A run-down of the top IR pages on the web
Remember what it was like to be a kid in the candy store, unable to decide how to spend those precious coins among such bountiful choices?
Well then, you'll have some idea of the avalanche of choices this column has had available in recent weeks as we tried to decide which ten IR-oriented World Wide Web home pages to nominate for a final vote among Investor Relations readers. You'll recall that we are sponsoring our first annual IR World Wide Web contest, to see which of the newly-minted IR home pages is the single most effective, imaginative and useful.
We tabulated your suggestions and took our own stab at cyber sleuthing. But there's a problem: what a thankless job upon which we have embarked. At the risk of alienating many, we reward a few.
Nevertheless, after many hours spent in smoke-filled meetings hunched around the desktop, we have come up with a list of 10 top corporate IR sites. Now it is your turn to decide who the winner will be (see voting instructions on page 59).
But before the big list of nominations is unveiled in detail to a, no doubt, breathless audience, a sidebar.
Talk about timing. As we were finalising the list, along comes some news of interest.
Nielsen Media Research says some 24 mn Americans and Canadians have gone on the Internet in the past three months. About 2.5 mn of them have made purchases through the World Wide Web. With this growth, online financial management is attracting the attention of the big boys in the industry. America Online announced recently that next year it will offer online banking in an alliance with Intuit, the company that publishes Quicken financial software.
Another bit of tangential diversion about Intuit. Keen readers may remember the profile of GALT Technologies (Investor Relations, June 1995), which operates the highly successful NETworth mutual fund information site on the Web. Started in June 1994, the service attracted some 500,000 users in its first twelve months. At the time of our profile, GALT co-founder and CEO Rob Frasca, himself just out of graduate school, said: 'Every banker and broker on the planet will be doing this kind of stuff within a year.'
Frasca must have his fans. In November, GALT was sold to Intuit. For $9 mn. Can there be any lingering doubt left that online delivery of financial and investment information is not only here to stay, but will soon be the dominant means of reaching your constituents? Anyway, enough of these asides and onto the golden envelopes. Just who is doing the best job of presenting their IR story on the Web? You'll find our top ten favourite sites - drum roll, please - in strict alphabetical order in the box below.
In most cases, the addresses will take you to one of the opening pages devoted to investor communications. Look around, and you'll see an icon that sends you to the corporation's main page, from here you can be zipped off to any number of product promos, sales pitches and, as noted below, sometimes some nice surprises.
So how did we pick the top ten? If we told you, our cover would be blown. No more credibility. No more respect. No more monthly cheques from my favourite British publisher.
But here are a few hints. Sometimes the pages just looked so darn pretty, like Silicon Graphics' use of colour and balanced design. That shouldn't come as much of a surprise, though, as Silicon Graphics is a leading supplier of visual computing workstations and servers.
As we all secretly long to be Californians, OJ notwithstanding, we also liked Silicon Graphics' use of language such as 'awesome products' and 'serious
fun' on its linked pages. (The investor pages are a bit drier, though.) Dell Computer's site also offers an attractive appearance, with vivid colours and catchy design.
CEO-as-celebrity gets a boost on IBM's opening page, where chairman Lou Gerstner's smiling mug awaits. 'Hello, I'm Lou Gerstner...Welcome,' the tag lines say. I, for one, felt like e- mailing back, 'Well, hi Lou. I'm one of the 8 mn you've laid off.' But that wouldn't be true.
Kodak's page also features its CEO, George Fisher. But, alas, either the highly-paid Mr Fisher doesn't have as good a corporate photographer as Gerstner (doubtful, given the company Fisher runs), or else the Kodak chief just doesn't get this Brad Pitt stuff. In any case, Gerstner's pic wins hands down.
But Kodak's Web site does win on another front. While the financial information is not clearly marked for investors (you have to click on 'corporate information' to find it), it is nicely paired with other news about the company. For example, you can read a piece entitled Kodak Petition: Japanese Market Barriers.
Another reason for getting on our oh-so-important list is timeliness, such as Xerox making its earnings releases available on its Web site by 7 am on the morning they are announced. This is actually ahead of the Dow Jones transmission and prior to the NYSE's opening. Separately, we also liked the way that Xerox included photos in the online version of its annual report.
A number of pages shone through because of the logic with which data is presented.
IBM's Web IR service, for example, gives users the choice of downloading financials in Excel or Lotus 123 spreadsheet formats, or by using the Acrobat Reader software. That's a fantastically powerful piece of wizardry that scans your disk to see if you have the right software to display graphics. If not, it gives it to you. In seconds.
We also liked the way some central corporate home pages linked to other sites not directly related to the corporation itself. For example, Northern Telecom - the giant Canadian telecommunications company - has within its Web service a rotating Featured Essay of the Month on some technology-related subject. A recent offering was by BBC radio host James Burke on InfoSurge and Infrastructure. Thoughtful. Intelligent. And, thank goodness, short and to the point. It's a godsend for technology columnists always on the prowl for ideas to recycle. Needless to say, it's on my bookmark.
Another interesting concept Northern Telecom brings to the Web is the positioning of its home page as a platform for promoting environmental issues. Click on the Leadership box on the opening home page, for example, and you'll be directed to a Nortel Habitat area, which in turn sends you through a wealth of materials on how corporations can be better environmental citizens. Included is a list of hyper-links to other environment-related spots scattered across the Web, from the Sierra Club's home page to the mostly Dutch-language Green World Wide Web, itself a relay to many other points.
But for our money, the most daring tactic of providing objective financial information came from Apple Computer. Among the options on its site is a link to the Experimental Stock Data Service from the Artificial Intelligence Lab at MIT. Not only does Stock Data give all the facts of the stock's current and historical performance - the good, bad and ugly - but it also sends you off to other repositories of financial reporting and interpretation. Apple, it seems, has nothing to fear but ignorance, despite its lacklustre performance of late. Take it from me. I bought Apple at $70, back when John Sculley was the smartest guy in the universe.
But don't let that cloud your judgement. Now it's your turn to decide.
Top Ten WWW Investor Relations Sites
- Apple Computer http://www.apple.com/documents/aboutapple.html
- AT&T http://www.att.com/infocenter/report.html
- Dell Computer http://www.us.dell.com/corpinfo/investor-info/
- Eastman Kodak http://www.kodak.com/aboutKodak/aboutKodak.shtml
- General Electric http://www.ge.com/report94/index.html
- IBM http://www.ibm.com/ibm
- Northern Telecom http://www.nortel.com:80
- Silicon Graphics http://www.sgi.com/Overview/money.html
- Sterling Software http://www.sterling.com/corp/corporate.html
- Xerox http://www.xerox.com/Investor/Contents.html
12/95
Deals
Southern Company vs SWEB John Jedlicka begins this new regular series with an investigation of the first US bid for a UK electricity utility
The summer was unusually hot in the southeastern US this year, with 100 temperatures baking the residents of America's fastest-growing region. The Southern Company's power subsidiaries scrambled to meet the demands of its electric customers throughout the southeast. Meanwhile, the Atlanta-based holding company for five southeastern US utilities was turning up the heat an ocean away in a very unlikely area - Bristol, England.
And it wasn't just the location that was unlikely. The whole event was novel. After all, this was only the second ever takeover attempt on one of the UK's former state-owned regional electricity companies (known as the RECs), since they were originally sold off by the government and listed on the London Stock Exchange back in December 1990.
The first had been Trafalgar House's bid for Northern Electric earlier this year, but that deal subsequently lapsed. The second was from a foreign company, America's Southern Co, which had its sights set on South Western Electricity PLC (Sweb), in Bristol.
On a sweltering day in July the Southern Company announced that it had acquired an 11.2 per cent stake in the Bristol regional utility company. The original investment, valued at $180 mn, started Southern's roller-coaster ride into the world of cross-border acquisitions. Before the step-by-step strategy began to unfold there had already been a commitment by Southern to expand into a global energy company. But undertaking a hostile takeover undoubtedly caught observers unawares, not least because the group had long been identified as a Southern gentlemen's company.
'Our long-term strategy is to become a global energy solution company,' said Glen Kundert, Southern's point man on the takeover. 'To achieve this we need to have a presence in Europe and a strong place to start is the UK. Sweb's growth potential in a commercial sense is among the best of any of the regional electricity companies.'
What's more, Kundert said, 'As one of the smaller RECs its acquisition cost was more manageable.' In fact, the final acquisition cost was to grow larger than Southern had originally bid, but the ultimate deal placed Sweb directly into the fold of Southern Co.
Southern's first move was a friendly one, acquiring just a small bit of the company with an eventual 'street-sweep' programme - buying up Sweb's shares on the open market to force the acquisition. But the programme didn't succeed, not least because of the stiff-necked opposition voiced by Sweb's management in the UK.
So, three days after announcing its initial stake in Sweb, the Southern Co in Atlanta said that it was going to undertake a hostile takeover, upping the ante to $1.6 bn. The company actually made its bid through Southern Electric International (SEI), the holding company subsidiary that operates the group's power plants and electrical systems worldwide.
From the start SBC Warburg, adviser to Southern Co, handled shareholder communications. The London investment bank gets high marks from Southern executives who describe the IR process as smooth. 'From our perspective there were very few shareholder problems,' says Kundert. 'SBC Warburg did an excellent job of communicating with shareholders during the bid, which reduced their concerns to a minimum.
Once Sweb management approved the transaction price we had no difficulty achieving 95 per cent shareholder approval.'
But getting to the shareholder approval stage proved more difficult than Southern had anticipated. First off, the Sweb management rejected the offer outright. And many analysts on both sides of the ocean expected the predator to sweeten its bid. This led to more shareholder confusion and an investor relations dilemma: hang tough or meet market demand? In late July Southern Co upped its involvement in the bid by dispatching Thomas Boren, the company's global expansion leader, to England to manage the Sweb deal from there.
At first Boren put aside the Sweb rejection as a non-event, but he was prepared to hole up in London for the duration of the battle.
What complicated the deal for Southern was the involvement - and potential power to scupper the deal - of the UK authorities. To be sure, they were watching this battle particularly closely, both because it was the first of its kind and because the regional utilities have a monopoly in the areas they serve.
With the Labour Party and others calling for automatic reference of such bids to the UK's Monopolies and Mergers Commission, concern was mounting among City analysts that political pressure could lead to a referral. In fact, the government finally gave the green light, but not until much later.
In late July the Sweb board urged its shareholders to reject the bid, charging the Atlanta-based utility with trying to acquire the utility 'on the cheap'. In a letter to shareholders Sweb chairman Maurice Warren claimed that the offer price 'significantly undervalued' his company. Southern officials remained sanguine, however, saying that the Sweb chairman's statements were only to be expected.
Back in the US the domestic side of Southern's investor relations campaign ran a bit more smoothly. Southern executives point out that the financial payback from the Sweb acquisition was almost immediate, so there was little downward pressure on the stock.
What's more, the Atlanta-based company already had international holdings so the addition of Sweb merely amounted to another non-US utility in the company's growing portfolio.
'Our stock went up by a few points following the announcement of the Sweb acquisition but it's difficult to say whether it was the acquisition or the general movement by utility shares at that time,' says a company spokesman.
Southern Co staffers in the communications department handled the domestic investor relations effort, fielding individual inquiries as they came in. They may have been helped by the fact that Southern's chairman, A W 'Bill' Dahlberg, had already scheduled a round of off-site investor meetings before the Sweb announcement. 'He undoubtedly addressed the acquisition during the meetings,' concedes a spokesman for Southern, but he stresses that this was not the original focus of the tour. However, Dahlberg did make a special trip to speak to the New York-based utility stock analysts.
Throughout this period of the deal Southern Co management decided to hang tough.
During the bidding process the SEI management held its ground, not giving in to the speculation surrounding the deal from the analyst community. 'There's no evidence in the {Sweb}document that could cause us to change our view on the value of South Western,' SEI's Boren said in an interview in the summer.
In the meantime the SEI presence in London began to grow. According to Kundert: 'The size of the team varied during the bid. The number of SEI employees in London usually averaged about four to six. Including the London-based advisers, the total team was about 25.'
In mid-August SEI announced that it was sticking by its bid and extending its $1.6 bn offer for a further two weeks. This met with groans from the analyst community, who still believed the offer needed to be increased if the bid was to succeed.
Meanwhile, the UK authorities sat on the sidelines delaying a decision about whether the deal would be referred until August 31. Their intervention could have soured the whole deal for Southern, a step the Atlanta-based utility naturally hoped to avoid. SEI's Boren said the company wasn't concerned by the procrastination, however, assuming that it was just par for the course.
In late August, undaunted by the bickering between the two companies, Boren returned to Atlanta. While there, a minor blip appeared on the screen when a neighbouring utility in England, Southern Electric, announced a counter-bid for Sweb. The deal didn't pan out, however, and SEI was still firmly in control of the bidding process: Southern Electric may have been a 'white knight', but it was a knight that came without horse or appropriate armament. Southern Electric's chairman duly abandoned the bid, announcing that the company had decided the pursuit of Sweb would have been too costly and too time consuming. That left the field wide open for SEI.
Back on the regulatory front, Ian Lang, the UK's secretary of state for trade and industry, was finally ready to announce his decision on the last day of August. By then the expected free-for-all market for RECs had been unleashed by Southern's early move; and there were now three ongoing REC bids awaiting regulatory ruling. An agreed bid from Hanson for Eastern Group was one; a hostile attempt by Scottish Power to take over Manweb was the other.
All three were cleared, notwithstanding the advice from Stephen Littlechild, the director general of electricity supply and the man responsible for regulation of the UK electricity industry, that the Scottish Power bid should be referred. In fact, even after Lang's decision, the Southern Co/Sweb deal still needed the nod from Littlechild, but that was expected to be uncontroversial.
By late summer, SEI had sweetened the bid to the satisfaction of Sweb's board of directors, who now unanimously accepted it.
So what had begun as an investment of $180 mn turned into a $1.8 bn purchase and the first foothold by an Atlanta-based electric utility in the new world of deregulated European power companies. The first, maybe, but certainly not the last.