Investor relations at AT&T is possibly the most daunting job in the profession. Luckily the company’s vice president of investor relations, Connie Weaver, came prepared. Beginning at MCI, she moved to AT&T via Microsoft some six years ago with an IR philosophy shaped by experience in marketing, strategic planning and operations at McGraw Hill.
Indeed, when she was targeted by the chairman of MCI for the IR job, she admits, ‘I wasn’t at all clear what IR was, so I called a friend and asked, What is this? Am I going to like it? And she said, Oh, you’ll be fine, it’s a marketing job.’
In fact Weaver has found her friend wasn’t so wrong. ‘It’s a very sophisticated marketing task that requires you to understand the company, the industry, the history, and all sorts of other aspects of the company – its people, its products and its numbers – and interpret it all for a very sophisticated audience,’ she summarizes.
‘You know the hardest thing to do is get your head in the business, to understand the technology, the strategy, the dynamics, the people; but if you don’t, you’re not going to be effective. All you do is regurgitate a party line,’ she says’
Weaver’s introduction to IR was not so daunting, she concedes: ‘You can apply the same principle to anything you take to market, so it’s a matter of learning and planning the environment that you are in to make decisions. I get bored very easily, so if I’m not learning new things or having new experiences, I get very antsy.’
Weaver’s approach to IR has always been that ‘if you’re not a part of the management team, then you become an outsider and spend far too much time finding out what you need to know to do your job. You have to be a player at the table.’
Officially Weaver reports to CFO Chuck Noski, but, ‘In fact, there’s not much that I don’t participate in really – business, operational reviews, new product launches, interactions with our board – since I’ve been integrally involved in all the transactions, debt or equity, the company’s done over the last few years.’
Recent experiences range from AT&T’s debt offerings to the AT&T Wireless IPO to the sale of its broadband unit to Comcast, and a forthcoming tracking stock for its consumer business. ‘It’s been a lot of experience in transactions,’ she comments laconically, ‘a real personal growth opportunity.’
Team of ten
Weaver has a team of ten people who oversee 4.5 mn investors holding on to 3.5 bn shares. ‘I can’t know everything, so I try to hire people who are much smarter than I am about different aspects,’ she says. ‘So together there are very few things we can’t address. It’s a team that’s flexible, has fun every day and works hard.’
Investor relations director Rochelle Fuhrmann is one of the two CPAs who pull together the quarterly financials and deal with the surges of transaction work. ‘It’s helpful to have accountants on the IR team to bring extra clarity to the nuances of the numbers. A lot of the team have a finance background, but the accountancy side can sift through the numbers and understand the impact on the financial statements,’ comments Fuhrmann. ‘When we did the wireless exchange offer, I did everything from working with the investment bankers, to preparing the management and presentation for the roadshow. And I work with [executive director, IR] Claudia Holcombe to ensure everything is communicated on the retail side as well,’ she adds. Fuhrmann reports that Weaver is brought in to any kind of potential transaction very early on, and then the rest of the team is brought in shortly afterwards – ‘early enough to see the whole transaction through.’
Holcombe comments, ‘When you’re doing a distribution, such as the one we did with the wireless stock, you’re asking many questions. Is it going into the hands of people who will continue to hold the stock? Do they know the story? Are they comfortable with it? Is it something that their investment strategy includes?’ In fact the people who used to handle the wireless side of IR proceed to form the core of their own IR department with the IPO. On a similar track, investor relations director James Hart has branched out and currently looks after the consumer segment, for which a tracking stock will be launched later this year.
‘Interest is growing, but so far, most people are following us as an aggregated entity,’ Hart says. ‘But we are obviously targeting. There are clearly industry comparables: Some of the funds are holding stocks that look like what [subsidiary AT&T] Consumer will look like.
And then on the sell side, there are analysts who follow some similar companies, so of course we try to get that information out to investors before it goes public. In fact we’re trying to create a target group.’ Picking up Weaver’s marketing motif, he concludes, ‘It’s like introducing a new product to the market – except it happens to be a new investment product.’
The 70 mn-odd customers should give the team both marketing experience and advantage, but apart from the brand power, AT&T doesn’t use its extensive retail marketing channels to attract investors. ‘On the other hand we do market our product to our shareholders. In last year’s annual report we gave all our shareholders a free prepaid card for ten minutes of calling,’ reports Weaver. And since around 4.5 mn retail investors hold over half the stock, ‘Obviously we take their care and feedback seriously. It’s important to communicate with them the way we communicate with analysts and institutions.’
Millions sold
Claudia Holcombe is the team member who, for five years, has been specializing in servicing the millions of individual investors at AT&T. She explains, ‘Many of them have been around a long time and have stuck with us through a lot of changes to the company. In fact we call them shareholders of long experience, and as that generation passes on they pass on their shares to the next, which shows a similar huge loyalty – whether to us or their parents.’
The wireless and broadband deals attracted a different kind of investor, according to Holcombe: ‘People other than widows and orphans. We do have a generational migration.’ This means she doesn’t have to trawl NAIC conferences to attract younger holders. Rather, the team has been working hard to get the registered owners to participate in the Drip (dividend reinvestment plan) or to top up on stock. More recently it’s been trying to persuade them to accept their proxy materials online or sign up for direct payment of dividends.
Weaver adds, ‘We’ve leveraged the web very heavily over the last few years. AT&T’s IR link has usually been the number one or two in terms of hits from the company’s home page. All the different analysts meetings, plus conference calls which we do very frequently, are webcast. My philosophy has always been: the more investors know and understand our business, the more confidence they have in the people running it, and the better informed they are to make a sound investment judgment.’
On the retail side this philosophy is working. In 1996 with the NCR float, a full 90 percent of the shareholders wanted certificates; by last year’s wireless float, all but 25 percent had gone electronic.
And recently almost 18 percent were voting their proxies on the web. ‘This is where Connie’s marketing expertise really affects us,’ Holcombe comments appreciatively.
For more traditional forms of communications, AT&T’s transfer agent, EquiServe, has a team of people who can handle the more routine inquiries.
Weaver says she is happy with the current investor mix. ‘It’s like our consumer base, really – we go from the smallest individuals up to the largest institutions.’
Despite some coming and going with the various transactions, Weaver asserts, ‘For the most part, when you’re so large and broadly held, most institutions hold you. So the only question is, do they hold you a lot, or do they have a smaller position? In any case, you build up relationships with them all. The top 100 institutions bring in an awful lot of dollars, and we’ve always made a point of knowing what they’re thinking, to make sure they know us.’
Know thy customer
Weaver’s marketing background also enhances her appreciation of the value of shareholder ID since, as she says, ‘Your objective is always to know the customer.’ But it goes deeper than 13Fs and tracking services. ‘For me, philosophically, the most important thing is to know those people. They’re all important, whether they are in the stock or not, since even if they’re not shareholders now, they may be your most important prospect for tomorrow.’
In general, Weaver disclaims different approaches for the buy side and sell side. ‘Now that the deal flow has slowed down, I’m beginning to see some really good research coming out of the sell side again,’ she acknowledges. ‘They were all a bit busy before. However, you never want to depend on anyone else to talk to your customer, so I’ve always put a huge emphasis on the buy side. I do understand the importance of an educated sell side, even if they don’t have you on a buy. When you have people out there who don’t know the company making quick comments to the press, you’re much better off working with them.’
The other channel is, of course, the press, and Weaver claims to have a ‘very good partnership with some of the best in the profession. They understand the business, they understand finance, and we work together very integrally. When you give out earnings, the press wants to know as soon as the analysts.’ She further comments, ‘I think we have always been very open and honest with information for all. You have to hold yourself to a very high standard when you have a retail base and a brand name like AT&T’s.’
Lately, however, it has been a somewhat confusing brand, bring even more challenges to the IR role. As the business model changes, so do niche analysts covering it, and they often have to be carefully targeted. Sometimes, Weaver adds, ‘It’s like running multiple IR departments simultaneously. The buy side is much more integrated, so you’re often dealing with the same analyst, but it’s very different on the sell side,’ she finds.
‘As an IRO the most important contribution you make is when times are tough. And given the environment that we’re in and all the changes at AT&T, I’ve had incredible support from my management,’ Weaver says. ‘Frankly I’ve seen no pressure from them for any kind of pull-back on the resources we use.’
She recalls, ‘I told my boss last year that I’ve never been bored doing IR. Not once. There’s always something new, nothing is rote. Whenever I wonder what else can possibly happen, then something comes up.’ This is, of course, true of the profession as a whole which, Weaver insists, ‘is not a fluffy one.’
What the analysts say
Dan Reingold, Credit Suisse First Boston
‘Connie Weaver and the IR team do a terrific job with timely response and excellent information. It’s a very complex company with lots of parts and Connie has integrated herself in the financial planning process there. She has taken IR from being simply an information-funneling function to an integral part of management. This facilitates feedback from the Street, since she’s heard within the company. So if there’s concern or criticism on the Street, it influences management. It’s a conduit, with her being mainstreamed and with her networking within the company. She tries relentlessly to make sure the investor’s voice is heard.’
Tod Jacobs, JP Morgan
‘When you consider the breadth of challenges that have been thrown the way of Connie and her group, it’s been almost staggering. She has not only faced but successfully faced a series of crises on the earnings front that began in 1996. She has lived through three leaders and their accompanying lieutenants and their different management styles. She has lived through three CFOs with their differing styles, and she has steered the investment community through some of the most high profile deals ever executed, as well as one of the most extraordinary restructurings ever undertaken by a major corporation. And as if that’s not enough, she has successfully accommodated and managed one of the most headstrong groups of sell-side analysts ever to grace the market.’
