While pretty much all IR professionals are well acquainted with webcasting these days, many are unfamiliar with web conferencing. The reason this tool is less popular with the IR population is because it allows users to collaborate on a shared document through the internet. Understandably, this feature is neither necessary nor overly attractive for the quarterly call – which remains the main focus of IR departments in terms of conferencing needs. However, as an internal tool and for some types of outside meetings, web conferencing is starting to catch on among IROs around the world.
The essential difference between web conferencing and webcasting is that conferencing allows users to log on through a secured site and share documents if desired, whereas webcasting allows information to be streamed over the internet and participants cannot interact with the data. Web conferencing technology has come a long way and service providers now offer tools that combine the convenience of an audio conference with data sharing and visuals. This allows IROs in disparate locations to collaborate on a presentation via the web. Once the presentation is complete, it can then be presented over the internet to audiences worldwide.
IROs who have embraced this evolutionary technology find the data-sharing quality useful when working with other departments on a given project. This means web conferencing saves IR professionals time and legwork because it removes the need for them to physically visit other offices or departments.
Outside help
Beyond internal meetings, some IROs are using this technology for outside events like analyst meetings. When given the opportunity to conduct an analyst meeting from the NYSE’s boardroom, the IR team at Texas-based Transocean decided to do a web conference to ensure that analysts not present in New York could participate.
‘We had a little over a hundred analysts in the boardroom of the NYSE,’ recalls Jeff Chastain, vice president of investor relations and corporate communications at Transocean. ‘In order to get the meeting out beyond the walls of the exchange we did a web conference that pulled in another 600 people from all over the world.’
The interactive, real-time quality of web conferencing facilitated questions from analysts who weren’t sitting in the NYSE’s boardroom, notes Chastain. ‘When we invited those who were listening in to e-mail questions, we were able to collect the questions right then and there and provide responses as they came in,’ he explains.
As is the case at many European companies, Scandinavian Air Services (SAS) uses web conferencing to reach out to international investors. The firm goes on roadshows in the US twice a year, visiting Boston and New York, but finds this isn’t enough for maintaining buy-side interest in the US. So it uses web conferencing to keep in touch with American institutional and private investors throughout the year, says Sture Stølen, head of IR at SAS.
‘We use it both as a complement to our ordinary, regular presentations and as a channel to reach out to smaller investors around the globe,’ says Stølen. As SAS has a relatively small IR department, Stølen says using this technology helps it to remain efficient, though he stresses it should never replace face-to-face meetings altogether.
SAS usually holds web conferences to present quarterly earnings results. ‘We are listed on three Scandinavian exchanges and it is important for us to be able to reach out to investors immediately after results come in,’ says Stølen. With web conferencing, senior management members can easily explain what they plan to do with results by holding a brief presentation, he adds. Afterwards, investors are invited to ask questions during a Q&A session.
Stølen says SAS usually gets up to 100 investors and analysts participating in the quarterly web conference. ‘Our experience with it is very positive,’ he notes. ‘We reach out geographically, but also to an investor base that would otherwise be impossible for us to reach with our limited resources.’
Inside edge
IROs hesitant to use web conferencing for external meetings can benefit from using it as an interoffice communications tool. For example, Cisco Systems is a big user of web conferencing for internal functions – the technology company’s employees often use it to collaborate on projects.
‘Our routing group uses this technology quite often,’ says Lisa Magleby, IR online communications manager at Cisco. ‘The group uses it daily as a collaborative tool to develop new products. Because the routing group is pretty large and located in several countries, [web conferencing] is a great tool. There is a function called ‘white boarding’ that allows the group to share notes. You can draw on the white board and share it with everyone in the web conference in real time.’
Although Cisco has IR professionals based in North America, Europe and Asia, it hasn’t used web conferencing externally to date. However, as Magleby points out, if it does decide to, the company now has the resources to execute an IR web conference.
One company currently contemplating using web conferencing is Wendy’s International. The Ohio-based restaurant franchise is keen to buy its own web-conferencing system for both internal and IR purposes. ‘Wendy’s International and other subsidiaries have offices in various cities throughout the country and using a web-conferencing tool will help bring the company together,’ says Marsha Gordon, investor and shareholder relations specialist at Wendy’s. ‘[This way] employees will be able to see slides and presenters as opposed to just listening in on a teleconference.’
Wendy’s plans to test web conferencing in-house and then eventually start using it to communicate with external audiences, including investors and analysts, according to Gordon. ‘We think it will work well because we have done a lot of research on web conferencing as a company,’ she says. ‘But we are still testing. Depending on how it goes, we will then move it to the next level and add more applications. We might use it to conduct our analyst meetings, investor conferences and things like that.’
Regulatory pressure
Web conferencing is currently used more often by European companies for IR purposes than by their US counterparts. Jack Carsky, senior vice president of IR at Providian Financial Corporation, thinks this is because European IROs have more ground to cover when trying to reach investors. ‘In the US, you can go to five or six cities and cover more than 50 percent of the equity universe, whereas over there you have to go to two or three cities in 15 different countries,’ Carsky notes. ‘So you can see why it makes more sense for those folks to use web conferencing.’
Another reason US-based IROs are reluctant to use web conferencing is Reg FD. You can’t disclose any material non-public information during a closed analyst meeting via the web, for instance. And new disclosure rules under Sarbanes-Oxley are adding more layers to the review process before information goes out to the public. ‘Before our presentations are shared publicly, they are reviewed by our legal department, internal accounting team and internal auditing team,’ notes Lynn Tyson, senior vice president of IR at Dell.
However, with regulatory requirements in mind, web-conferencing tools are now integrating some of the benefits of webcasting and teleconferencing so that companies can collaborate and present without fear of breaking the rules. ‘Our biggest concern [with web conferencing] was disclosure,’ admits Chastain. ‘We didn’t want to conduct a meeting only with those who happened to be in New York, so with this [tool] we managed to get our meeting out in a fully disclosed, accessible format.’
As they are hardly risk-takers, IROs need to feel comfortable with technology before they integrate it into regular IR activities – so it might be best to try out this tool in a safe, internal meeting before using it to report quarterly results. Either way, it’s interesting to see where technology is taking investor relations. Who knows: one day, you may never need to get on a plane again.
