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3/31/1999
Overview
On Wednesday, March 31, 1999, the National Investor Relations Institute (NIRI) Silicon Valley Chapter: Events: Chapter held its annual Spring Conference at the Fairmont Hotel in San Jose, Calif. Among the topics discussed were Developing a Disclosure Policy, Communication Practices with Senior Management and Your Board, Targeting Strategies, Conference Call Tactics, Portfolio Managers' Top 10 Investment Criteria, and Analyst Communication. The following are highlights of the panel discussions.
Developing a Disclosure Policy
Panelists Louis M. Thompson, President and Chief Executive Officer,
NIRI; Melissa Plaisance, Senior Vice President, Finance and Public Affairs,
Safeway, Inc.; and Larry Kurtz, Vice President, Corporate Communications,
McKesson HBOC, Inc., discuss disclosure practices.
Presentation PPT [ 132KB ]
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Communication Practices with Senior Management and Your Board
- Larry Kurtz- McKessanHBOC, Vice President Corporate Communication
- Melissa Plaisance-Safeway Inc., Senior Vice President Finance & Public Affairs
- Lou Thompson, Jr.-National Investor Relations Institute, President & CEO
Larry Kurtz is responsible for all corporate communication at McKessanHBOC, but not investor relations professional. Larry feels that it is very important to have effective communication with executive staff, but he believes that it is important to have realistic expectations. He considers it a benefit to have a generalist type of career to include knowledge of human resources, mergers & acquisitions, board affairs. By doing so one can begin to build a level of shared understanding and commonality. His comments in dealing with the CEO include, spend time with CEO and study his or her personality and viewpoint, and quickly find out what s/he views as important and what is not.
Melissa Plaisance stated that she is included in the CEO staff meeting and actively keeps executive staff abreast of IR developments. She currently oversees public affairs, investor relations and finance, and she participates in mergers and acquisitions. She plays a role of understanding finance and has an open door to executives.
Lou Thompson indicated that more than 50% of Investor Relations professional have interaction with the Board of Directors. Those who have interaction with their board generally give presentations at every board meeting. He also indicated that the Street must feel the IR professional has direct access to management. In addition a key role of the IR Professional is that you are a representative of the company, and you bring knowledge of how the Street perceives the company.
The following is a sample of a Q&A's that the panel addressed:
Should IR interact in meetings with CEO and analysts? How do you involve yourself?
Melissa: She and the CFO decide before hand who is going to talk about what. They involve everyone participating in the discussion so that everyone can make a contribution.
Larry: He stated that after executive has made a comment, he might say a cue word. If something is stated that might be incorrect, he follows up with the guest later by phone.
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Targeting Strategies - Broaden Your Audience
- Kira Bacon- Acuson Corporation, Director of Investor Relations
- Nick Kormeluk- Covad Communications Group, Vice President Investor Relations
Moderator Janine Zanelli, Manager of Investor Relations, Checkpoint
Software moderates a panel on communication practices with panelists
Kira Bacon, Director of Investor Relations, Acuson, Corporation; and
Nick Kormeluk,Vice President of Investor Relations, Covad Communications.
Kira Bacon feels that to broaden your audience you need to target. She feels there are many different ways to target that can be done through various services and databases, which are referenced to in the NIRI Who's Who publication. It is important for IR professional to manage ownership of the company stock, as well as the company's desirable shareholder base, which is usually done through company and industry profiles. When contacting institutions directly, one should understand the company's profile and style of investing. Make sure to explain yourself and be really organized. Start small and target places such as Chicago and Milwaukee. Targeting is an important ongoing program and should be done day to day.
Nick Kormeluk indicated that the value of targeting should be pushed to one of the top priorities. He feels that targeting will ultimately lower the company's cost to capital. He feels you must be proactive. It is important to recycle your shareholder base. Targeting is a way for IR plays an active role. The IR professional's function is to understand the valuation and to understand how the portfolio manager thinks. Make sure that expectations are achievable and realistic and it is important to give 3 to 5 points about your company and strategy.
The following are just of few of the Q&A's that the panel addressed:
When to contact buy-side and how do you approach them without sounding like a sales call?
Kira: Should quickly mention 3 to 5 things about company, one being your market cap.
Nick: Use the opportunity to leverage your targeting strategies after a press release is disseminated.
What if it is difficult to find peer group because your company does not fall into any one category?
Kira: Look at whom your sell-side is covering.
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Conference Call Tactics - Current Trends
- Lance Lissner- Altera Corporation, Vice President Investor Relations
- Thom Weatherford- Business Objects, Senior Vice President and Chief Financial Officer
Typical conference call: Decide what topics will be covered, set key metrics-financial & operations, and reports consistently. It is important to make earning release date routinely available and to maintain consistency whether good and bad. During conference call the CFO handles the revenue breakout and guidance for operating model, CEO deals with the highlights and top line guidance. We do an online broadcast of conference call.
Thom's procedures are very similar to Lance's. In addition to what was previously mentioned the company tries not to schedule the call when it will conflict with peers and large companies. He will generally do the call after competitor's have done their calls. It is important not to knock competitors and to not include the press on conference call. The following are just of few of the Q&A's that the panel addressed:
How do you provide guidance after the call?
Lance: One of the benefits of giving guidance on call is that you deal with specific concerns.
Thom: Try to give guidance after call so analysts are not confused.
How do you deal with a conference call when the news in not good?
Lance: Get information out there along with a solution, and repeat key financial & operations metrics everytime.
Thom: Take the hit with the bad news. Do it once and do it well.
In preparing and during the call how much do you depend on IR?
Lance: CEO, CFO and IR work on call. We work on the outline right after the close of quarter and rehearse script before call.
Thom: CEO, CFO and IR hold strategy meeting on what we should focus on, during call we use hand signals for who will answer what.
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Portfolio Managers' Top 10 Investment Criteria
- Andrew R. Midler- Standard Pacific Capital, Portfolio Manager
- James Cottle- University of California
Andrew Midler indicated that to create value is critical. He likes to look at the company's prospects for the year and tries to stay away for quarterly hysteria. He feels it is important to separate perception from reality and to understand the prospect through industry trends, monitoring short and intermediate trends and the global mosaic. He follows the 10K and financial documents, solely for clues as to whether things are getting better. He likes to use street consensus as a foil and resource, but spend most of the time with the company.
James Cottle runs a $50 billion fund for the nine UC campuses, therefore it is important to take a long-term view. He feels there are four important factors: industry, company fundamentals, management and valuation. It is important to know how fast the top line is growing and what the demand drivers for the industry, as well as if industry is growing faster than the GDP. The company fundamentals should have a top line that has a trend line with predictable revenue growth. Important factors include market share, R&D and conservative balance sheets. Meeting with management is a must, preferably all of management and he likes to see evidence of execution skills.
The following are just of few of the Q&A's that the panel addressed:
If an IRO feels company meets your criteria for targeting how should s/he proceed?
Andrew: Best way is be direct and to come visit us.
Jim: Force a visit, if you come to us it is hard to say no.
How accurate do you feel write-ups are on funds?
Andrew: Prospectuses are written very broadly and it depends how the words are defined. Prospectuses can be deceiving and it is best to check the annual or semi-annual reports.
Jim: Look at portfolio turnover.
IR professionals have problems in one-on-one's when CEO and CFO are not present. How do you build credibility?
Andrew: Knowledge is power, it is the ability to articulate about the industry, trends, and the company story. In some cases I will need to talk directly with CEO but in most cases it is important for me to talk to someone who can articulate.
Jim: If you have access to top management that is good. It is important to build you own credibility by being responsive through good
and bad times.
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Analyst Communications - "Cutting Through the Clutter for Coverage"
- Martin Pyykkonen-CIBC Oppenheimer, Networking Analyst
- Bruce Walicek- BT Alex Brown, Semiconductor Analyst
Maria Quillard, Director of Investor Relations, Xilinx, moderates a panel on sell-side
coverage with panelists Bruce Walicek, Vice President, BT Alex Brown, and Martin
Pyykkonen, Executive Director, Networking Equipment Industry, CIBC
Oppenheimer.
Martin feels responsiveness of IR and access to management and product managers is critical. He generally scans email for product announcements and considers email and faxes very important. It is good when IR points out emphasis and important factors.
Bruce scans faxes and emails but is generally looking at the headlines and first two sentences. Contacting him directly is the best way.
The following are just of few of the Q&A's that the panel addressed:
How many models do you keep and how many companies do you follow?
Martin: I follow a dozen companies. I have three models per company, income, cash flow and revenues
Bruce: I follow ten companies and I do about 4 spreadsheets per company.
In closing, National Investor Relations Institute (NIRI) Silicon Valley Chapter: Events: Chapter Annual Conference had 130 Investor Relations Professionals in attendance along with 15 various vendors.
Attendees of the Silicon Valley NIRI Annual Spring Conference enjoy
lunch and conversation
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