How Analysts Are Using the Web

How Analysts Are Using the Web

Analysts presenting at the 1998 NIRI Annual Conference made it clear they are increasingly using the Internet and they cited several examples of best practices for investor relations segments of corporate web sites.

In a session which ran twice on June 9, Moderator Douglas R. Wilbourne, Director of Investor Relations for AMP Incorporated, drew upon the assistance of the Association for Investment Management and Research to ensure expertise on the panel. Two of the panelists were recommended by the AIMR as among the most net-savvy people in the 30,000-member group.

They were Tim Knepp, a financial analyst and President of the Palm Group of Oceanside, CA, and Jim Robinson, Portfolio Manager for the Tennessee Consolidated Retirement System in Nashville. Joining them was Jeffrey Parker, founder of Thomson’s First Call and now Chief Executive of CCBN, a Boston-based purveyor of IR Internet communications services.

Knepp advised IROs to make sites more than just product-oriented. He urged that companies promote their sites and tend carefully to them, keeping data fresh while only making changes when change had to do with format, timeliness or content. Analysts like to see your company’s perspective on your industry. They want discussion of topics of the day, along with your unique value-added stories, Knepp said, adding: "The web is the best newsletter you will ever have."

Knepp noted that computer maker Compaq has reported that in 1998, the number one reason consumers are buying computers is to access the Internet. In 1997, that was the number seven reason for computer purchase.

Robinson made clear the high level of web use he practices from his buy-side perch by taking the audiences through dozens of his personal web bookmarks. They comprise a remarkably comprehensive set, ranging from query mechanisms that sweep multiple search engines all at once (http://metasearch.com/ and www.isleuth.com/), to an example of best practices in describing business divisions on a corporate site: Bowater Incorporated at www.bowater.com.

Knepp also suggested a great starting point for best practices on the net, at Usable Web www.usableweb.com, where you will find an exhaustive listing of many other sites covering "how to’s" for web use and site-building.

During the plenary session on Monday morning, portfolio managers talked about the Internet as a source of information for them, although the time required to search was a problem for at least two panelists. The time needed to find data on the web is one of the biggest hurdles the net faces to proceed to higher levels of interest, but it is being addressed. But despite such complaints, one panelist made clear how her firm has adjusted to the of world of the Internet: "We use it a lot now in doing (both) our initial white papers and in getting basic up-to-date information."

What about the non-users? A number of IROs say their audiences do not make use of company websites. Jeff Parker suggested they themselves may have a role in the situation. "The quality of your data drives the quality of your audience," he admonished. "Right now, publicly traded companies do not give the analysts a reason to go to their web sites."

But, while many sites do sport poor information that frustrates visitors, one of Parker’s slides portrayed a buy side that is resolutely seeking web-based information. It showed results from an Investor Relations magazine study conducted by Rivel Research in which 93 per cent of sell side analysts and 79 per cent of buy side analysts said they made use of the web.

There were plenty of examples of rapidly increasing use of the net. For instance, several brokers were cited by Robinson for their research offerings. Donaldson, Lufkin & Jenrette, Oppenheimer & Co, Inc. and Multex Systems, Inc. were among them. Each requires a customer relationship to allow full access to the research materials, but those brokerage customers are IRO targets, and access to research draws more of them onto the web. In some research articles, there is a hotlink provided to any mentioned company web sites; yet another reason to ensure company sites are made to be as useful as possible for the buy side.

Giving all attendees something to think about, Parker went beyond the issue of today’s rising web use to peer across the millenium threshold. He predicts the Internet will pass beyond its role as an information archive to lead the way in corporate disclosure "The web will be the standard of disclosure in a few years," Parker predicted, perhaps setting the stage for quite a different panel at next year’s annual convention in Orlando.

[This article first appeared in the NIRI Newsletter, UPDATE, in 1998.]