Suppose every time you produce some new IR information you leave copies at the entrance to your headquarters. Make sure you leave the door open 24 hours-a-day so that anyone – from Wall Street analyst to person on the street – can access the information. And don’t forget to let the whole world know at the outset – through either a press release or form 8K – that they’re invited to drop by every day in case there’s something new. Is that full and fair disclosure under Regulation FD?
Now instead of printed documents, suppose you start putting information on your corporate web site and invite the world to drop by every day in case there’s something new. How about that for full disclosure?
That’s exactly what some companies have started doing in questionable efforts to comply with Reg FD. The SEC’s rule makes it clear that posting material information only on the web is selective disclosure. And although many proponents, including Niri, would like the web accompanied by e-mail alerts to be a vehicle of full disclosure, at the moment that’s the reserve of press releases and form 8K.
But take a look at CommScope and AlliedWaste Industries, for example. They have announced identical disclosure policies, presumably using the same counsel: ‘We do not expect to file a form 8K each time we make a public disclosure prompted by our interpretation of Regulation FD. Instead, we will utilize our web site for that purpose. The only way investors can be certain to learn information we may disclose… therefore, will be to review our web site.’ Investors are directed to two new site sections: ‘current disclosures’ are posted and updated as needed for ten days then moved to ‘archived disclosures’.
Talbots and Linens ‘n Things have also issued similar 8Ks, directing investors to check their web sites regularly for new information including investor presentations.
Not so fast
These are just four of the thousands of companies creating or revamping disclosure policies in light of Reg FD, and the web is certainly playing a prominent role in mass distributing everything from earnings calls to investor presentations and CEO speeches. Take Amazon.com, which webcast its annual meeting with investors and analysts for the first time in September; or Nokia, which similarly webcast its Annual Capital Markets Day in November. But they differ from CommScope et al in that they conscientiously provide the public with specific advance notice of these disclosures through press releases rather than a one-time, one-size-fits-all 8K.
Other companies have used the web simply to declare their disclosure policies. Gateway, for example, posted new Reg FD ‘guidelines’ covering reporting metrics and practices, while FedEx produced a summary of its ‘Regulation FD policy’ in the form of web-based Q&A at the same time as its last earnings announcement.
Stretching the envelope further are Xilinx and Altera, which have adopted similar policies of providing ‘business updates’ on the web: A presentation is posted after the close of the market on the first business day of the second and third months of each quarter, with the exact dates included with quarterly earnings releases. Both companies also have IR hotlines with summaries of the business updates, and individuals can sign up to receive e-mail alerts about Xilinx’s updates while Altera is planning to introduce the same feature.
Like CommScope and AlliedWaste, Xilinx and Altera don’t comply with the letter of Reg FD in that they don’t issue their business updates in press releases. But they do provide specific advance notice of the update release dates as well as e-mail alerts. ‘The SEC made it clear they want companies to adapt and adopt policies that fit their own circumstances; they’re not looking for a one-size-fits-all policy,’ comments Scott Wylie, VP of IR at Altera. ‘The purpose behind Reg FD is to make sure information gets out, and that’s a philosophical goal we’re in alignment with.’ James Hawley, investor relations analyst at Xilinx, says little about the company’s disclosure policy has changed under FD: ‘It’s the same volume and scope of information as before, just a different means of conveying it.’
Written response
The new disclosure policy adopted by Expeditors International of Washington in Seattle is probably unique: all requests for information must be submitted in writing, and that applies equally to securities analysts, current shareholders and potential shareholders. Selected answers to quarterly earnings release questions are posted on the company’s web site within 48 hours, while other answers are saved up and posted on the first day after the 15th of the month.
According to R Jordan Gates, Expeditors’ CFO, the practice actually ‘increases the quality and the volume of information.’ The company has never done earnings conference calls, nor does it plan to: ‘They tend to have a choreographed script and softball questions. In contrast, we wanted to give people meaningful responses. It’s not practical to totally stop talking to analysts one-on-one, but we have to be very general in our disclosures. Putting answers in writing and posting them on the web for everybody to see has allowed us to give out more specific information than ever.’
Feedback about the new policy has been good, according to Gates, although some followers have pushed for more timely responses to quarterly earnings questions. ‘Over time the process will be more streamlined as we get in tune with the questions people are asking.’
Gates says one outside securities counsel was initially concerned that Expeditors’ new disclosure policy was ‘unorthodox’, but after consulting with the firm’s Reg FD expert, they were supportive of the concept. ‘We can now answer questions from analysts and shareholders more completely.’
Expeditors still holds one-on-one meetings with investment professionals, talking about previously disclosed results as well as the competitive environment and general industry conditions. But when it comes to questions about non-public information, the answer is always the same: ‘Put it in writing.’ Gates adds that analysts and investors have been supportive in the wake of Reg FD, often saying, ‘I know about Reg FD, and I’ll understand if you can’t answer.’
These moves by Expeditors, Altera and Xilinx show that Reg FD need not provoke the IR chill many feared. Instead, it’s an opportunity to structure and distribute more information than before. Indeed, browse the news wires and Edgar filings and you’ll find a whole new breed of corporate document usually called ‘Regulation FD disclosure’. That translates as information that was unavailable before, which can only be a boon for corporate transparency and communication.
Technology Round Up
Let’s off road
Everybody knows that a long roadshow campaign can prove to be an endurance test of departure lounges, hotel lobbies and meeting rooms. A new initiative developed in Europe means that company roadshow presentations can now reach even more investors, without IROs having to go anywhere near the airport. Say hello to the virtual IR roadshow, developed in a joint venture between online investment firm EPO.com and European internet company Kamera.
The virtual roadshow allows customers of EPO.com to access a video of a CEO presentation online, giving investors an opportunity to gain an insight into a company without having to wade through mountains of paper, the partners claim. Listed companies wishing to make their CEO presentation available through the virtual roadshow can do so by recording their presentation at any EPO.com office, and the video is then placed on the web, complete with the necessary slides and branding information.
Eyes wide open
Companies want to know what’s being said about them on the web. To that end PR Newswire has launched eWatch in Europe (ewatch.prnewswire.co.uk). The service hunts through more than 3,700 web publications and news sites worldwide to track mentions of specific companies and provides the feedback to clients.
PR Newswire acquired eWatch early in 2000 after trying it out for clients in the US. The service also monitors online forums and web bulletin boards for gossip about clients – a phenomenon now making itself felt in Europe.
Streaming hit
Teleconferencing leader Genesys has launched a new web-based video streaming service called PowerStream, to be offered by a new division called Genesys Open Media. The company claims that its way of combining a high quality video stream with audio and data then delivering it in one process is a world first.
Open Media aims to offer the type of conferencing previously the reserve of satellite and cable link-ups. The idea is to take advantage of higher bandwidth systems now widespread in business. Options include document downloads, user polls, chat facilities, multiple languages and customized web pages.
