When Antisoma did its first webcast late last year, the London-based bio-pharmaceutical concern was hoping to attract new investors from outside its domestic market. Valerie Tate, Antisoma’s investor relations officer, says, ‘We decided to bite the bullet because this seemed like a tremendous opportunity to raise our profile not just in the UK but outside the UK as well.’
For her first webcast, Tate chose an occasion that she felt would appeal to German investors: Antisoma was licensing a product from a German cancer institute. The thinking was that European investors, especially German ones, are an attractive target market because they’re hungry for biotech stocks but have a limited number of publicly-listed choices at home.
Although the decision to webcast still takes some soul searching in Europe and Canada, in the US, where Regulation FD went into effect in October 2000, webcasting has quickly become an IR must. Yet the widespread acceptance of webcasting was no foregone conclusion. In fact, requiring a company to do something is usually the surest way to invite opposition.
Gift of a lifetime
But instead of seeking loopholes in Regulation FD (companies could, for instance, jettison analyst calls altogether), IROs are behaving as if the SEC just gave them the gift of a lifetime. By year’s end, practically all public companies in the US will webcast their earnings calls. In late 2000, the National Investor Relations Institute (Niri) found that over 60 percent of its members conducting conference calls were webcasting them, and those not yet webcasting planned to do so in the not-too-distant future. More tellingly, IROs aren’t just broadcasting audio feeds and calling it a day. They’ve expressed a keen interest in spreading their technological wings and trying PowerPoint slides, chat features, intelligent archiving and even state-of-the-art videostreaming.
‘Regulation FD really was a jolt to the system,’ says Mark Coker, founder and president of BestCalls.com in Los Gatos, California. Coker, an outspoken advocate of webcasts, says his company, which is a free and public directory listing investor event dates and times, was launched ‘to really blow the doors wide open to these conference calls.’
Christopher Farage, who’s responsible for investor relations at Cleveland, Ohio-based PolyOne Corp (formerly MA Hanna), where he’s director of corporate communications and marketing, calls the decision to webcast a ‘simple’ one. ‘The principles that a company needs to follow are not much different than the things your mother taught you as a child: IR professionals should speak about their companies openly and honestly. And when you have either good news or bad news to get out, you should get it out right away. Webcasting is an inexpensive way to give everyone with an interest in your company equal access to the same information.’
The typical IR webcast is transmitted to a web site through an audio feed, and any and all participants can follow the proceedings in listen-only mode. The event is usually archived and then made available on the web site for anywhere from 24 hours to a year after it originally took place.
Regulation FD is slowly changing the nature of analyst calls. For one, calls are getting longer. Howard Christensen, president and CEO of Christensen & Associates, an investor relations consulting firm based in Scottsdale, Arizona, points out that the financial community is now required to gather all forward-looking information during the webcast itself.
He estimates that analysts are asking two to three times the number of questions in the post-Reg FD world, making the overall proceedings more time consuming.
Participation levels are also growing. Niri found that last year the average audience for a quarterly conference call was 121 people, nearly double the 64 reported in 1996. At large-cap companies, the average number of participants was 189. Marti Benfield, director of investor relations services for Vcall, a service of Investor Broadcast Network in Gilbert, Arizona, says that anywhere from 50 to over 10,000 listeners may tune in. The largest audiences have ‘gathered’ at webcasts of Cisco Systems, America Online, Microsoft, Intel, Dell and Oracle.
Land grab
One reason IROs have wholeheartedly embraced webcasting is the emergence of a wealth of new service providers, including firms such as Yahoo Broadcasting, CCBN, StreetFusion, Medialink, Shareholder.com, Vcall and WorldStream Communications, which all offer to manage these events on behalf of companies.
Another reason is that competition has dramatically driven down typical prices for webcasting. Christensen estimates that a plain vanilla audio webcast runs $250-650. ‘The webcasters have been doing the proverbial land grab,’ says Coker. ‘Those that establish long-term relationships with the most companies are the ones that are going to be in the webcasting business in the future. So they’re all fighting amongst themselves for those relationships.’
The aftershocks of Regulation FD aren’t being felt only in the US, says Susan Herman, partner and executive vice president of investor relations for Stylus Strategic Communications in Montreal. She claims most Canadian companies see Regulation FD as a guide for best practices, and her clients ‘want to be among those that employ best practices when it comes to investor relations.’
Without the insistent prodding of FD, European companies are webcasting in far smaller numbers than their US and Canadian counterparts. Darren Thomas, marketing manager for Genesys Conferencing in the UK, estimates that 20 percent of Genesys clients who hold event conference calls are webcasting them. In the UK, says Thomas, many companies are using M.Show; M.Show participants listen to the presentation by telephone and watch synchronized slides, controlled by the speaker, on their PCs.
Because webcasts are still regarded as cutting edge in Europe, the prestige factor is higher there. ‘Companies who take that first step,’ says Thomas, ‘will get the most kudos for putting their necks on the line.’
Nifty extras
Some companies are supporting their audio webcasts with PowerPoint slides, which are the equivalent of presentation hand-outs. Slides are universally well received. ‘Frankly,’ admits Christensen, ‘there’s nothing more boring than listening to your computer talk to you for 30 minutes about a company’s earnings and its prospects and so forth. You need to enliven it.’ Analysts, who tend to listen to conference calls by phone so that they can ask questions, will tune in to the webcast for the slide presentation, says Linda Byus, an electric utilities analyst at Dresdner Kleinwort Wasserstein in Chicago.
That said, only around 20 percent of companies doing webcasts are currently offering slide shows. IROs aren’t holding back because of the cost (although slides do drive up the tab), but because of the lead time. David Dragics, director of investor relations for CACI International, a small-cap IT firm in Arlington, Virginia, has been webcasting analyst calls since the week before Regulation FD went into effect last fall, and plans to add PowerPoint slides in the near future. The difficulty, he admits, is that the slides must be prepared in advance when IROs are already harried.
Rob Kraft, VP of sales for Shareholder.com in Maynard, Mass, is convinced slide shows will soon be de rigueur. ‘If you’re seeing analysts embrace slides, that’s going to push IR folks to figure out how they can, in a more timely way, produce a presentation at literally the last-hour scramble. Webcasting is a multimedia medium. It wasn’t designed for just audio.’
The glitziest of extras – videostreaming – is also the most controversial. Fewer than 1 percent of US companies currently include video in their webcasts. And even advocates like Christensen don’t predict that video will be ubiquitous anytime soon. He suggests that a year from now, perhaps 20 percent of US companies will incorporate some form of video in their webcast presentations.
One current drawback of videostreaming is its bandwidth requirement. ‘The technology’s not there,’ says Coker. ‘It’s kind of annoying to watch a postage stamp-sized video that’s all jerky. And with a conference call, there’s no visual element; it’s a bunch of executives sitting around a table and passing notes back and forth.’ Given this, his conclusion comes as no surprise: ‘I don’t see videocasts taking off for a while.’
Lawrence Orans, a senior analyst at Gartner in Stamford, Connecticut, points out that it takes at least 300 kilobytes of bandwidth to approach a VHS-quality viewing experience on a personal computer, but many home viewers still have much slower 56K or even 28K modems. Video also presents a psychological hurdle. ‘If you’re going to do live video, the CEO’s got to look right on the screen,’ says Orans. ‘Some CEOs may prefer not to do it. If there’s sweat on the brow at a bad earnings announcement, it’s easier to hide behind the mike than to be on video.’
Nor are analysts clamoring for videocasts. Carl Palitti, a research associate and junior analyst for the telecom department at Gerard Klauer Mattison in New York, says he’s indifferent to video feeds. He jokes that the only advantage is the chance to count the number of lawyers a company has in the room during the conference call.
The usefulness of video may well depend upon the precise nature of the event. Major announcements – such as the high-profile mergers of TimeWarner and America Online and Chrysler and DaimlerBenz – were videostreamed on the web. Laurence Moskowitz, CEO of Manhattan-based Medialink, which produced the corporate videos for both of these merger announcements, thinks that IROs have to pick and choose which events to film, especially since corporate videos cost anywhere from $20,000 to $60,000.
‘To have another person in a suit talking does not necessarily merit going to video,’ he says. ‘But with a big merger, there are personalities involved. People want to see the body language and the logos. A video injects excitement.’
Secret product launch
Yahoo Broadcast points out that the much talked about 1999 webcast for Victoria’s Secret was essentially a product launch, with the webcast encouraging viewers to purchase products, according to director of business development Dan Routman. As covered in Investor Relations magazine (August 1999), the Victoria’s Secret web campaign was a unique mix of corporate branding and IR. Routman says consultants like Forrester Research and Arbitron have found that end users watching streamed media stay engaged longer.
Beyond PowerPoint slides and videostreaming – two technologies that really change the complexion of a webcast – there are a welter of other features that IROs are also investigating. One is intelligent archiving, which lets viewers search for topics raised in the Q&A using any keyword. Archives can be a lifesaver for harried analysts, who regularly experience schedule conflicts and information overload. Bill Malloy, CEO of WorldStream Communications, says, ‘I don’t understand how [Morgan Stanley Dean Witter internet analyst] Mary Meeker does it. She must look like an air-traffic controller on a bad day at O’Hare. It’s just squawk, squawk, squawk.’
Another feature is simultaneous translation. Herman says that companies like Canadian transport giant Bombardier and Montreal-based IT firm CGI offer webcast listeners three options: French, English or ‘floor’ (the ability to listen to proceedings in whatever language the speaker uses).
Chat is another much-ballyhooed feature. Some, however, fear the possibility of losing control of the proceedings. ‘The company needs to be in charge of who’s asking questions,’ says Coker. ‘You can’t have 200 individual investors queued up to ask questions. Nothing will get done.’
Malloy disagrees, saying that chat need not be equated with a free-for-all. Bellevue, Washington-based WorldStream recently introduced an IR platform that lets participants type questions into a chat window; these questions can either be collected and handled during the call itself, or answered within the archives after the call has concluded, explains Malloy. As long as companies provide information equally and to everyone, the archive can be amended as new questions arise. ‘You’ve got a communication that continues in a live sense,’ he observes.
In addition, a company using chat would gain a welcome window into the thinking of analysts and other participants. ‘Not only would I know that Mary Meeker attended, I’d know what questions she has, what are her concerns, where she is in relation to where our sector is going,’ says Malloy. ‘This lets us be more responsive to her.’
Potential glitches
In these days of unbridled enthusiasm for webcasts, the problems go largely unmentioned. One reality is that while the number of listeners has steadily climbed, audiences are not flocking to these events as they might to a rock concert. The truth is that analyst calls can be water torture for anyone who’s not intimately concerned about the financial outlook of a company.
Nor is tuning in necessarily a cinch. Internet enthusiasts sign on without a hitch, but ‘if you don’t know what a web browser is, a webcast is going to present a challenge,’ quips Shareholder.com’s Kraft. Even professional analysts may be daunted by the technology. Byus says that perhaps because of her firm’s firewalls, she’s never successfully accessed a live webcast. And she’s not alone; several analysts declined to be interviewed for this story because of a lack of firsthand webcast experience.
What’s more, even experienced public speakers can find themselves intimidated by the medium. Recalling her first webcast, Herman says, ‘I’m used to using body language and looking into people’s eyes. Here I was sitting in my office with a closed door staring at a black box. I found it very challenging.’
Finally, webcasts aren’t immune to the same quirks of fate that derail face-to-face presentations. Tate recalls that attendance numbers at Antisoma’s debut webcast weren’t nearly as high as the company had hoped they would be. On the day of the webcast, storms ravaged London, roads were flooded, and several key individuals couldn’t make it to work. ‘We actually had to postpone the webcast a couple of hours,’ recalls Tate. The good news? ‘The webcast is still there,’ she says. ‘It’s in archive form.’
Win-win situation
IROs are increasingly aware that webcasting subtly changes the nature of the analyst conference call. Dragics recalls that for CACI’s first webcast, he taped a piece of paper on the table in front of every speaker that said You are not just talking to the analysts, you’re talking to our employees who will listen to the replay, you’re talking to our customers, and you’re talking to potential investors. ‘I only did that twice, and now everyone understands we’re making a public presentation to the world.’
Although webcasts are still in their infancy, some unexpected benefits are already becoming apparent. One attractive possibility is that rumors will be quashed before they spread. Coker says that since the advent of webcasts, the level of discussion on the message boards has risen a notch or two. ‘If a site posts false or misleading information, then an individual investor may pipe up and say, That’s not true. I listened to the conference call and the CEO said XYZ. This is what happens when a company takes the time to create a more informed shareholder base.’
Malloy suggests that webcasting will rapidly evolve into a forum for ongoing dialogue between a company and its shareholders. ‘Rather than doing just what’s needed to comply with the rules of full disclosure, investor relations officers are quickly going to migrate to How do I use webcasting to break out of the pack and be closer to my shareholders and understand what they need from me? Only then can
I provide them the type of guidance that’s a win-win for both the shareholder and the enterprise.’ That day is fast approaching: ‘Webcasting is a bigger shift than people realize. This changes everything.’
