Today the Wall Street Journal ran a piece that included some commentary from us around Yahoo and Netflix’s use of video to enhance their earnings call process. Below is an excerpt of our commentary from the piece:
“While some technology companies may choose to stream their earnings commentary most executives likely will remain off camera, says Chris Hodges, founder of Alpha IR Group, a Chicago investor-relations adviser. Companies spend at least two or three weeks preparing for a typical earnings call, he says. Getting CEOs and CFOs camera-ready could take even longer.”
Marissa Mayer (Yahoo’s CFO) has been a lighting rod for the press and more importantly, a new face for the future of a technology company that was considered by most as becoming rapidly irrelevant. What she’s accomplished in such a short period of time in terms of cultural shift and strategy has been amazing to watch, and thus this video stream was well attended. However, watching a CFO read his or her script, even one that may be a little more dynamic than the traditional CFO (with no offense intended to those reading), was taken as quite boring.
Preparing for a more interactive approach to earnings, and make sure the presentation is dynamic enough to capture live eyeballs, will require a significant amount of time and creativity by the IR and management team. In our experience, the typical earnings cycle is already several weeks long for most public companies to adequately prepare, tick and tie the numbers, and execute.
It’s only a matter of time before a multi-practice agency or vendor is suddenly trying to sell the IR community on their new “Dynamic Video Enhanced Earnings Platform” product. The resulting question is whether or not the buy- or sell-side care. Are they asking for this medium and will they actually participate actively in the forum?
Many of you have likely seen surveys from social media IR vendors claiming the Street is waiting with open arms for you on Twitter, but it’s just not true. We talk to between 50-100 investors a month for our clients and we are always asking them for suggestions on how our clients could communicate more effectively. By our estimation, at most 1 in 20 has ever noted that they are actively using social media to learn more about a company. Futher, as most of you know, the buy-side has pulled back dramatically from active participation in earnings calls during the Q&A session, preferring to wait for one-on-one time post call. Many of our key buy-side contacts tell us that for their core growth stocks, the ones they don’t worry quarter-to-quarter about, they often prefer to print earnings transcripts to read on their train ride home.
So the reality is, if you plan to use social media and/or video to enhance your quarterly earnings process, our suggestion is that your motivating factor is not focused on the Street. They don’t care. If you’re a technology company looking to further your perception as an innovator, or a retail company that is already actively using social media to engage with your customers, it makes far more sense to us. If you’re a $1.5B widget company with 90% institutional ownership, we’d rather see you focus your limited IR preparation time on activities that will actually be valued by the Street during the earnings process.
About Alpha IR Group:
Alpha IR Group is a full-service investor relations consulting firm that partners with companies to deliver best-in-class investor relations, from strategic insights to daily, tactical execution. Alpha IR offers a range of tailored programs, as well as sophisticated insights and significant experience with activist preparedness, investor day preparation and execution, earnings support, M&A/transaction support, perception studies, and more. The firm’s leaders have over 100 years of combined sell-side, buy-side, investment banking, and IR consulting experience. The firm has offices in Chicago, New York, and Boston. Alpha’s growing staff supports a client base that spans seven industry verticals and represents nearly $100 billion of equity value trading on public exchanges in North America.