Archive for September, 2011

Things could be worse

September 27, 2011

In the “things could be worse” category: Unless you work for Hewlett-Packard, Yahoo! or News Corporation, your company isn’t discussed in “The Worst Board in America,” a video by Thomson Reuters tech correspondent Peter Lauria.

“There’s basically a race to the bottom. They’re all dysfunctional in their own way,” Lauria says of the trio of companies that have been generating negative headlines. He reviews the CEO firings, shifting strategies and downward-moving stock graphs and then names “the worst board” – well, I won’t spoil it. You can watch the video.

No doubt H-P, Yahoo! and News Corp. might respond, “Who is Peter Lauria? What qualifies him to judge the merit of our boards of directors?” And they’d be right. He’s just a journalist who covers media, technology and telecom for Reuters.

On the other hand, he’s not alone in his assessment.

The positive side of this: If you’re doing investor relations for a company that does have a long-term, consistent strategy and high-quality board and management, you’ve got some very attractive selling points for long-term investors.

Focus your IR messages on the track record of your strategy and how it’s paying off, the quality and experience of management, and the expertise of your board. The long-term investors will be with you.

© 2011 Johnson Strategic Communications Inc.


Five stages of grief

September 15, 2011

I hate to go all morose and contrarian on another “up” day in the markets, but …

Jerome Booth, research director of London-based emerging markets specialist Ashmore Investment Management, makes an interesting point in a Sept. 14 Financial Times column. He posits that global markets are moving, slogging really, through the classic five stages of grief. When we lose a loved one, we follow a pattern described by psychiatrist Elisabeth Kübler-Ross as the five-step model of grief: denial … anger … bargaining … depression … and, finally, acceptance.

Booth applies this to global markets.

As investor relations people making our rounds with investors, we might probe what stage the patient is in, on any particular day, before launching into our story.

What has died, Booth writes, is our complacence in using debt to meet all needs:

Western Europe and the US now face years of painful deleveraging. The loss they feel is the death of the levered model enabling them to live beyond their means, plus a loss of prestige as their economic models have failed.

As an EM guy, Booth says we’ll have to adjust to kowtowing a bit to emerging markets. In the West right now, he writes, we’re in denial:

When faced with a truly awful prospect we explore and then cling to any theory or hope that reality may be different. Even where political leaders understand the immensity of their loss, the denial of their electorates constrains their action.

There are examples of anger – riots in Greece and other nations over economics. And of bargaining to delay unpleasant consequences or sweep them under the rug. Still ahead, perhaps, is the loss of hope a patient feels as depression. And we haven’t seen many signs yet that our leaders – or we the people – have moved on to acceptance of realities so we can deal with what needs to be done.

All this is very global and “macro,” but let’s think about how it applies to IR messages about the businesses we speak for:

  • Above all, are we helping our management teams to avoid living in denial?
  • In offering forward-looking views to investors, do we spell out assumptions on the economic factors that drive our particular businesses?
  • Do we explain how we plan to perform if the economy stays weak for a long time, vs. signing onto consensus hopes for recovery in H2, or H1 2012, or  … ?
  • When our stock is beaten-down, do we listen to see if the investor on the line is in the anger stage or depression – or maybe in a place to hear reality and look forward to ways out of the doldrums?
  • Do we deal with debt and balance sheet metrics, including strategies for managing the balance sheet, in a way that helps investors understand?

Just a handful of thought-starters. I’m not arguing where investors’ sentiment should be – just saying IR people need to pay attention to where it is.

Mainly, I appreciate Booth’s wry insight into the psychology of today’s happy-nervous-elated-terrified-optimistic-not so sure-ever mercurial stock market. I’d love to hear your reactions.

© 2011 Johnson Strategic Communications Inc.

Investors, this is your day!

September 13, 2011

If you’re not already doing an “analyst day” every year or two, maybe you should be. That’s my takeaway from “NIRI Survey Reveals Current Analyst/Investor Day Practices” – a benchmarking study released Monday by NIRI.

Key finding: 71% of the 431 investor relations professionals responding to NIRI’s survey hold a periodic analyst/investor day. It’s a chance to show off management and tell the company’s story in-depth. After all, you’re locking investors in a room for a half day or full day, so this is “quality time.”

Of course, the larger a company is, the more likely it is to host a regular analyst day. But even among small caps ($250 million-$2 billion), 63% offer a “day.”

Some 70% hold their analyst days in New York or another major investment center, while 40% invite investors in to meetings at a corporate facility, NIRI found.

A few thoughts based on analyst days I’ve been involved with:

  • The CEO and CFO play host and give the strategic overview, but having a half day or more is a great opportunity to demonstrate management’s bench strength by bringing division heads, R&D leaders or operating executives forward for investors to meet them in a fairly controlled environment.
  • It’s also a chance to put on display the chemistry of the management team – showing investors how the top execs relate to each other. Not a bad idea to do this some months after a big merger, to present a unified, compatible team.
  • How often you hold an analyst day is up to you. How fast is the story evolving? If there’s progress every year, annual is great. If this year looks a lot like last, maybe not. (NIRI found 49% of companies who hold “days” do so annually, 35% less often, 12% on an ad hoc basis, 3% more than once a year.)
  • The name “analyst day” doesn’t quite capture the fact that institutional investors are the primary audience. Sure, the sell side attends – but real shareholders and potential investors are the main point of the effort.
  • I personally like the on-site analyst day, giving investors a feeling of seeing the business and kicking the tires, even though they’re carefully shepherded on any tours of the plant or laboratories. But a lot depends on your location. Call up a few analysts or investors and get their input before scheduling your day.
  • Schedule enough breaks to let investors check email, used the phone and visit the restroom. It’s hard to limit your speakers – but, hey, give people a break.

What’s your experience with analyst days? Love ’em? Hate ’em? Any tips?

© 2011 Johnson Strategic Communications Inc.