor relations practitioners surveying the Wall Street carnage. I’d welcome your comments or ideas on helping our companies rise above the malaise.

© 2011 Johnson Strategic Communications Inc.

Investor relations for the USA?

August 8, 2011

The President has pulled into the lead, ahead of a three-way tie among the Treasury secretary, “Other” (write-ins Ben BernankePaul Volcker, Bill Clinton and “Someone who’s fluent in Chinese“) and “Oh, never mind!” What do you think?

Not a political comment … just a little comic relief amid wild days in the markets.

Adding wiggle room to guidance

August 5, 2011

Are we in recession again? Weak recovery? Heading for Financial Crisis 2.0? No wonder more than a few CFOs and IROs have been wringing their hands over what guidance to provide investors as part of the second-quarter reporting season.

If you’re looking for an example of softening guidance by widening the range, Procter & Gamble provided just that today with its fiscal fourth-quarter results. For the new fiscal year, P&G forecast core EPS “in a range of $4.17 to $4.33, up six to 10 percent.” Fair enough. That’s not exactly fuzzy, but the range is a bit broader than P&G gave last year at this time (a 10-cent span in EPS, vs. 16 cents this year).

Market watchers commented on the change, as in The Wall Street Journal story headlined “P&G Outlook Reflects Jitters”:

P&G adopted a wider-than-normal range for its fiscal 2012 outlook, which encircled Wall Street estimates, calling for per-share earnings growth of 6% to 10%. The low-end is slightly below the consumer-product giant’s long-term goals for annual growth of high-single digits to low double-digit growth, largely on questions percolating through the global economy.

On P&G’s conference call, Chief Financial Officer Jon Moeller blamed a cloudy macro environment:

Our guidance ranges will be a little bit wider than normal this year, reflecting a broad policy uncertainty, ongoing high levels of volatility and market growth rates, input costs and foreign exchange, as well as uncertainty both upside and downside related to pricing across the portfolio.

So there you have it – big, sensible P&G is a pretty safe role model. Go ahead and add wiggle room to your guidance. We may all need it.

© 2011 Johnson Strategic Communications Inc.

Deadlines in IR – and thoughts on coping

August 3, 2011

Often the investor relations job revolves around corporate news, and sometimes timelines get compressed so we must get it out quickly. This kind of breaking news puts the IR professional on deadline – a short deadline. This morning, for example, a client got in touch just after 7:00 and asked me to write a news release on a transaction – and make it fast so the execs negotiating the deal could show a draft to the other company today.

Mentally this took me back to my time in the daily newspaper business. In the news biz, deadlines must be part of your DNA. Not faraway deadlines like, “We have to do an annual report on 2011 and drop it in the mail by March 23 of next year.”

Real deadlines get your heart beating and adrenaline flowing. These deadlines are measured in minutes rather than days or weeks. The feeling returns:

Something blows up, a plane crashes, the mayor resigns unexpectedly. Suddenly you’re hunkered over a keyboard, the City Editor looking over your shoulder. “Give it to me in takes,” he says. Takes are scraps of two or three paragraphs that an editor can mark up and send to be typeset.

To meet a very short deadline, you have to move copy fast. “We’ll hold the presses for this,” the City Editor’s boss says … a costly move, only for an extraordinary news event. We have to get this into the papers to go on the trucks and be thrown on people’s driveways (or nowadays, we rush to beat the competition in posting the story to the Web).

So you think fast and write fast. Tick, tick, tick. You must get that news out, but of course even more importantly you must get it right.

Since I’ve calmed down now from my morning deadline, I’ll share a few thoughts about deadlines and how we as IR professionals can cope with them:

  • Plan your approach. When you get a short-notice assignment, spend the first few moments jotting an outline of key messages, a short list of resources you need, a rough work plan to guide your use of time.
  • Clear your mind. Take a few breaths or get a cup of coffee before diving in.
  • Assess your progress. Once you’ve made some headway, make a printout and read it over to see what works – and what’s still missing.
  • When it’s done, check it. If you’re working fast, the need is greater than ever to proofread what you write – better yet, get a reality check from colleagues.
  • Practice stress management. Really, this is about lifestyle. Many IR people would benefit from taking time off, staying in better shape, eating better – all of those healthy tips that can best be implemented when you’re not on deadline.

What do you think? Any secrets or tips for coping with deadline pressures in IR?

© 2011 Johnson Strategic Communications Inc.

IR nightmare: leaking earnings

August 2, 2011

As the Q2 reporting season winds down, a nightmare scenario for investor relations professionals comes to mind: accidentally leaking your company’s earnings release or M&A announcement by inadvertently posting it online. Such a leak spreads easily into a widespread spill into social or traditional media.

Can’t happen? Well, it does. A panel discussion at the NIRI 2011 Annual Conference in June was all about warning IR people of this potential mishap. Two folks from Microsoft, IR manager Dennie Kimbrough and IT manager Josh Bailey, courageously provided the red meat of the NIRI panel discussion called “Keep a Lid on It: How to Guard Against Leaks, and What to Do if One Happens.”

Most importantly for all of us in investor relations, the Microsoft staffers shared lessons learned on how to guard against similar leaks at our companies.

The software giant is one of a handful of companies – Walt Disney, NetApp and Transocean are others – recently tripped up by the interplay of humans and technology, causing the inadvertent, early and selective release of earnings.

For MSFT, it happened on January 27, 2011. According to Kimbrough, the first word of a problem came about 12:35 p.m. Pacific time, an hour before the market would close. A Reuters reporter called to confirm an online report of the software giant’s Q2 earnings – not due out until after the close. Not the media call you want to get.

It seems MSFT’s 77-cent earnings per share figure was already out on StockTwits, through the work of Selerity, a “low-latency news aggregator.” For us non-techies, that means Selerity uses web crawler programs to snoop around continually for information on web pages that might move stocks – and move the data quickly to its clients, who are hedge funds, banks and prop traders.

What Selerity’s crawlers found was a page where someone at Microsoft posted Q2 earnings data on what they assumed was a secure “staging” page, but actually was a live web page. “It was just a simple human error,” Kimbrough said.

There was no link to it, as an official news release gets when posted to a website, but crawlers don’t need a link. Kimbrough said MSFT put its earning data up on the blind (but public) web page at 11:23 a.m., and Selerity’s crawler found it six minutes later. Selerity sent the numbers right out to its clients – and broadcast MSFT’s 77-cent EPS on StockTwits at 12:50, a full 70 minutes before the close.

Bailey, the Microsoft IT guy, explained three kinds of web crawlers: Those used by search engines “play nice” with web administrators in handling nonpublic files. Others scrape email addresses and phone numbers from thousands of websites to enable marketers to spam us. A third, scarier group of crawlers search for not-yet-public pages, systematically guessing URLs that might provide interesting data (something like “…/earnings/Q2/press release.html”).

The problem isn’t brand new. Another panelist, Andy Backman (a former IRO and now CEO of InVisionIR) recalled an encounter 10 years ago when a reporter guessed the URL for his company’s second-quarter earnings release – and reported the numbers an hour and a half before the release was due out.

Of course, the damage-control step to take if a leak of this sort happens is to issue the darn news release – get it out fast! Microsoft posted a brief statement to its corporate blog immediately after the reporter’s call and had the full earnings announcement up by 12:55 Pacific time, about 20 minutes after the reporter’s call.

But prevention is the real need.

And prevention is where IROs can play an important role by taking precautionary steps as part of the team that develops earnings and M&A announcements:

  • Keep online staging areas secure to prevent public posting of earnings and similar announcements. “The only way to protect yourself against web crawlers is to keep your files on your side of the firewall,” Bailey says. Both in-house staffers and third-party service providers like lawyers, CPAs and newswires need to have strict procedures in place. The IRO needs to check.
  • Don’t allow anyone to leave drafts lying around on a printer or desk. This is the old-fashioned leak, allowing non-confidential employees or even members of the public who pass by to see nonpublic information sitting out in the open. “Shred everything. Lock it away,” Backman advises.
  • Demand better code names for M&A projects or offerings. Lawyers and I-bankers love to create code names. And they’re fun – we all get a sense of adventure working on a hush-hush project called “Operation Pegasus.” Trouble is, Backman notes, code names are almost always picked because they point to the real name. We’re making a bid for Procter & Gamble, so we call it Operation Pegasus. Sometimes namers use a double entendre (the acquisition of Energizer might be “Project Bunny”). Backman suggests: Pick a code name that has nothing to do with the target company – a code name.

In many respects, IR professionals need to be a little paranoid. For most of us, Q2 reporting is finished (my excuse for not posting in July), but security of financial information is a process issue we can start working on now for next quarter.

As gatekeepers of material information, IR people need to work with colleagues in finance and IT to ensure that “Top Secret” remains so right up until our broad dissemination to the market.

© 2011 Johnson Strategic Communications Inc.