History was made when an investor day was webcast live
The bus driver blundered when he dropped off his cargo of securities analysts and portfolio managers in front of Infonet's old headquarters in the Computer Sciences Corp building. But these passengers would not make the same mistake in thinking Infonet Services Corp, which went public in December 1999, is still part of CSC. Over the next few hours these investment professionals – along with others the world over – would be shown how Infonet has embraced its new role as a public company. This was the Los Angeles-based telecoms company's first investor day, with presentations by eleven top executives on June 26. And in a world first, the whole seven-hour event was webcast.
The internet audience of 800 included about 500 retail investors, 200 institutions and 100 Infonet friends and family. 'Good morning – or good afternoon or good evening, wherever you happen to be,' quipped VP of investor relations Morgan Molthrop – and sometime writer for this magazine – who masterminded the whole event.
With the live audience of ten sell-side analysts and 25 top shareholders assembled in a meeting room-cum-studio, the video cameras and lights immediately leant the event a touch of Hollywood excitement. 'It was just like producing a TV show,' recalls Infonet's CEO, Jose Collazo. 'Things were timed to the split second, and that took a lot of preparation. It was quite a production.'
Preparation had indeed been intensive. Apart from the technical attention demanded by the webcast there were four pre-prepared videos of 'The INside Scoop' that gave presenters and audience breaks during the event. These took the form of newscasts hosted by Nonnie Gerber, who is also a media trainer to Infonet's management team.
All the presenters had undergone two days of practice Q&A as well as a full-day dress rehearsal the Friday before the Monday event. In the Sunday evening calm before the storm, everyone – from analysts to portfolio managers to company management – went on a cruise in Marina del Rey. A certain camaraderie among the telecoms analysts was on display on the boat, and one commented on the warmth with which the Infonet management team greeted each other – obviously a good sign for any company.
As a trained attorney, Molthrop was well-aware of the risk that material information could be released during the investor day. Indeed, the sheer amount of discussion during the seven-hour broadcast was material in and of itself, he points out, so a press release was issued that morning covering the major issues to be addressed, along with confirmation of analyst estimates and other numbers. There were also consultants, lawyers and news wires on hand ready to immediately issue another release if needed.
'Infonet has a very complex story and by telling our story in a concise way, taking every question that could possibly be asked about the company, we were able to eliminate some of the confusion that was out there,' Molthrop says. 'We feel strongly that a new, higher bottom of the stock was created because of better information.'
'It's interesting how the analysts feed off each others' questions,' Collazo says. 'They tend to be focused on their way of thinking, and when you deal with them individually it's difficult to get them off that. With a group, they react to each other, and you get to deal with questions some analysts wouldn't think of bringing up. Some knew the company very well, so were able to instruct the others, while some of the new ones also asked interesting questions. That interaction gives analysts a much broader perspective than they would get in one-on-ones.'
The management team also learned a great deal thanks to this day. 'Usually it's a small number of people who deal with analysts. Now the whole senior management team has firsthand knowledge of how analysts work, including the quantitative as well as strategic questions they have,' Collazo remarks.
Indeed, all of Infonet's employees rallied around the event, with groups gathering before a large-screen TV in the lobby to watch the event live. 'We used so many internal resources to help get the day together,' Molthrop recounts. 'Employees' pride in Infonet was greatly enhanced, along with their understanding of how Wall Street views the company. It really focused everyone's attention on the fact that we are now a public company and this is an audience that's looking at our every move.'
A high point came after John Williams, global network VP, described Infonet's products as 'applications at the edge'. A visibly excited Collazo seized on the new catch-phrase and it became a prominent theme for the rest of the day. 'That clicked for me, I thought, Damn, this is exactly right!' he says. 'Now that we're a public company, I find that one problem is expressing things in a way that people not involved in the business understand easier. They understand applications at the edge and now it's creeping more and more into our vocabulary.'
The analysts on hand contributed a number of incisive questions to draw management out, unlike those coming in over the internet which included: 'When will the share price return to the IPO level?' Collazo was surprised at the poor quality of the e-mailed queries. 'I found them very superficial,' he says. 'I thought we'd get much more involved, difficult questions because people are anonymous when they send them over the web. It could be that the quality of questions will improve when people are more used to events like this.'
Those in attendance were enthusiastic about Infonet's performance during the investor day. 'Everyone is upbeat, everyone is friendly. There's a good feeling,' one remarked at the time. 'The management team really went into a lot of detail and I got a chance to follow up in one-on-one conversations.'
'It was excellent,' says Lehman Brothers' Dan Fletcher in retrospect. 'We got to meet all the key people in a format that was informative yet interactive. It was extremely well-orchestrated, giving us everything we needed to analyze the company and its prospects.'
Not everyone was so positive. One hedge fund manager was unhappy with the location (it should have been in New York) and the timing (the week of the Russell 2000 reshuffling, and with no tie-in to a major announcement by the company). He was also disappointed that there was no gain in stock price in advance of the event. Still, he held hope for an uptick in the aftermath.
Many of the analysts and fund managers had flown in from the UK, including the telecoms teams from Infonet's underwriters, Merrill Lynch and UBS Warburg. 'We fall between two stools in that we're an NYSE-listed company but about 75 percent of our business is currently derived from Europe,' remarks Amanda Bassett, Infonet's new London-based director of pan-European IR. 'So we get investors interested in US companies as well as European operations.'
The investor day and webcast helped to 'clearly put us on the map,' Bassett sums up. 'It generated a lot of conversation.' Asked on the eve of the event what the stock price would do, Bassett stated, 'The best case scenario is that it does nothing. People will go away, reflect on it, then they'll think about writing a note and marketing the stock. The feedback will really come through in the next couple of weeks.'
With just three research houses covering Infonet prior to the investor day, expanding coverage has been a key goal of the IR team. 'We love the stock, but no-one knows about it,' remarked one analyst at the event. 'That's a big factor in why the stock isn't performing better. If they could pick up more analysts then the price would improve.'
So far, so good: within weeks of the event Goldman Sachs initiated coverage, one UK research house that sent its analyst team is expected to begin publishing soon, and two others have contacted Bassett. The latter had either seen the webcast or spoken to clients about it, and the same appears to be true of large UK and European institutions Bassett has since talked to.
Another benefit remarked upon by Molthrop is that Infonet's stock price has been unchained from that of its nearest competitor, Equant. 'We had been trading neck-and-neck,' he says. 'But after the investor day you see divergence because we were able to distinguish ourselves from our peers in a dramatic way.'
Infonet's investor day was a 'milestone', concludes Collazo, who believes webcast analyst conferences that are open to the public will become the norm for public companies. In fact, the reaction from all sides has been so positive that Infonet is now planning to stage a half-day event in November that will be webcast from New York.