IR Newsletter

By Howard Kalt

So, you’ve heard over and over that 2009  has seen  companies take a hard look at communications goals and strategies. But, how about you personally?  What can you do to build your own business acumen to make yourself more valuable to your organization? 

It’s one thing to understand the need for research, to know how to write, and to be creative in building interesting and credible corporate positioning. But if you really want to add value, you need to get a handle on the financial aspects of how business actually works – especially your business.  And, to turn an old phrase inside out, that means not just walking the walk, but talking the talk. You need to know the “lingo” used in the executive suite, and feel as comfortable using terms such as return on investment [ROI], margin and market share as you do talking about, circ, CPM and readership data.

As we  slog through the triple whammy of major business downturn, historic stock market declines and tightly restrictive  credit, PR strategies and tactics are being measured by ROI, as are the teams who deploy them.  However, ROI isn’t solely monetary, it includes the perceived value-added qualities you personify to your company.

So, begin by investing in yourself: 

1.       Get a good book on understanding financial terminology, such as “Barron’s Dictionary of Finance and Investment Terms.” It’s basically a 600+ page, paperbacked dictionary of easy to understand definitions and illustrations of terms from “amortization” to “zombie companies” (add their site to your bookmarks:  http://www.allbusiness.com/glossaries/finance-investment/4941811-1.html).

2.       Read the Wall Street Journal every day. They have the most comprehensive business reporting, and the “Personal Journal” section is fun, to boot.

3.       Read and understand your company’s annual report (if it’s a subsidiary of a public company, read the parent’s annual report; if it’s private, read a publicly traded competitor’s report). Start with the letter from the CEO to see what he/she thinks is important, then go on to the Review of Operations, and the Notes to Financial Statements, where some of the most important information appears.

4.       Listen to a quarterly earnings conference call, webcast or podcast. Live calls and replays are open to any interested party on a listen-only basis and most companies archive past calls on the Investor Relations page of their website. Focus particularly on the questions securities analysts and institutional investors ask management about performance in the last quarter. And then listen to the answers and determine if communications are clear and responsive.

5.       Read one or more reports published by securities analysts following your company.  Compare  different  analyst conclusions  with what management said in that earnings news release and conference call presentation.

1. Understand how the Security and Exchange Commission’s (SEC) disclosure and insider trading rules require you and your team to safeguard important information.

Here’s a good example of how individuals’ poor judgment can snowball into a serious company issue:

Several years ago, a leading maker of graphics chips for computers won a significant contract from Microsoft.  According to the SEC complaint [http://www.sec.gov/litigation/litreleases/lr17243.htm], before the contract was announced to the public, the company CEO sent an email announcing the win to all employees, along with its expected revenue impact.

The next morning, the company’s vice president of marketing sent an email to all employees reminding them that news of the agreement was confidential until the news release was disseminated. After receiving both emails, 11 mid-level employees began to buy company stock, and a few tipped off some friends and relatives who also bought stock. For the next three days, the company's share price soared as rumors about the contract circulated on the Internet and in the press.

After Microsoft announced the agreement to the public, the company’s shares continued to rise, closing that day at more than twice the closing price as on the day prior to the first email. The  SEC sought “disgorgement” (that is, “surrender of”) defendants' profits, plus interest, civil monetary penalties for insider trading, and an order from the court permanently enjoining them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  When all was said and done, everyone gave back their profits, plus interest and fines…but it could have been worse—up to 5 years in prison worse.

 Slipping down the insider trading slope happens easily, and is hard to fix. Bottom line: it’s a good time to invest in yourself, and these six steps take only a few dollars and a few hours, with the potential for a big, legitimate payback.

• › search the news archive

• search the news archive