The onus to communicate financial news -- good or bad -- to the analyst community rests primarily with the investor relations department. But as the first official recession in
a decade sets in, IR pros are depending on their colleagues in the PR department to help them soothe wary analysts as well as a host of other cautious stakeholders.
Analysts got burned in the dotcom bust, and they're now putting every company they cover under the microscope. "Their reputations are based on their predictions," says Stacey
Gaswirth, VP of PR for Shelton Communications in Dallas. "Now more than ever, they have to make sure they have good information. From a PR perspective, that means we have to make
sure we're communicating what's going on -- good or bad."
Quickly and consistently communicating information about management, finances and other important company news to all stakeholders sends an important signal of honesty and
openness to analysts.
"If analysts put a company on their watch list, in the past it meant they might cover it within a week," says Leanne Sievers, VP of IR for Shelton. "Now it may take months, if
not several quarters. Their thoroughness in their research supersedes anything they've done in the past. Now, even after they've done their own research, they want to see more
follow-through. They rely on the consistency of the message and on management giving consistent information to shareholders and stakeholders despite bad news."
Cooperative Communications
Producing "follow-through" and consistency necessitates a close cooperation between internal PR and IR departments. Wellpoint, a national health insurance company, has designed
its communications infrastructure with that cooperative spirit in mind: the corporate communications team reports directly to investor relations executives and, ultimately, the
CFO. "We're very involved in major analyst activities," says Ken Ferber, staff vice president of corporate communications.
The company recently announced two separate billion-dollar acquisitions. Ferber and his staff were part of the communications strategy from the beginning. Ferber was able to
offer advice for communicating with the media and other audiences, and he had inside knowledge of what IR was sharing with the analysts.
That's especially important given the stringent demands of Reg FD, he says. "Because of Reg FD, investor presentations have to be Webcast. I've got reporters calling saying, 'I
heard the Webcast,' and I need to be knowledgeable about what to tell them."
Knowing what messages to highlight with the press -- particularly the business and financial media -- is a key support function corporate communications can provide for the IR
team. Gaswirth and Sievers recently worked with one client to communicate negative financial news to the investment community and encountered a significant hurdle working with the
company's former CFO. The CFO was reluctant to collaborate with the PR and IR teams on developing messages to the press. "We had to work the angles of business pubs to make sure
the stories being picked up were the stories we wanted communicated to the financial community," Gaswirth says. "We had to get together with that CFO and plan what would come out
in terms of product announcements and make sure we were being sensitive to quiet periods. The CFO wasn't willing to work with us on a regular basis, and it could have ended in
disaster." By aggressively pushing for a seat at the investor relations table, the team was able to salvage some near major mishaps.
"Corporate communications and investor relations are separate disciplines," Gaswirth says. "Investor relations professionals are trained on the rules of the SEC and Reg FD.
However, there are so many things those departments can do to support each other."
(Contacts: Ken Ferber, 805/557-6794, [email protected]; Stacey Gaswirth, 972/239-5119, [email protected]; Leanne Sievers, 972/239-5119, [email protected])
Hit the Road
Unfortunately, a lack of cooperation between the investor relations and public relations functions is all too common in corporate America. For communications pros who don't
enjoy as close a relationship with their investor relations department as they might like, Wellpoint's Ferber recommends an old adage:
"Walk a mile in another man's shoes. I get out to the investor conferences, and I go to as many presentations as I can -- not just my company's or competitors', but really high
quality companies'. Listen to the questions the analysts are asking. That's the essence of communications -- what does the audience want to hear? If you're a smart communicator,
you can come back and make it relate to what you're doing [with other audiences].