Public relations professionals and their counterparts in the investor relations department have, in the past, jealously guarded their respective roles. But in an economy that
includes online investors, Regulation FD and, in many cases, dramatically reduced revenues, earnings season demands newly unified communications.
"There's a responsibility for public relations, investor relations and advertising to cohere," says Bob Ferris, executive managing director of RFBinder Partners. "Increasingly,
it is the case that investors look to the media for inconsistencies in a company's messaging. As time goes on, and there is less independent third party research coming out of the
financial community, investors are looking to the media to provide comfort in their own assessment of what they're betting on."
Media relations pros aren't the only ones who need to brush up on their financial communications skills. Announcing financial results in today's economic environment --
especially results like the record-breaking $50.6 billion loss reported by JDS Uniphase this month -- entails a variety of new responsibilities for the entire communications
team.
Not So Calm Before the Storm
Preparing the release is perhaps the most critical task for internal communicators during earnings season, and the responsibility falls largely to the investor relations
department. The traditional model, including limited information beyond the numbers, does little to meet the needs of today's multiple stakeholders.
"We've worked with some companies that are very hesitant about the fullness and richness of press releases," Ferris says. "All they do is issue numbers and maybe a percentage
change column."
Corporate communications pros often must work with the investor relations department to ensure that the press release includes what it should: a detailed explanation of the
numbers (especially when they're down), consistent with overall corporate messaging. "If you're reporting sales of $20 million vs. sales of $30 million last year, there has to be
a good explanation," says Jeff Corbin, managing partner with KCSA Public Relations Worldwide.
Corbin cites the case of a major technology client that changed its product offering and, as a result, experienced significantly diminished growth. Corporate communications
worked along with the investor relations team to develop messaging that would reflect the company's enthusiasm for the new product line and make clear to its stakeholders that
while the company was taking a short-term hit, the new product vastly improved its long-term outlook.
The strategy was threefold, explains Corbin. "First, demonstrate confidence about the product line -- they didn't want to be in a defensive posture. Second, make sure the
company's analysts maintained a strong buy recommendation, and last, make sure analysts reduced projections." While the second two goals were the jurisdiction of the IR team,
generating positive press and spreading the word about the company's new offerings were efforts shared by the entire communications department.
Beyond the Street
Once the news is released to the street, corporate communications pros must consider whether every stakeholder is being addressed, says Cathleen Mayrose, senior managing
director with Hill and Knowlton and deputy director of the firm's New York financial communications practice. Once results are publicly available, it's important to be proactive
about reiterating the corporate stance behind the numbers to every key audience.
Mayrose suggests using email to distribute tailored communications from the CEO or CFO to special groups like employees and business partners.
And although the media typically takes limited interest in earnings results, there are exceptions, as when a company announces its first earnings after going public, or when a
significant financial disaster strikes.
"If the company is reporting significantly low results," Mayrose warns, "some companies have a tendency to hide the bad news. The last thing you want is for the media to
interpret your financial news without insight from your management team." She encourages clients to talk openly with the media and provide as many facts and explanations as
possible.
"The real middle man for PR and IR is the financial media," Corbin says. "There needs to be one spokesperson for the company, someone who has a very strong IR background, but
also has a PR background. It's not just PR folks who have to understand finance. It's IR having an understanding [of corporate communications] and what it can accomplish."
(Contacts: Bob Ferris, RFBinder Partners, 212/593-5800; Jeff Corbin, KCSA, 212/896-1214; Cathleen Mayrose, H&K, 212/885-0474, [email protected])
Beyond Shareholders to Stakeholders
Financial results have always been communicated to the obvious audiences: investors and the financial community. But the public relations department at any company, public or
not, should communicate financial news - and its impact - to a variety of stakeholder groups. Hill and Knowlton's Cathleen Mayrose lists the following key groups, often
neglected:
Employees - "This is an audience sometimes overlooked, and it's particularly critical to address them if employees are shareholders or option-holders. You can't give
information to them before you give it to the outside world, but it's important to inform them as simultaneously as possible."
Sales/Client Services Staff - Anyone who has direct contact with customers should have a firm grasp of the facts and be able to explain them to customers. "Content is critical;
you must put the news in context so customers understand what it means for their relationship with your company."
Suppliers/Business Partners - "You need their buy-in and support to keep up a robust relationship. You don't want your technology partner to call into question your ability to
pay your bill."
(Cathleen Mayrose, H&K, 212/885-0474, [email protected])