VideoIf you logged on to the Internet and wanted to find out about the latest quarterly earnings for International Paper Co., you would need to look no further than the corporate home page (www.internationalpaper.com). Right there, in the middle of the computer screen, you'd find a green hyperlink labeled "1999 4th Quarter Earnings Press Release." Click, and you'd go right to the company's January 1 release.
Finding The Boeing Co.'s (www.boeing.com) latest earnings takes two clicks--one to reach the investor-relations home page, a second to reach the release. Campbell Soup (www.campbellsoup.com) requires three clicks; Lycos Inc. takes four; Philip Morris Cos., five. Such disparate results prove what the estimated 25 million investors who gather corporate financial information on the Internet already know: online investor relations is all over the map and changing every moment.
"We have to make these sites user-friendly," says Edd Grigsby, vice president of investor relations at Phillips Petroleum Co. "I believe that if you have to click more than three times to find any key piece of investor information, you're going to lose people." By the way, it takes three clicks on the Phillips site (www.phillips66.com).
The explosive growth of the Internet is not only changing the way companies conduct their business, it also promises to forever alter the way they communicate business performance. With investors demanding instantaneous access to corporate disclosure, and regulators pressuring for more openness, effective IR on the Web will be key to building shareholder value in the future. Information availability may soon determine which companies benefit from market insight and which are hurt by market ignorance.
In a review of more than 50 IR Web pages selected at random from the Wall Street Journal''s "Index to Businesses" from Wednesday, November 24, 1999, CFO did more than count clicks. Based on conversations with corporate executives, IR consultants, and shareholder advocates, we identified seven critical features that make for an exemplary investor.
What we found was that only two sites, Dayton Hudson Corp. (www.dhc.com) and Motorola Inc. (www.motorola.com), came anywhere close to excelling in all seven categories.
With the explosive growth of online investing, with the days (and nights) of extended trading hours nearing, and with more global investors, the desire among shareholders for direct, immediate access to relevant, timely, and well- organized information has never been greater. And it will continue to grow.
No longer will a company's shareholders be a relatively small group. There are currently an estimated 10.5 million online trading accounts, the overwhelming majority of which belong to individuals looking for convenience and lower fees, not to day traders. That number is expected to double by 2001, and the equity assets in these accounts will reach $3 trillion by 2003, from about $400 billion at the end of 1999.
"You're going to be looking at an increasingly fragmented shareholder base," advises Louis Thompson, president and CEO of the National Investor Relations Institute. "You won't be able to go to your top 10 investors and cover 50 percent of your outstanding shares anymore."
Moreover, Thompson notes, even institutional investors are turning more often to the Web for corporate information. In a recent survey by the Association for Investment Management and Research, 65 percent of analysts and portfolio managers indicated that a corporate Web site makes it "easier to provide an accurate analysis of a company." Little wonder the Internet is emerging as a critical tool for promoting a company to investors.
"Companies whose materials are most available will be the ones who most attract capital," says Nell Minow, a former principal at LENS Inc., an activist money manager in Washington, D.C. "If you make it hard to find information online, you're telling investors that you're not committed to letting them know how you're doing. And they'll go elsewhere."
Although every Web site is distinct in design and feel, the most effective IR tools share these characteristics:
1. EASY ACCESS TO KEY DATA
On most of the corporate Web sites surveyed, it took no more than three clicks to reach a company's latest earnings release. Only Merck had a permanent hyperlink at the top of its corporate home page. Other one-clickers, such as The Home Depot Inc. (www.homedepot.com), removed the link from their home page as the subsequent quarter wore on.
But the number of clicks to a key piece of information is not the only measure of accessibility. Inclusion of an explicit "Investor Relations" button on the home page is another, though many companies make investors guess where to look.
Consumer-oriented sites, like Nike Inc.'s (www.nike.com), and sites that are largely portals for E-commerce, like Amazon.com Inc.'s (www.amazon.com), make it even harder. They tend to put their general corporate or IR hyperlinks in less-prominent places, typically at the bottom of the home page. "There should be a button at the top, no matter how unhip it looks," says Minow.
Organization is also important for helping guide investors. The latest earnings release for Broadcom Corp. (www.broadcom.com) is only two clicks from the home page, but it is buried among other corporate releases and hard to locate. Financial press releases, experts say, should be grouped separately.
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