It was the spring of 2000 and the profit warning came out of the blue. Over the next two days, half the value of graphics chip designer ATI Technologies’ stock vanished. Over the next five years, the Canadian high-tech firm weathered an insider trading investigation that forced hefty penalties on senior managers, including the company’s IR director who, along with her husband, agreed to pay almost C$1.5 mn to settle charges.
These were undoubtedly dark days for ATI investor relations. According to one analyst, ‘IR was in a shambles’. In fact, by January 2001 the IR slot had been vacant for six months.
Enter Janet Craig. At first, she seemed an unlikely candidate to take over the IR reins. With a background working for much smaller biotech companies, Craig was unaccustomed to the semiconductor industry’s fast-paced product development cycle, market dynamics and stock volatility. ‘If I had known what I was getting into, I would have run screaming out the door,’ says Craig. ‘ It was a whole new ball game.’
As it was, ATI’s new management liked what it saw and Craig was brought in to the lineup to revamp the IR department. Her first job: make contact with the seven analysts that covered ATI’s stock. ‘At the time, I didn’t even know what a motherboard was,’ admits Craig. However, her relative na?veté proved an asset. Rather than immediately pitching a detailed turnaround story, she set about methodically asking questions – a technique that she would extend to all facets of investor relations at ATI. ‘I wanted to introduce myself and find out what analysts did and didn’t like and what they needed to know,’ says Craig. ‘For the first year I focused on the basics: returning phone calls, creating collateral material and starting to do non-deal roadshows.’
Doing IR stuff
Her efforts proved so successful that ATI won the award for most improved IR at the IR Magazine Canada Awards 2002. Modestly, Craig comments, ‘It was just because we started doing stuff.’ More recently, at the IR Magazine Canada Awards 2005, ATI won the prize for best overall IR in the large-cap category and Craig won best IRO in the same market-cap range.
Craig’s ‘stuff’ reflected a new company-wide customer service orientation especially welcome in a complex and demanding industry. Soon, ATI’s frank and open communication policy began paying dividends and, as the company’s stock price rose (assisted, to be sure, by the remarkable success of Intel, its only direct competitor), so did investor and analyst interest.
So much so, in fact, that today ATI’s IR department must handle the information needs of 34 analysts (with another ten initiating coverage). ‘We have so many analyst and buy-side calls each day, it has forced us to think outside the box for better ways to handle the work,’ says Craig. Two key methods that ATI’s three-person IR unit uses to head off the deluge of calls are a sophisticated communications feedback loop and what Craig dubs ‘teach-ins’.
The teach-ins are especially helpful at product launch time, which is something ATI might do twelve times a year. Instead of waiting for up to 50 calls following a launch, Craig invites analysts and investors to sign up for a multimedia webcast, often featuring a product manager. Following a 20-45 minute presentation, the call is opened up to Q&A. Within a day of the call, transcripts and slides are available.
‘Our products are complex and we operate in five different end markets,’ notes Craig. ‘For analysts to do a good job evaluating our business as an investment prospect, it is up to us to give them the tools to do so. Fortunately, IR gets tremendous support throughout the ATI organization and we can bring in research, marketing and engineering people to help the Street understand our products.’ At the same time, should its competitor launch a product, an ATI product manager is on standby that day to help answer questions.
The pester list
Meanwhile, if Craig notes she’s getting a lot of calls on a particular topic, she’ll send out a group e-mail to people who wish to be contacted regularly – what she calls her pester list.
‘I’ll ask if they want a teach-in and if so what they would like us to cover,’ she explains. ‘We literally get back 50 e-mails in 15 minutes because they are so eager to tell us their questions and concerns. After the teach-in, we ask what they liked or not and what they wanted covered that wasn’t. That way, we have a constant feedback loop and I can precisely target the right information to the right people.’
This proactive teach-in and feedback technique is applied to almost all areas of ATI’s IR communications. Before larger trade shows, for example, Craig may set up a teach-in with an industry analyst, and inquire whether attending analysts and investors want to meet with her at the show and what they want to talk about. The same sort of detailed information requests are sent out before analyst days. ‘We ask in advance what people want to hear about and then structure our analyst days to ensure we get maximum bang for our buck,’ says Craig. ‘Our biggest fear would be to have 100 people show up and leave feeling it was a waste of time.’
Investment conferences get the same treatment. ‘The sell side encourages us to go to it but when we ask the buy side it says investment conferences are at the bottom of the list of all the things that it does,’ notes Craig. ‘That’s caused us to reevaluate how many conferences we support.’
Craig’s feedback procedure has also caused ATI to reconsider plans to change the time of day that earnings calls occur. ‘We had begun preparations to send out news releases at 8 am but, based on input from analysts, we reverted to a 6 am release,’ she explains. ‘They begged us to move it back because it enabled them to present it at their 7 am meetings with salespeople.’
Not rocket science
When it comes to one-on-ones, many companies rely on institutional salespeople to give them the goods on their target. Not Craig. She likes to get information from the horse’s mouth. ‘In advance of buy-side visits, we have begun requesting information to ensure we are as prepared as possible,’ she says. ‘Following each one-on-one meeting, we send out thank you notes and ask if they need anything else and whether they want to be added to our contact list. Never underestimate the power of being polite.’
Indeed, nothing Craig and her team do is rocket science. The IR feedback loop evolved as a logical response to customer demand for fair treatment and good service under conditions of limited resources. ‘We asked ourselves, How can we head off the calls?,’ says Craig. ‘Using teach-ins and carefully monitoring feedback lets us do more with less.’ Even so, Craig says there are days when she’s on the phone for more than ten hours. Makes you wonder if there would ever be enough hours in the day.
What the analysts say
Dayle Hogg, GMP Securities
‘Janet is, by far, the best IR person I’ve had the opportunity to work with. I’ve frequently sent her an e-mail at 10 pm and received an answer 15 minutes later. I greatly value ATI’s teach-ins; they aren’t standard industry practice, but should be. The teach-in webcasts make very efficient use of one’s time and provide a high level of detail into the different technologies and markets impacting the company.
‘While Janet deserves most of the credit, senior management should also be credited with creating a strong corporate culture at ATI that encourages its straightforward approach to dealing with the investment community.’
Bruce Krugel, First Associates
‘When you call Janet with a question, you know she will do all she can to get you an answer – and you know it’s going to be an honest and informed one. Importantly, she’s been around long enough to know why you asked the question. She can say, You’re barking up the wrong tree. This is the way you should be looking at [the issue].
‘Janet is careful about managing analyst access to management. You can’t phone up anybody in the company without her knowing about it. Of course, any analyst would like a ‘Deep Throat’ at the companies he or she follows. But, from an IR perspective, you have to discourage analysts from phoning company personnel willy-nilly because people down the line may not understand the full picture. I can call Janet and get consistent information; she knows the business very well.’
Stateside IR
By necessity, ATI Technologies spends about three quarters of its IR time dealing with US investors and analysts. ‘In general, I find US analysts a lot more aggressive,’ says Janet Craig who heads IR for the firm and, along with the rest of the ATI investor relations team – IR manager Zev Korman and Irmina Blaszczyk, IR specialist – was a runner-up for the award for best IR in the US market at this year’s IR Magazine Canada Awards.
‘They look at the whole PC supply chain and are usually part of a global network, which causes them to have a whole different level of research. Many US analysts, depending on whether they look for growth or momentum, are looking for catalysts when they decide whether your stock is a buy or not.
‘On the other hand, Canadians have known ATI for longer and tend to have more extended investment horizons. Rather than being tech specialists, Canadian portfolio managers tend to cover three or four different industries.’
