I read IR Magazine editor Neil Stewart’s breathless piece on Microsoft’s planned “next-gen” IR website, due for delivery “some time in 2010” (can’t they be more specific than that?) and was left wondering what all the fuss is about. Nothing that’s mentioned in the story strikes me as particularly leading-edge. Stewart tells us to look at Microsoft’s two-year-old “investor central” section for a taste of what’s to come. (Caution, you may need to install some software to see it!)

What is investor central, you ask? Well, for starters it’s not new. They’ve been doing it for two years and it’s just an interactive quarterly report that happens to be driven by Silverlight and XBRL. It’s actually not bad as interactive quarterlies go, but other companies have been doing much better things for much longer than Microsoft. And those other companies have never been confused about what they doing and didn’t have to invent silly names like “investor central” to describe their interactive quarterlies. For the longest time, Microsoft, wasn’t able to produce it’s “investor central” interactive quarterly until a few days after it had reported its results. They’ve got it down pat now, but it took them two years to do that, whereas lots of companies in Europe have for years been posting interactive quarterlies on the same day as their results announcements. Just ask the folks at Nexxar who produce a lot of them — without the luxury of XBRL and Microsoft’s considerable resources.

OK, so I’m not impressed with this “investor central” thing, so what other “cutting-edge” IR website stuff does Microsoft have planned? Stewart offers this:

“Dennie Kimbrough, Microsoft’s IR manager, says the new website’s goal will be ‘taking what we have today and streamlining it so people have everything they need in one location.’ For example, it will be easier for investors to subcribe to RSS feeds, and retail shareholder FAQs on topics like direct stock purchase plans will be front and center.”

RSS feeds and FAQs! OMG, they can’t seriously think those are leading-edge in 2010 can they? According to IR Magazine, they do.

But there’s more:

‘Whether it’s retail investors or institutional investors, they’re all looking for the company’s strategy and what we see as driving growth. We want to make it easier for them to analyze those things,’ Kimbrough says.

‘Key performance indicators’ under the ‘company overview’ tab turned out to be an especially popular feature of investor central. ‘We go into metrics like bookings growth on every earnings call, but normally an investor would have to comb through the transcripts to build their own databases. In the KPI section, you can see trends over time and drill down into them,’ Setcavage says.

OK, it’s getting better. But explaining your company’s strategy more prominently and surfacing KPIs is hardly leading-edge. Lots of companies have for years set aside entire sections on their sites for this type of content. Microsoft is late to the party.

Microsoft’s current earnings release format is a traditional HTML document with options to download Excel, Word or XBRL. On the new website, the main view of the earnings release will be a direct rendering of the XBRL-tagged data, as it is already on investor central.

Wow, we’ll get an HTML rendering of XBRL just as it is now in “investor central.” This is not leading edge or new. They already have it. Indeed, even the SEC, hardly the bastion of web innovation, already offers same thing on EDGAR. Check it out.

Another innovation will to make the online presentation of Microsoft’s annual financial analyst meeting more interactive with the video sliced into chapters and matched up with the transcript.

Again, nothing new here. In fact, it’s really just a trip back in time, to around 2002 when companies, including Microsoft, used to post so-called interactive transcripts that were offered by Shareholder.com.  You could click anywhere in the transcript and view the precise point where the words were spoken in video or audio. Again, that was around 2002, so it’s really not an “innovation.”

Setcavage says investor central and its interactive features haven’t been hidden but neither have they been shown off. ‘It’s a sub-site and you have to work to find it, which is not best practice. Now we want to take the best from investor central and make it pervasive throughout our overall IR site.’

Finally, something I agree with. The current “investor central” section is poorly integrated into the site. It never should have been a separate section. But fixing it’s location isn’t leading-edge. It’s just bringing Microsoft up to par with other companies. Nothing in Stewart’s article suggests to me that Microsoft’s planned new IR website is going to be “next-gen” or “cutting edge.” Importantly, there’s no mention of the IR team being more accessible to the people they’re supposed to build relationships with, such as direct contact info for IR team members to replace the current aloof and impersonal page. There’s no blog or social media. And no mobile site mentioned either.

I don’t blame Microsoft’s IR department for the article. They seem rather humble and cognizant of their current shortcomings. However, IR Magazine’s Stewart appears to me to have blown things out of proportion because he doesn’t know good from bad IR websites. And by doing so, he does everyone in IR a disservice by glorifying mediocrity.

Many people who don’t know better will now look to Microsoft as the exemplar when, in fact, it’s unlikely to be anything near that. Anyway, like all of you, I’m still looking forward to seeing Microsoft’s new site “some time in 2010.”

Comments are open…

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This doesn’t need much of an explanation, beyond explaining that the middle tweet was several hours late. Read the tweets starting from the bottom. Murphy’s Law says that when you point to something as a best practice, something will invariably go wrong.

However, it is worth noting that Roche’s communications people do try harder than most.

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Aimlessly browsing Twitter today, I stumbled across an account of a firm that supposedly provides digital marketing services. I forget the firm’s name, but I don’t feel bad about that because it’s a firm that’s not worth remembering. What tipped me off to the fact that this is a low rent firm was a tweet along the lines of “auto-DMs are bad, only idiots do them.”

I scoff when I see such simplistic advice. Yeah, most auto-DMs of a marketing ilk are bad. You know the type: “Thanks for following, check out my eBook «href»” or “Thanks for following, look forward to tweeting with ya.” Barf! I agree. But there are situations were auto-DMs are extremely valuable and can help to avoid pain for your followers.

For instance, let’s say you’re a big bank and you have a customer service Twitter account. You absolutely can’t have your customers tweeting their personal account details out in the open. Sending them an auto-DM reminding them not to tweet personal banking information could spare your followers a lot of grief. It also shows that you care for your customers’ welfare and the security of their personal info.

In this case, auto-DMs aren’t bad, they’re a best practice. What is bad are “digital marketing firms” that employ people who can’t think past what they read on Mashable six weeks ago.

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Mark Latham represents retail investors on the U.S. Securities and Exchange Commission’s Investor Advisory Committee (SECIAC). His main interest is corporate governance and proxy voting in particular. As a member of the SECIAC, Latham has been doing something I’ve long advocated for corpoprate directors to do: communicating directly with the people he represents.

Latham is doing this through his blog. One recent post tells us about a proposal he will be presenting to the full committee on Monday recommending that SEC investigate the use of  XBRL for proxy statements and fund voting records.

While I have some doubts about how useful XBRL will be when no one can actually parse the stuff because of a lack of XBRL browsers, the idea of putting some structure around this simple data is a good one. But more important to me than the proposal itself that we are getting a preview of what he intends to propose. If you have an opinion, you can comment on his blog or trackback to his post from your own blog.

This is how all shareholder representatives should be communicating, be they directors of public companies, mutual funds, pension funds or SEC committees. No amount new regulations or mandatory disclosures that the SEC can dream up will ever be as effective at rebuilding public trust than directors communicating directly with the people they are supposed to represent.

Of course, I can hear the howls of protest from the governance wonks: “We can’t have directors blogging or tweeting for confidentiality reasons or because of Regulation FD.” Rubbish. If we can’t trust individual directors to exercise good judgment in public communications with their constituents, we shouldn’t be entrusting your public corporations to them.

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I’m starting to discover signs of Spring. In February. :-P Spring comes much earlier here than in most parts of Canada. It’s something new to me, so I stop to snap photos on my phone whenever I see a beacon of brightness peaking through the dull detritus of Winter’s blight.

Spring’s freshness is uplifting, full of promise and excitement. Of course, it also signals pending chores and pounds to lose, but an early Spring gives me an advantage over my blubbery old friends back East. ;-). I don’t have clue what these flowers are. When I do, perhaps my own transformation will be complete.

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Norway’s Yara announced this morning that it plans to buy Terra Industries for $4.1 Billion. But if you live in the U.S., where Terra is based and where its stock trades on the New York Stock Exchange under the symbol TRA, you’re not supposed to know any of the details contained in Yara’s presentation on the deal. You’ll have to wait for the official SEC filings, as per the notice below:

So, my American friends, don’t click this link, OK?

http://www.yara.com/doc/263692010-02-15%20Terra%20acquisition%20Web_US.pdf Yeah, exactly. These rules, and how they’re being applied, are stupidly pointless.

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The Australasian Investor Relations Association (AIRA) has warned companies to ensure they are aware of analysts forecasts and inform the Australian Securities Exchange (ASX) when internal earnings figures differ materially from the market consensus. Material differences between company reported earnings and market consensus can have a large impact on share prices, says AIRA, which issued its reminder after consulting with its members, regulators, accounting bodies and other interested parties about profit updates. Its findings have been published in an Issues Paper entitled, The what, when and where of consensus estimates for listed entities in Australia.

“The ASX imposes a responsibility on companies to provide an update when their own estimates or performance from the previous corresponding period, depart “materially” from what is called the market consensus. This needs to be done even if a company doesn’t give formal market guidance”, AIRA Working Party Chair David Perry said. Current rules require companies to provide profit updates when they become aware of facts that a reasonable person would expect to have a material effect the share price. Generally, any variation of more than 10% to 15% between a previously released financial forecast or expectation triggers disclosure. But as the issues paper notes, that policy may not always apply. There is also uncertainty about guidance if a variation is between 10% and 15%, and also leaves the interpretation open as to what might be material.

“There is a compounding impact of uncertainty in the current system,” says AIRA’s Chief Executive Officer Ian Matheson. “There is ambiguity about the 10% and 15% levels. A conservative approach would say that a company should provide guidance for a variation of more than 10%. The Australian Securities and Investment Commission (ASIC) favours 10%, but the ASX tends to apply a ‘greater than 10% to 15% test when it assesses reported results’. “AIRA believes there needs to be greater discussion about what the appropriate quantum variation is that should trigger a profit update and also whether there should be greater consistency about what the key number is, that is, NPAT, EPS, EDITDA, and so on,” said Mr. Mathenson.

The issues paper also notes that there are differing measures of consensus. There should be greater clarity in the definition of market consensus, which for many smaller companies that have little or no research coverage is potentially very misleading to the market. Some earnings consensus numbers are provided by companies, and others by third parties that gather and collate broker estimates. The figures may comprise a variety of different samples, measures and assumptions. “In the final analysis, the sharemarket needs clarity so that the numbers can be relied upon,” Mr Perry says. “We would like to see a system that is more uniform and one that is more transparent. In this way companies will benefit and, importantly, investors will too.”

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I was alerted today to a legal note from Canadian law firm McCarthy Tétrault titled Managing the Legal Risks of Social Technology — Part 2 It’s a well-written, clear piece that covers a range of topics relevant to corporations that are currently using, or thinking about using, social media. Part of it deals with social media and disclosure, and it’s that part that I want to comment on because I think it’s too simplistic:

The note says:     There are essentially two approaches that can be taken if you are considering the implications of Web 2.0 to your procedures for corporate disclosure.  One posture is simply not to allow executives to participate in social media.  Some companies take this approach because they are nervous that the risks inherent in Web 2.0 interactions cannot be sufficiently managed and controlled to permit it to be a safe channel of corporate disclosure.

How many companies never talk to analysts and fund managers on the phone or in person because it’s not “a safe channel of corporate disclosure”? Communications via social media are no different than interactions via any other medium.

Actually, there is a difference, a big one. Social media is mostly public, whereas email, phone calls and one-on-ones are private. The risk of tipping insider information on the phone or in one-on-ones seems far greater than doing so out in the open on a social network. When you release material non-public information on the web to 300 or 3,000 followers on Twitter, it’s pretty hard to argue that the information is private. The note actually cites a legal precedent in where information on Facebook was deemed not to be private because the individual had 300 Facebook friends.

While the case is outside of the corporate disclosure domain, it’s interesting to think about how a judge would assess the public nature of an inadvertent slip on Twitter versus one in a private meeting with a fund manager. I think it’s a slam-dunk that the latter is private. Also relevant is that most social media communications are written, allowing the author the opportunity to think before pushing “post.” This is not the case in one-on-ones or phone calls where the executive must think on their feet and there’s no delete button.

Chances are, more is let slip in private meetings with investors than will ever be divulged via social media. The note goes on:

The other approach is to update your disclosure policy, and to coach your executives, so that you address the risks of Web 2.0 communications as best you can. This would entail, among other things, the following.

Your pre-Web 2.0 disclosure policy likely has a pre-issuance review process for items such as news releases. The policy would be updated to require that draft blog postings and tweets would undergo the same pre-issuance discipline and rigor.  Equally, your current disclosure policy probably restricts the number of executives who are permitted to speak for the organization. Presumably, only a sub-set of these same people would be authorized to post blog entries, or make tweets.

This seems like good advice, have lawyers review stuff before it’s posted and restrict who can post. However, it’s not practical. We need to draw a distinction between social media communications that are more like formal written disclosures that should be reviewed prior to posting (blog posts, for instance), and those that should not be reviewed before posting because they are more casual and like oral communications (blog comments and Tweets). I think a key factor in determining which are formal, well-considered communications and which are casual is the time between a question or comment and the executive’s response. FINRA’s social media guidelines seem to do this. Although they don’t mention this timing factor, they do draw the distinction between static and dynamic communications. FINRA seems to recognize that the interactive and conversational nature of many social media interactions will be stifled if every utterance must go through legal review. I think the same must apply to corporate social media communications.

As for limiting who can participate and “speak for the organization” this also is impractical. Anyone who can be identified as an employee of a company speaks for the company when they participate in social media. You can’t stop them touching on topics that interest investors, because investors are interested in just about everything a company does. Investors are smart enough to weigh the credibility of a statement made by a customer service rep versus one made by the company’s CFO. Yes, customer services reps shouldn’t be answering questions from investors, but telling CSRs they can’t talk about anything remotely related to a company’s financial performance of business prospects is impractical.

How CSRs answer customer questions and the nature of those questions can be relevant information to investors. Toyota springs to mind. If the company’s policy was that only executives could speak for the corporation, then the fallout over recall debacle would be much worse than it is now. Social media channels like the company’ss US Twitter account have helped lower-level employees reach out to customers and keep them informed. As an investor, it gives me insight into how they’re handling the crisis that was not possible before social media.

In terms of what they post and tweet about, one approach would be to restrict material for social media dissemination and discussion only to that information about your company that was perviously disclosed through your more traditional disclosure channel(s). In a similar vein, blog posts and tweets might link to other company material that had been previously disclosed. This is an important way to overcome the 140 character limit of tweets.

Two issues here: 1. We need to define “previously disclosed.” Are we talking nanoseconds or days? This advice about only disseminating information that was “previously disclosured” is leading to situations where I think companies are exposing themselves to potential litigation because they’re too casual about updating their social media followers on material breaking news. Yahoo! is a recent case I posted about recently. They tweeted about their earnings release so long after it had been “previously disclosed” that anyone relying on their Twitter account for updates was almost the last to know.

2. This presumes that social media communications are non-public for the purposes of Reg. FD and similar requirements outside of the U.S.. But are they non-public? If a tweet appears simultaneously on a company website that is a “recognized channel” with investors, is it non-public?  If the company’s Twitter account is followed by 1,000,000 people, is a tweet containing material non-public information really non-public? Technology advances and widespread adoption of social media are reaching the point where I believe we will have to recognize that social media communications are as effective as news releases. Maybe not for all companies in all circumstances just yet, but I’m comfortable saying that it’s the case for certain companies in certain circumstances. ;-)

Other suggestions for bringing discipline to Web 2.0 corporate disclosure include:  maintaining up-to-date (indeed, ideally real-time) records of the content and interactions your executives have with social media (including so that corporate counsel can monitor compliance with your company’s disclosure policy, as updated to cover social media issues); monitoring what other web sites and internet pundits have to say about your organization; and coaching executives about the risks of impromptu communications over social media.

Records are important, but again I have to ask if legal counsel is recording all phone calls and one-on-ones. If they are, that’s fine. But if they’re not, then why apply a different standard to social media where the risks of tipping insider info are much lower?

In essence, it is not impossible to manage the legal risks presented by social media in a Web 2.0 world, but it is challenging.  And it requires legal counsel and executives to communicate and co-operate together, so that the attendant risks are managed pro-actively, rather than as items generating regulatory intervention or litigation.

Of course, this is the reason for this note in the first place. You must use your legal counsel help you navigate the “attendant risks” which could lead to “regulatory intervention or litigation.” Only problem here is that the risks are less than for other investor communications and, so far, we have no examples of regulatory intervention or litigation stemming from communications to investors via social media.

Other than that, I think it’s great that lawyers are talking about this stuff. P.S. Thanks to Rob Berick (@robberick on Twitter) for bringing the McCarthy Tétrault note to my attention. He deserves all the blame.

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Syndication latency is one of the topics I obsess over is online investor relations communications. I probably think about it far too much because speed is of relative importance to investors. Most retail investors don’t care if they get your news 1 second, 1 minute, or even 1 day after everyone else has it. They’re not going to do anything with the information anyway. But latency does matter to professional investors, which includes professional traders/analysts/investors and program trading. Billions of dollars are being spent in the pursuit of slicing off a milliseconds in the trading chain. It’s a big issue for the industry and for regulators.

However, individual investors, the media and the growing ecosystem of finance bloggers also are noticing when they don’t receive information from companies at the same time as other traders or investors. Often they see evidence of inequitable information access in pre- or after-hours trading. The stock they’re following starts moving a minute or more before they get the news release and understand why. I wrote about the latency problems of the traditional PR wire service networks at length in November 2008. Since then, things have not improved. In fact, they’ve gotten worse because investors now have more places from which to get companies’ news.

Currently, I’m tracking more than 600 public companies that have official Twitter accounts and which use these accounts to disseminate company news (see @ir_tweets for highlights). However, in many cases these companies make no effort to synchronize their tweets with the release of their news on their websites or via PR wires. The delays between when news is released to other channels and when it is tweeted or posted to a Facebook page can be anything from a few minutes to several hours. Some companies just don’t bother  to post some news releases to these channels, even though they tell investors and others on their websites to use Twitter or Facebook to receive updates.

Meanwhile, investor relations website vendors have been negligent by not implementing web feeds properly on their clients’ websites. I touched on part of the problem earlier this week, but the issues run much deeper than latency. So why does this matter? I think it matters because it impacts on the credibility of the market as a whole and investors’ willingness to participate in it. No one wants to play with a deck that’s stacked against them. Clearly, the current SEC leadership understand this and they’re taking action on a variety of fronts.

But companies and their service providers also have a role to play in working harder to ensure that when companies release important news, they do so in a way that’s fair to all.

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