The chips stacked in favor of an award-winning IR team
Intel's IR team is more macro than micro. And even if its eleven players missed the Super Bowl, they did take home coveted trophies from the Investor Relations magazine US Awards in March: best conferencing and best communications with the retail market for a company over $30 bn in market capitalization.
'We have a great story to tell and our IR effort can never be more than that,' confesses the captain of the team, Shelley Floyd, with becoming modesty both for her department, and indeed for the company, which makes 90 percent of the world's microchips. It also makes up a considerable proportion of any smart investor's portfolio with its regular 40 percent-plus annual returns.
Still, the chip-making giant has run into a few problems of late. A tumultuous personal computer market, Andy Grove stepping aside as chief executive officer, and an antitrust investigation by the Federal Trade Commission have turned a few loyal investors into nervous investors. And the share price has sagged accordingly.
Having a large IR department obviously helps when you're faced with such a number of challenges all at once. But Floyd also points to the ongoing value of being able to reach out to audiences directly. 'Many IR departments, if only for budgeting reasons, tend to work through intermediaries. But we try to work directly with institutions, overseas investors and even with the retail market, although that's a bit of a challenge.'
IR inside
Backstopped by three administrative assistants, who do much of the event planning, Intel's eight front-line IR players are deployed by a combination of geographical and direct vertical marketing approaches. For the overseas audience, Mary Ellen Clifford - who can also claim credit for Intel winning two Investor Relations magazine UK Awards for best IR by a North American company - concentrates on Europe. Gina de Boutez looks after Asia - mostly Tokyo, Singapore, Hong Kong and Australia.
On the home front, two of the team's members, Elizabeth Land and Doug Lusk, concentrate on US institutions, but have some responsibility for retail, to which Alex Lenke and Jackie Parker are devoted full-time. These two call on brokers, go to the trade shows and run the web site. Meanwhile, Gordon Casey does on his own what many IR departments devote themselves to almost full-time: he looks after the sell-side analysts. And then, of course, there is Shelley Floyd herself, who coaches and coordinates the team.
Everyone has other responsibilities that don't fall into any of those neat categories, and among them they attend to the annual stockholders meeting and two analyst meetings a year - in New York in the spring, in the Bay Area in November. Then there are the usual quarterly earnings releases and conference calls.
Strength in diversity
Interconnected IR doesn't stop there, since Floyd also works closely with Howard High, head of Intel's business press relations. He comments: 'Even though IR is part of treasury, we work very closely together. We sit in the same area so there's a lot of both formal and informal connections. We're also lucky because we have a management that wants to share its story.'
Today Intel is consciously diversifying its shareholder base, after a period in which ownership was concentrated in a few institutional hands - often short-term and many of them momentum players. 'We're looking for strength in diversity. We think that it's in the interests of all stockholders to have a balanced investor base,' says Floyd, revealing that by the end of last year retail ownership had soared to 39.3 percent from the more usual 22 percent that it was when the program began in 1996.
The company's retail effort includes a dividend reinvestment plan, but not free PC upgrades to stockholders. 'The stock has gone up so much, we think that they can afford to buy their own upgrades,' Howard High suggests. Preferring not to put a number on the target for retail ownership, Floyd contents herself with, 'Higher and higher! We haven't let up yet on our retail effort.'
The role models for the effort to attract retail shareholders are America's big brand-name companies like Coca-Cola and McDonald's. As Floyd points out wryly, 'Those are the companies we competed with for the IR awards. We have a strong marketing effort and a strong brand identity which appeals to retail investors.'
In fact, Intel has bonged and bunnied its way to being one of the most valuable brands in the world - which makes its stock eminently more desirable to retail investors, who are doubtless subliminally prompted by the Intel inside stickers on their computers as they log on for their internet trades.
As might be expected from the company that provided the tools for the electronic age, Intel has been aggressive in its use of the internet. Conference calls to analysts and significant speeches from management are web cast. Floyd comments: 'It gets back to our theme of reaching as many investors as we can at the same time. We'd like to be sure that the retail investor in Nebraska or Hong Kong has the same access to information at the same time as the large institutional investor in New York.'
High points out, 'If someone is surfing the web, then they are PC owners. It points to the usefulness of the connected PC, which is our vision: a world where there are billions of interconnected PCs.' To support the vision, the IR department has its own web site (www.intc.com) separate from the company's own (www.intel.com).
Sticking power
Among institutions, Intel seeks out long-term holders, using a targeting service to identify them. 'We want people who hold stocks the way we run our business - long-term - so we've tried to increase the percentage of longer-term holders and to increase the number of institutions.' Institutions that stick around are well rewarded: Intel has repurchased over 235 mn shares since 1990, totalling almost $8.6 bn.
Overseas investors are more difficult to target. 'Currently they hold about 7.7 percent of shares. But those are some of the softest numbers we have, since many of them invest here in the US. It's a bedrock minimum, and about double what it used to be,' Floyd comments, adding that the two big trends in global capital markets are the influx of individual investors in the US, and globalization. 'Over half our sales are overseas. A global brand needs global participation.'
However, Nasdaq-listed Intel's only overseas listing is on the Swiss Stock Exchange, which accounts for about 6 percent of trading volume. 'In fact, we've been doing interesting things in Europe with Nasdaq, trying to reach and develop a retail stockholder base there, and we'll be doing much the same thing in Asia in the future.'
Intel has so far resisted periodic approaches from the New York Stock Exchange to switch, doubtless more firmly since the company's treasurer, Arvind Sodhani, is on Nasdaq's board of directors.
Intel goes out of its way to expose top executives to investors, nationally and internationally, with conference opportunities averaging around one a week. Global industrial expansion is also used for global investment attraction. For example, this spring, a plant opening in Ireland allowed the IR department to introduce investors to new CEO, Craig Barrett; and the same will happen at new plants in Johannesburg and Tokyo.
Off the beaten track
Intel wants its investor relations personnel to have the greatest possible access to management and to information, so the whole staff is based at headquarters in Santa Clara, where they field the inevitable flood of phone calls. But these IR doctors do house calls as well - lots of them. They touch down at investors, analysts and brokers everywhere from Lansing, Michigan to Topeka, Kansas.
The other advantage of a large investor relations department is its ability to attract people with a wide variety of skills and experience. Shelley Floyd herself was conducting 'infant relations' with two young daughters in Virginia when she was offered the job a year ago. She was also working part-time as a journalist, but perhaps more germane were her previous ten years on Wall Street, mostly with LF Rothschild Unterburg Towbin, which did much of Intel's investment banking. That was where she met her predecessor, Jim Jarrett, who left to take over Intel's operations in Beijing.
Others in the team came from Wall Street: an analyst with Merrill Lynch, a Robertson Stephens salesperson. Then there's the former airforce pilot who brings a whole new energy to it all, even if she is kept away from targeting.
Of course, one way to ensure experience is association with Niri, of which Gordon Casey is a long-standing member. Alex Lenke and Mary Ellen Clifford have spoken at the Silicon Valley chapter recently and Floyd is speaking at the national conference in June.
Open communication
'As a company, we have a very open information style,' notes Howard High. 'We probably send around a million e-mails a day. Our executives read their own e-mail and respond to it themselves. Our senior officers sit in close proximity, so we get really good access, not just to Shelley's boss, who's the treasurer, but also to Andy Bryant, CFO.' In fact, he adds, 'We not only have an open door policy, we have a no-door policy because we're all in cubes.'
'It's a challenge to service a growing and more active shareholder base,' Floyd concludes, while resisting the temptation to simply say, Let them send e-mails. For Intel does, after all, accommodate other channels of communications with investors: Floyd recalls a recent conversation with a Nasdaq rep about what he called non-web-based activities. This, she discovered, meant that beta version of interconnectedness: the telephone.