Many earnings calls are now pre-recorded, sometimes with live Q&A, but while some are open about pre-recording, others pretend the call is live
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In last month’s issue of IR magazine, we looked at how companies monitor and sometimes rearrange their earnings call question queue (see Managing the conference call queue, October 2007). Some even project their call management web page onto the wall during the earnings call. Now, coming soon to a wall near you: click on a participant’s name to get information like an investor’s holdings or an analyst’s history of recommendations and estimates.
Some conferencing companies are working with market intelligence providers so IROs will be able to drop a conference call module into contact management (CM) systems like Thomson One, Reuters Knowledge, Ilios Partners’ IRNavigator or Ipreo’s Bigdough. ‘During the call, IROs should be able to click on a name and get more history: a profile, how many calls they’ve been on, the questions they’ve asked,’ explains Martha DeGraw, senior director of product management at InterCall.
Andrea Bargetzi, general manager of Chorus Call Canada, surveyed Thomson Financial clients to find out if such a system would be helpful. Half said yes. ‘But half said no – they know it all anyway,’ Bargetzi notes. ‘They don’t have time to look at that data during the call.’ Instead, the first priority is to speed up the transfer of the participants’ list to the IR team so it can be uploaded straight into the CM system immediately after the call.
Recording stars
As dozens of analysts and investors dial in to Premiere Global Services’ quarterly earnings call, there are no frayed nerves in the meeting room where the call is hosted, no papers shuffled anxiously, and few ‘ers’, ‘ums’ or ‘aws’. In fact, there’s nobody in the room – at least until the part that was recorded and edited the previous day ends and the live Q&A begins.
Three years ago, Randy Salisbury, Premiere’s chief communications officer, introduced prerecording, a service Premiere also offers its conferencing clients. ‘By recording the prepared remarks ahead of time, it lowers the amount of nervous tension and anxiety on the day of the call, which we can spend going over the questions and answers we expect in the live Q&A,’ he explains.
The call isn’t meant to sound like a professional recording. ‘If there’s a stumble or a stutter, we just keep going,’ Salisbury continues. ‘I’m listening for tone, delivery, confidence and the effective communication of important points.’ Sometimes he stops his chief executive or president to redo a section. Then Premiere’s sound technicians edit the takes together overnight and present the recording for Salisbury’s final approval.
Some companies prerecord their entire call without any Q&A. ‘It’s part of the company’s history,’ says Carol Schumacher, vice president of IR at Wal-Mart. She says IR executives take questions from analysts and investors in private phone calls after the recorded call is played, and adds that in the last two years Wal-Mart has worked to increase the level of detail it gives in its recorded calls.
Wells Fargo is also known for its prerecorded calls, which have prompted some competitors to go the same route. One IRO we spoke to, however, has recently switched back from recorded to live calls. ‘The bottom line is: analysts and investors like live calls,’ she says. ‘They bring in a little humanity. Plus, they like to hear the questions.’
But while Wal-Mart, Wells Fargo, Walgreens and others make it clear their calls are prerecorded, some companies don’t talk about it. One Fortune 100 firm with a prerecorded portion and live Q&A never announces the distinction. Nor does Premiere, or the 10 percent of its clients that use prerecordings.
‘It’s seamless,’ Salisbury says. ‘The audience doesn’t know the first part is recorded.’ Premiere even encourages clients to leave in ‘ums’ to make the recording sound live, though not everyone follows that advice. The content, Salisbury says, is material; the delivery is not.
But as Howard Suskin, co-chair of the securities litigation practice at Jenner & Block, points out: ‘Analysts and investors are not only listening to the substance of the disclosure, they’re listening to the tone.’ Indeed, the IRO who went back to live calls says pretending a recorded call is live is ‘a little awkward.’
Seeking attention
While companies like Wal-Mart and Wells Fargo omit earnings call Q&As, many smaller companies are going out of their way to put their CEO on the spot.
SeekingAlpha, an online community of fund managers, analysts and investment bankers founded by former Morgan Stanley analyst David Jackson, has built a fine business transcribing earnings calls and posting the transcripts for people to read for free. Now it features CEOs in ‘interactive Q&As’.
The CEO first posts a brief introduction, then SeekingAlpha members submit questions over a period of several days. The whole dialog of questions and answers is posted online. Ezra Marbach, director of client services at SeekingAlpha, says one portfolio manager is such a fan he proposes replacing earnings calls with interactive Q&As.
Marbach also remarks on another trend: ‘Some small-cap companies struggling to get people on their calls are recruiting analysts or fund managers to ask certain questions and help bring out key messages. They know that with these calls getting transcribed, they make great marketing tools.