The next level in teleconferencing is more than just a phone call away
Conference calls with analysts are a quarterly rite for many executives and IROs. Scripts are drafted and answers to probable questions pondered. Tensely hunkered, executives strive to spin a positive tale while avoiding ad-lib remarks that might spark misunderstanding or even litigation.
While the phone seems destined to remain the IR conference call mainstay for some time, teleconferencing vendors are scrambling to take the high ground in the battle to deliver the IR message in the 21st century. Today's public companies can take advantage of a smorgasbord of new technologies that blend real-time audio, video and computer links.
While companies naturally look for better interactive tools to impart corporate information with analysts and shareholders, does anybody really want all these bells and whistles for quarterly conference calls?
'Audio technology is less sexy, but it's what allows people to achieve what they've got to do,' says Jim Wilson of Denver-based ConferTech. 'The Internet is a great tool to complement the service we can provide customers. However, I would not want to develop a whole business plan in this industry around the Internet. Let's face it, it's easy to pick up a phone and dial a number.'
Still, ConferTech, a veteran of teleconferencing and now part of Frontier Corporation, is expanding its reach into multimedia realms. In fact, ConferTech says it pioneered multi-point data conferencing with a system called ConferCall Plus, letting users write, erase, point or type on shared data.
Last year, ConferTech and Microsoft agreed to develop and market a desktop audio, data and video conferencing service for Windows-based PCs. Set for release in the third quarter of this year, the service will allow users to schedule and conduct teleconferences using an Explorer Web browser combined with ConferCall and Microsoft netMeeting conferencing software. Like much Internet technology, netMeeting may yet be ahead of its time - it will inevitably rely on the 'build it and they will come' phenomenon.
All in all, Wilson believes teleconferencing is ultimately a 'commodity service'. 'People don't like the term, but that's the reality,' says Wilson. 'The market is driven by value-added services and delivering the easiest access to whatever is most convenient for the user.'
Share and Share Alike
For its part, MCI, as the world's largest carrier of Internet traffic, has established a few on-ramps of its own. Its 'Net Conferencing' system makes document conferencing available to virtually every PC user.
'Users don't need additional software,' says Birgit Wagschal, an MCI spokesperson. 'You can log on to a document conference on the Internet with a standard Web browser.' Virtually any document that can be created in Windows can be shared with an unlimited number of people in real time. The audio portion of the call is done over traditional phone lines. So analysts could examine charts or spreadsheets on the Web while listening to company executives on a regular conference call.
In the same vein, MCI partner BT is testing Conference Call Presenter in the UK. The service combines a normal conference call with text, charts, graphics and even pictures on the Web.
Taking the concept a step further, Lotus Development Corp's RealTime Notes product integrates Notes groupware with Intel's ProShare conferencing system. Proshare offers audio, video and 'whiteboard' conferencing for personal computers (whiteboard conferencing means 'drawing' on a computer document just like using magic markers on a conference room whiteboard). Lotus hopes its 5 mn installed Notes users will give it a leg up on the competition.
Meanwhile, AT&T is setting up an online teleconference reservation service and plans a system for hosts to control conferences through the Internet while all voice connections are established through the existing telephone network.
Ramping Revenues
Telecommunications consultant Frost & Sullivan forecasts revenues in the audioconferencing and document conferencing industries of $4.22 bn by 2002. But it's the videoconferencing arena that is experiencing the most explosive growth, with a market predicted to grow to almost $35 bn in 2002. Maryland-based PictureTel, for instance, has over 50,000 installed systems, including audio, video, data and whiteboard capabilities.
While industry heavyweights scout the Internet's perimeter and wait to meet future demand, smaller outfits are betting on the Internet future today.
Take Santa Monica-based Direct Stock Market. It is unveiling a multi-point Internet conferencing system allowing streaming video, audio and graphic presentations while taking questions through an online chat window.
'This system's adoption as the accepted methodology in the business will show a typical adoption curve,' says Clay Womack, president of Direct Stock Market. 'However, enough technology oriented companies exist that we'll have plenty of business supplying early adopters.' The first of those early adopters is Utah-based Imall Inc, a Web commerce group which was to use the system in April to announce a series of strategic alliances.
For its part, Direct Report Corporation, which uses a range of technologies - phone, fax and Internet - to give investors timely access to company information, has set up prototypes for Internet audio conferences but hasn't put them to commercial use. 'Frankly, there's just not enough demand for it,' says Ron Gruner, president. 'Eventually conference calls over the Net will be common. It's just a question of people catching up with the technology. IROs are still assimilating Web sites and a push model of information delivery. Internet conferencing is a great idea that will save money, but other technologies are waiting in line for IROs to absorb them.'
In the meantime, Gruner suggests traditional phone line teleconferencing service providers see the Internet as a less-than-imminent competitive threat.
'Teleconference companies that basically generate revenue on per minute charges want to retain the telephone line aspect as long as possible,' states Gruner. 'They may switch to real-time conferences on the Internet, but it will be hard to move their current revenue model to one based on the Internet where incremental costs are exceptionally low.'
Paper Flood
For now, the phone rules Wall Street. 'Money managers can be technologically unsophisticated,' comments Jim Viglienzone, treasurer of San Jose, California software maker Adobe Systems. Viglienzone suggests teleconferencing companies offering Internet services could catalyze interest by targeting the investment community. 'Wall Street is flooded with paper, and Wall Street firms should look to electronic solutions, especially if they follow technology companies.'
Telephone conference calling has evolved from a clumsy procedure to an everyday routine. The challenge for the newer technologies is to seamlessly merge voice, video and data technologies so customers can use any combination.
Still, no matter what interactive features are provided, the bottom line is getting the job done. Customer loyalty is fleeting in the highly competitive teleconferencing industry and service remains at the top of customer wish lists.
Service is particularly 'mission critical' for IR conference calls, where big money is on the line. Adobe switched providers following a bad experience when an operator tried to handle two conference calls at the same time. 'That's not appropriate for a conference call,' comments Viglienzone. 'When you have 120 people on the phone as we do, and senior management at the other end, you simply can't afford glitches.'
Quarterly Right?
Perhaps the strongest push behind conference call innovation are the complaints of small investors who say analysts and portfolio managers have too much of an information edge. A recent University of Michigan study seems to bear them out, suggesting conference calls provide useful information which larger investors trade on during the course of the call.
Sometimes the big guys get caught. New York-based broker-dealer Fox-Pitt Kelton recently paid $50,000 to settle a Securities and Exchange Commission charge that it made trades during a conference call.
As the SEC found, 'Several Fox-Pitt salespersons and a second analyst walked in and out of the office where the conference call was taking place. While in the possession of material, non-public information, Fox-Pitt sales persons traded on behalf of the firm's clients in the stock of the issuer.' Fox-Pitt was ordered to revamp its procedures to prevent the misuse of material, non-public information.
Niri surveys clearly show the situation for smaller investors. While almost 80 percent of companies set up quarterly analyst conference calls, only 22 percent of companies invite individual investors to participate. Another Niri survey shows around one third of all companies have disclosure practices that may disadvantage individual investors.
Scoping Innovation
Presumably, using the Internet for conference calls would help broaden their scope. The Motley Fool, an online forum for individual investors, has asked companies to let its members listen in on their quarterly earnings release conference calls.
But do companies really want to invite anybody to listen in? Boris Feldman, a lawyer with Palo Alto-based Wilson Sonsini Goodrich & Rosati, counsels against it. 'You'd be crazy,' he warns. 'You might as well not hold the call. If you let in the Motley Fool crowd, analysts will sense the company will not say anything meaningful and ignore the call.'
'Conference calls are meant to get the analysts, who control the market for your stock, to understand your business and to fill in the blanks on the press release,' adds Feldman. 'They are not about greasing the squeaky wheel of the retired guy with 100 shares.' Feldman predicts a backlash: 'We will see companies drawing fine lines around calls, limiting them strictly to analysts. They have no legal obligation to let any other individuals or entities onto the call.'
Of course, such backsliders may retrench and ignore conferencing innovation. But those brave few who venture out with new breeds of technology and new kinds of teleconferences, welcoming new groups of listeners, may find their efforts recognized by analysts and investors alike, and reap rewards through higher valuations.