INDEX

Bloomberg, 157

board of directors, 102

Buy ratings, 175–176

buy-side, 3–4, 21–24

relationship with sell-side, 16

targeting, 137–38

capital markets

company’s voice in, 8–9

feedback from, 108–109

nurturing relationships with, 90

cash, on balance sheet, market effects

of, 229–230

CEOs (chief executive officers)

conducting corporate

communications, 92, 93

IR’s relationship with, 81, 217–221

not understanding role of analysts,

198, 199

role in conference call, 164, 168

CFOs (chief financial officers)

conducting corporate

communications, 92

role in conference call, 164, 168

Chinese Wall, 15, 36, 43, 46, 234–235

commissions, 206

analysts’ estimates, effect on, 131, 174

attractiveness to sell-side, 13–14, 18

conferences leading to, 209

economic events leading to, 19

generating, 143, 144, 175, 181, 183,

accountability, of management, 97

accounts receivable, 227

acquisitions, 239

advertising, 66

analyst days, 66

analysts, 18, 46–47, 144–145

approaching, 68, 70, 80

downgrading stocks, 223–24

estimates, effect on commissions,

131, 174

generating commissions, 143, 144,

175, 181, 183, 207

IR’s engagement with, 214

launching coverage on stocks, 208

looking for new companies, 93

morning meetings, 174

motivation and incentive, 144

rocky foundation for, 36–37

role in defining company, 109

sell-side, 14, 16

targeting, 138–143

annual meeting, 62–63

annual report, 62

Autex Rankings, 214

bad events, handling, 221–222

bad press, 153–154

banker mentality, 193, 233

banks, picking, 236–237

Best Practices in Global Investor

Relations (Higgins), 69

Big Dough.com, 11, 158

Index

commissions (continued)

stock ratings and, 37, 133

trade shows leading to, 210

communication, targeted, 89

compensation, in public companies,

51–52, 53–54

comps (comparables), identifying, in

defining company, 105–108

conference calls, 64, 123, 161, 163–177

as aspect of solid company-market

relations, 199

examples of, 176–177

gearing for success or failure,

168–170

for material miss, 182

preparations for, 164–167

sample script, 255–260

scripting, 164–167

timing of, 171–173

topics and speakers, 167–168

transcripts, 214

conferences, 65

consensus, 131–132

COO (chief operating officer), role in

conference call, 168

corporate governance, 52–55

cost of capital, 6–7

cost of goods sold, market effects,

227–228

coverage, 17

credibility, 218–220

Davila, Daniel, 108

debt, 4, 230–231, 240

definition, 88–89

diversification case study, 114–116

IR audit, 101–112

post–IR audit, 113–119

delivery, 88, 89

case study, 183–190

conference calls, 161, 163–177

earnings announcements, 161–163

pre-announcements, 161, 177–190

stages of, 123–124

targeting the audience, 137–145

dialogue, 88, 89, 90, 193–195

event management, 213–232

meeting The Street, 205–212

turbulence of, 194–195

direct mail, 63

disclosure, 123, 158–159

distribution, quality of, 235

dividends, 240–243

earnings

announcements, 123, 161–163

missing estimates, 177–178

releases, 102, 161–163

revisions, 177–178

earnings call, announcing date and time

of, 178

economic events, 19

EDGAR (Electronic Data Gathering and

Retrieval System), 63

ego, of management, 97

8-K, 62

email alerts, 64

equity research, 14–15, 16–18, 68, 70

equity shares, 4

equity value, 95. See also stock price

event management, 81, 193

fact books, 65

fact sheets, 65

feedback, 80

from capital markets, 108–109

as part of dialogue, 214

Financial Accounting Standards Board

(FASB), 43

First Call, 131–132, 158, 214

Fresh Del Monte Produce, 199

Gates, Bill, 104

good events, handling, 223–225

GTECH holdings, 134

guidance, 70, 123

absence of, 125, 126–127

aggressive, 155

conservatism in, 133–135, 155–1156,

examples, case studies, 127–130

linchpin on effective IR, 124–125

lowering, 221–223

opting out of, 126

public relations and, 155–156

revising, 178

role of, 125

setting the range, 127

short-term vs. shortsighted, 126–127

straddling definition and delivery,

124

horizon thinking, 231–32

income investors, 22

individual investors, 21

industry events, drafting off others’

momentum, 215–217

industry intelligence, 109–111

information flow, 213–217

infrastructure, 90, 123

initial public offerings (IPOs), 35,

92–93

inside information, 41

Institutional Holders Report, 137–138

institutional investors, 21–22, 201

institutional salespeople, 236

internal due diligence, 165

international companies, 94

Internet, 64

inventory levels, market effects, 227

investment banking, 15, 36–37

consolidation of, 14

new landscape for, 57

saving industry, 46

types of companies, 15

investment banks, 173–75, 207,

233–234

investor conferences, 208–209

investor days, 209–210

investor objectives, 7–8

investor relations

addressing banker mentality,

233–243

administrative activities, 67–68

appealing to analysts, 16–17

backgrounds of people performing,

73, 74

benefit to companies, 9–10

building and maintaining

relationships, 197–204

capital markets perspective, 69, 71,

125, 245

changes needed in industry, 245–248

changing work processes, 246

clarifying effects of short- and longterm

strategies, 227–231

conducting industry intelligence,

109–111

coordinating with public relations,

147–156

creating company story, 57

creating paydays for the sell-side, 207

critical nature of, 79

dealing with short-sellers and shortterm

players, 22–23

developing relations with The Street,

246–247

different goals from public relations,

75–76

establishing communications with

stakeholders, 104

external communications, 61–67

financial communication strategy, 55

global, 10–12

guidance as key to effectiveness in,

124–125

handling bad events, 221–223

handling good events, 223–225

hiring personnel, 76–77

identifying comps, 105–108

integrated approach to, 75–78, 123,

247

internal, 91

internal vs. external, 77–78

interviewing senior management,

103–104

managing release of company news,

48–49

maximizing management’s time, 209

Index 269

investor relations (continued)

new approach to, 79–82

objectives, 78, 88

outsourcing, 91–92

personnel, 157

picking banks, 236–237

relations with the buy-side, 23–24

relationship with CEO, 217–221

relationship with sell-side, 15–16

responsibilities of, 73–74, 88

sample plan, 261–265

seeking out new analysts, 200

soliciting feedback from buy-side and

sell-side, 68, 70–71

team approach required, 74–77

traditional, 61–71, 79–82

transforming, 83–84

vendors, 157

Web site pages, 66–67

Investor Relations for the Emerging

Company (Rieves and Lefebvre),

69

investor relations officer, role in

conference call, 163

investors

concerns about communications and

events, 55–56

dialogue with, 215

needing credibility from sell-side, 47

IR. See investor relations

IR (investor relations) audit, 101,

113–119

IRontheNet.Com, 68

J.P. Morgan Chase, 220

Lamont, Owen A., 202–203

language, management’s use of,

225–226

large caps, 91

management

assessing performance, 161

meeting in bad times, 212

preparation for scripted conference

calls, 165

role in perception of company’s value,

97

setting the bar for guidance, 125

margin problems, healing, 118

market intelligence, for public relations,

153–154

material information, 4, 39–41

materiality, 26–27, 45

material miss, 182

MD&A (Management’s Discussion and

Analysis), 62, 102

media

disseminator of information, 63–64

exposure as blessing and curse, 148

feeding off The Street, 147

PR staying ahead of, 153

role and influence of, 29–31

media outlets, 148–149

media training, 149

mega caps, 91

Merrill, Charles E., 16

Merrill Lynch, 16

momentum players, 22

Morgan Stanley, 220

morning meetings, at investment banks,

173–175

net operating loss carry forwards,

market effects, 228

New Dimensions in Investor Relations

(Marcus and Wallace), 69

new inquiries, 201

newsletters, 65

Nextel Communications, 220

NIRI.org, 68

non-deal road shows, 65–66, 205–207

nonqualified stock options, 53–54

one-on-ones, 66

optimism, in guidance, 132–133

organic growth, 238–239

outsourcing, 247–248

peer groups, 105–106

P/E (price/earnings) multiples, changing,

116

perception, role in valuation, 97

performance shares, 53–54

PR. See public relations

pre-announcements, 97, 123, 172,

177–183, 190, 197

pre-emptive strike, 215–216

presentations, 211–212

press kit, 148

press releases, 63–64, 162–163, 249–254

private companies, 9, 17, 73, 82, 93

profits, pending, 118–119

Progressive, 51–52

proxy, 62

public companies

competition, 26–27

controlling news coming from, 48

employees, 25

executive compensation, 51–52

financing methods, 4

information required from, 4

IR function in, 5, 73

packaging information for different

audiences, 4–5

quick communications, benefits of,

47–48

supply and distribution channel, 26

sustaining value, 55

public relations (PR), 29–30

audit, 152–153

basic elements of, 148–149

coordinating with IR, 147–156

different goals from IR, 75–76

expertise, 75

integrating with IR, 123

personalizing the pitch, 150–152

problems when running the IR

function, 75

staying ahead of the media, 153

uncovering the angle, 152–153

understanding audience for, 150

publicity, 66

quarterly earnings releases, 63

Quiksilver, 12

Qwest Communications, 220

Reg FD (Regulation Full Disclosure),

39, 41–42, 44, 45–46, 63, 64

conference calls as safety net for, 163

impact on guidance, 132

impact on private calls to analysts, 163

post–conference call road shows

geared to, 205–206

pre-announcements helping

compliance with, 179, 180

reducing volatility, 181

violation based on “tone, emphasis,

and demeanor,” 226

regulators, 27

REITs (real estate investment trusts),

228

relative valuation, 108

reporters, understanding, 150

research, 143, 200, 236

research firms, 15

restricted stock, 53–54

retail investors, 21, 22

road shows, 65–66, 181

S-1, 62, 92

Sarbanes-Oxley Act, 39, 40, 42–44, 46,

181

scheduled appearances, canceling, 210

Sealed Air, 52

Securities and Exchange Commission

(SEC), 27, 39. See also Reg FD

disclosure documents, 4, 62

as distributor of information to the

public, 63

filings, 61–63

sell-side, 3

companies attracting analysis from,

47

investor relations with, 15–16

link between investors and

corporations, 13

Index 271

sell-side (continued)

players in, 14, 15

relationship with buy-side, 16

relationships with, 193, 197–200

size appropriateness for, 13–14

targeting, 137, 138–143

senior management, interview of, for IR

audit, 103

shareholder analysis, 68, 70, 80

share repurchases, 239–240

Short Interest Ratio, 202

short sellers, 22, 170, 202–204, 215

small-cap companies, 13, 75, 82, 91–92

Spitzer, Elliot, 46

stakeholders, role in defining company,

104

Starbucks, 11, 224–225

stock market

boom, 1990s, 35–38

efficiency of, 47–48

hot buttons for, 215–217

reconnaissance, 68, 69–70, 80

stock chart, 102

stock options, revisiting, 51–52, 53–54

stock ownership information, 214

stock price. See also equity value

companies’ interest in, 5–6

effects on, 5–6, 7–8, 9

recommendations to investors,

17–18, 37

virtuous cycle for maximizing value,

7, 8

stock quotes, 213

stocks, number followed by major

research firms, 56

Stock Watch, 181

story

crafting, 80

rebuilding, 111–112

strategy, 80

Street recon, conducting prior to

conference call, 165–166

sum of the parts valuation, 117–118

tape players, 22

targeted communication, 89

teach-ins, 208

10-K, 62, 102

10-K Wrap, 62

10-Q, 62, 102

third-party information systems,

213–214

Thompson Financial, 11

trade shows, 210

trading statistics, 214

trading support, quality of, 235

transparency, of management, 97

TSC v. Northway, Inc., 40

undervaluation, 109

unforeseen events, 215–217

valuation. See also stock price

leaving to the analysts, 211

perception’s role in, 95–98

performance relative to estimates,

180

related to business characteristics,

107

relative, 108

as science and art, 9–10, 94–96

sum of the parts, 117–118

valuation comparison, 108

value creation, 235, 238

value investors, 22

visibility, of management, 97

volatility, reduced with Sarbanes-Oxley

and Reg FD, 181

Wal-Mart, 11

Walton, Sam, 104

Web casts, 45, 65, 163, 210

Web sites, 66–67

whisper number, 179

yield perception, 242–243

Bloomberg, 157

board of directors, 102

Buy ratings, 175–176

buy-side, 3–4, 21–24

relationship with sell-side, 16

targeting, 137–38

capital markets

company’s voice in, 8–9

feedback from, 108–109

nurturing relationships with, 90

cash, on balance sheet, market effects

of, 229–230

CEOs (chief executive officers)

conducting corporate

communications, 92, 93

IR’s relationship with, 81, 217–221

not understanding role of analysts,

198, 199

role in conference call, 164, 168

CFOs (chief financial officers)

conducting corporate

communications, 92

role in conference call, 164, 168

Chinese Wall, 15, 36, 43, 46, 234–235

commissions, 206

analysts’ estimates, effect on, 131, 174

attractiveness to sell-side, 13–14, 18

conferences leading to, 209

economic events leading to, 19

generating, 143, 144, 175, 181, 183,

accountability, of management, 97

accounts receivable, 227

acquisitions, 239

advertising, 66

analyst days, 66

analysts, 18, 46–47, 144–145

approaching, 68, 70, 80

downgrading stocks, 223–24

estimates, effect on commissions,

131, 174

generating commissions, 143, 144,

175, 181, 183, 207

IR’s engagement with, 214

launching coverage on stocks, 208

looking for new companies, 93

morning meetings, 174

motivation and incentive, 144

rocky foundation for, 36–37

role in defining company, 109

sell-side, 14, 16

targeting, 138–143

annual meeting, 62–63

annual report, 62

Autex Rankings, 214

bad events, handling, 221–222

bad press, 153–154

banker mentality, 193, 233

banks, picking, 236–237

Best Practices in Global Investor

Relations (Higgins), 69

Big Dough.com, 11, 158

Index

commissions (continued)

stock ratings and, 37, 133

trade shows leading to, 210

communication, targeted, 89

compensation, in public companies,

51–52, 53–54

comps (comparables), identifying, in

defining company, 105–108

conference calls, 64, 123, 161, 163–177

as aspect of solid company-market

relations, 199

examples of, 176–177

gearing for success or failure,

168–170

for material miss, 182

preparations for, 164–167

sample script, 255–260

scripting, 164–167

timing of, 171–173

topics and speakers, 167–168

transcripts, 214

conferences, 65

consensus, 131–132

COO (chief operating officer), role in

conference call, 168

corporate governance, 52–55

cost of capital, 6–7

cost of goods sold, market effects,

227–228

coverage, 17

credibility, 218–220

Davila, Daniel, 108

debt, 4, 230–231, 240

definition, 88–89

diversification case study, 114–116

IR audit, 101–112

post–IR audit, 113–119

delivery, 88, 89

case study, 183–190

conference calls, 161, 163–177

earnings announcements, 161–163

pre-announcements, 161, 177–190

stages of, 123–124

targeting the audience, 137–145

dialogue, 88, 89, 90, 193–195

event management, 213–232

meeting The Street, 205–212

turbulence of, 194–195

direct mail, 63

disclosure, 123, 158–159

distribution, quality of, 235

dividends, 240–243

earnings

announcements, 123, 161–163

missing estimates, 177–178

releases, 102, 161–163

revisions, 177–178

earnings call, announcing date and time

of, 178

economic events, 19

EDGAR (Electronic Data Gathering and

Retrieval System), 63

ego, of management, 97

8-K, 62

email alerts, 64

equity research, 14–15, 16–18, 68, 70

equity shares, 4

equity value, 95. See also stock price

event management, 81, 193

fact books, 65

fact sheets, 65

feedback, 80

from capital markets, 108–109

as part of dialogue, 214

Financial Accounting Standards Board

(FASB), 43

First Call, 131–132, 158, 214

Fresh Del Monte Produce, 199

Gates, Bill, 104

good events, handling, 223–225

GTECH holdings, 134

guidance, 70, 123

absence of, 125, 126–127

aggressive, 155

conservatism in, 133–135, 155–1156,

examples, case studies, 127–130

linchpin on effective IR, 124–125

lowering, 221–223

opting out of, 126

public relations and, 155–156

revising, 178

role of, 125

setting the range, 127

short-term vs. shortsighted, 126–127

straddling definition and delivery,

124

horizon thinking, 231–32

income investors, 22

individual investors, 21

industry events, drafting off others’

momentum, 215–217

industry intelligence, 109–111

information flow, 213–217

infrastructure, 90, 123

initial public offerings (IPOs), 35,

92–93

inside information, 41

Institutional Holders Report, 137–138

institutional investors, 21–22, 201

institutional salespeople, 236

internal due diligence, 165

international companies, 94

Internet, 64

inventory levels, market effects, 227

investment banking, 15, 36–37

consolidation of, 14

new landscape for, 57

saving industry, 46

types of companies, 15

investment banks, 173–75, 207,

233–234

investor conferences, 208–209

investor days, 209–210

investor objectives, 7–8

investor relations

addressing banker mentality,

233–243

administrative activities, 67–68

appealing to analysts, 16–17

backgrounds of people performing,

73, 74

benefit to companies, 9–10

building and maintaining

relationships, 197–204

capital markets perspective, 69, 71,

125, 245

changes needed in industry, 245–248

changing work processes, 246

clarifying effects of short- and longterm

strategies, 227–231

conducting industry intelligence,

109–111

coordinating with public relations,

147–156

creating company story, 57

creating paydays for the sell-side, 207

critical nature of, 79

dealing with short-sellers and shortterm

players, 22–23

developing relations with The Street,

246–247

different goals from public relations,

75–76

establishing communications with

stakeholders, 104

external communications, 61–67

financial communication strategy, 55

global, 10–12

guidance as key to effectiveness in,

124–125

handling bad events, 221–223

handling good events, 223–225

hiring personnel, 76–77

identifying comps, 105–108

integrated approach to, 75–78, 123,

247

internal, 91

internal vs. external, 77–78

interviewing senior management,

103–104

managing release of company news,

48–49

maximizing management’s time, 209

Index 269

investor relations (continued)

new approach to, 79–82

objectives, 78, 88

outsourcing, 91–92

personnel, 157

picking banks, 236–237

relations with the buy-side, 23–24

relationship with CEO, 217–221

relationship with sell-side, 15–16

responsibilities of, 73–74, 88

sample plan, 261–265

seeking out new analysts, 200

soliciting feedback from buy-side and

sell-side, 68, 70–71

team approach required, 74–77

traditional, 61–71, 79–82

transforming, 83–84

vendors, 157

Web site pages, 66–67

Investor Relations for the Emerging

Company (Rieves and Lefebvre),

69

investor relations officer, role in

conference call, 163

investors

concerns about communications and

events, 55–56

dialogue with, 215

needing credibility from sell-side, 47

IR. See investor relations

IR (investor relations) audit, 101,

113–119

IRontheNet.Com, 68

J.P. Morgan Chase, 220

Lamont, Owen A., 202–203

language, management’s use of,

225–226

large caps, 91

management

assessing performance, 161

meeting in bad times, 212

preparation for scripted conference

calls, 165

role in perception of company’s value,

97

setting the bar for guidance, 125

margin problems, healing, 118

market intelligence, for public relations,

153–154

material information, 4, 39–41

materiality, 26–27, 45

material miss, 182

MD&A (Management’s Discussion and

Analysis), 62, 102

media

disseminator of information, 63–64

exposure as blessing and curse, 148

feeding off The Street, 147

PR staying ahead of, 153

role and influence of, 29–31

media outlets, 148–149

media training, 149

mega caps, 91

Merrill, Charles E., 16

Merrill Lynch, 16

momentum players, 22

Morgan Stanley, 220

morning meetings, at investment banks,

173–175

net operating loss carry forwards,

market effects, 228

New Dimensions in Investor Relations

(Marcus and Wallace), 69

new inquiries, 201

newsletters, 65

Nextel Communications, 220

NIRI.org, 68

non-deal road shows, 65–66, 205–207

nonqualified stock options, 53–54

one-on-ones, 66

optimism, in guidance, 132–133

organic growth, 238–239

outsourcing, 247–248

peer groups, 105–106

P/E (price/earnings) multiples, changing,

116

perception, role in valuation, 97

performance shares, 53–54

PR. See public relations

pre-announcements, 97, 123, 172,

177–183, 190, 197

pre-emptive strike, 215–216

presentations, 211–212

press kit, 148

press releases, 63–64, 162–163, 249–254

private companies, 9, 17, 73, 82, 93

profits, pending, 118–119

Progressive, 51–52

proxy, 62

public companies

competition, 26–27

controlling news coming from, 48

employees, 25

executive compensation, 51–52

financing methods, 4

information required from, 4

IR function in, 5, 73

packaging information for different

audiences, 4–5

quick communications, benefits of,

47–48

supply and distribution channel, 26

sustaining value, 55

public relations (PR), 29–30

audit, 152–153

basic elements of, 148–149

coordinating with IR, 147–156

different goals from IR, 75–76

expertise, 75

integrating with IR, 123

personalizing the pitch, 150–152

problems when running the IR

function, 75

staying ahead of the media, 153

uncovering the angle, 152–153

understanding audience for, 150

publicity, 66

quarterly earnings releases, 63

Quiksilver, 12

Qwest Communications, 220

Reg FD (Regulation Full Disclosure),

39, 41–42, 44, 45–46, 63, 64

conference calls as safety net for, 163

impact on guidance, 132

impact on private calls to analysts, 163

post–conference call road shows

geared to, 205–206

pre-announcements helping

compliance with, 179, 180

reducing volatility, 181

violation based on “tone, emphasis,

and demeanor,” 226

regulators, 27

REITs (real estate investment trusts),

228

relative valuation, 108

reporters, understanding, 150

research, 143, 200, 236

research firms, 15

restricted stock, 53–54

retail investors, 21, 22

road shows, 65–66, 181

S-1, 62, 92

Sarbanes-Oxley Act, 39, 40, 42–44, 46,

181

scheduled appearances, canceling, 210

Sealed Air, 52

Securities and Exchange Commission

(SEC), 27, 39. See also Reg FD

disclosure documents, 4, 62

as distributor of information to the

public, 63

filings, 61–63

sell-side, 3

companies attracting analysis from,

47

investor relations with, 15–16

link between investors and

corporations, 13

Index 271

sell-side (continued)

players in, 14, 15

relationship with buy-side, 16

relationships with, 193, 197–200

size appropriateness for, 13–14

targeting, 137, 138–143

senior management, interview of, for IR

audit, 103

shareholder analysis, 68, 70, 80

share repurchases, 239–240

Short Interest Ratio, 202

short sellers, 22, 170, 202–204, 215

small-cap companies, 13, 75, 82, 91–92

Spitzer, Elliot, 46

stakeholders, role in defining company,

104

Starbucks, 11, 224–225

stock market

boom, 1990s, 35–38

efficiency of, 47–48

hot buttons for, 215–217

reconnaissance, 68, 69–70, 80

stock chart, 102

stock options, revisiting, 51–52, 53–54

stock ownership information, 214

stock price. See also equity value

companies’ interest in, 5–6

effects on, 5–6, 7–8, 9

recommendations to investors,

17–18, 37

virtuous cycle for maximizing value,

7, 8

stock quotes, 213

stocks, number followed by major

research firms, 56

Stock Watch, 181

story

crafting, 80

rebuilding, 111–112

strategy, 80

Street recon, conducting prior to

conference call, 165–166

sum of the parts valuation, 117–118

tape players, 22

targeted communication, 89

teach-ins, 208

10-K, 62, 102

10-K Wrap, 62

10-Q, 62, 102

third-party information systems,

213–214

Thompson Financial, 11

trade shows, 210

trading statistics, 214

trading support, quality of, 235

transparency, of management, 97

TSC v. Northway, Inc., 40

undervaluation, 109

unforeseen events, 215–217

valuation. See also stock price

leaving to the analysts, 211

perception’s role in, 95–98

performance relative to estimates,

180

related to business characteristics,

107

relative, 108

as science and art, 9–10, 94–96

sum of the parts, 117–118

valuation comparison, 108

value creation, 235, 238

value investors, 22

visibility, of management, 97

volatility, reduced with Sarbanes-Oxley

and Reg FD, 181

Wal-Mart, 11

Walton, Sam, 104

Web casts, 45, 65, 163, 210

Web sites, 66–67

whisper number, 179

yield perception, 242–243