Shallow earnings call archives raise questions

COMPANIES that post conference call webcast replays on their sites for only short periods are making a big mistake. They often appear less transparent than other companies and may lose investors to other websites.Almost 38% of the companies in our rankings survey fail to provide access to even their most recent conference call on their IR websites. Legal concerns are the main reason for short call archiving practices at many of these companies. Their lawyers are worried about giving investors ammunition to hold management accountable for its forward-looking statements and unscripted remarks during analysts’ questions.

Some companies may argue that cost plays a role in their decisions, especially when investors rarely use old webcasts. Vendors may charge them extra fees to host streaming audio archives. However, there are cheap alternatives that companies can use for older call archives, such as posting them in downloadable MP3 format.

Also, it is dangerous to base decisions about content only on how often investors access and use the information. This is because the few investors who are using the information may actually be extremely important to the company. They may be major new potential institutional investors doing initial research by going back over the company’s past disclosures.

You can’t get the call on the company’s website, but you can on Yahoo! Finance. This makes the company’s site less relevant.

Even if they are never used, deep archives add value to a site by just being there. Perceptually, they make your website a more authoritative and useful resource, one investors are more likely to turn to when they need specific or detailed information.

Something to hide

Companies with shallow archives risk looking defensive. They can give the impression that management is trying to make it difficult for investors to hold them accountable for their past statements and pronouncements. They may give the impression that management lacks confidence or that the company’s lawyers are nervous.

The impression can be particularly strong if the company’s competitors provide archives of conference calls, or if investors are accustomed to companies that do so. The lack of call archives may set off alarm bells with investors and cause them to be more circumspect of the firm’s disclosure and communication materials.

Less reason to visit

Investors will only visit your website regularly if it offers what they need. Conference call archives are a key reason to use company sites because they typically aren’t available for long periods from other sources.

Some companies make the mistake of removing conference call archives from their site even before they are removed from public call databases, such as Yahoo! Finance.

Take the recent example of News Corporation, the media and entertainment company. During a recent review, we found that the company did not have a single conference call replay available.

However, the company’s most recent call was available on Yahoo! Finance. This means investors in News Corp. have a better chance getting information from one of the company’s competitors — Yahoo! - than from the company itself. Another irony is that the conference calls are provided to Yahoo! Finance by News Corp.’s investor relations webcasting vendor Thomson Financial.

News Corp.’s practices are symptomatic of a bigger problem — the company is a bad communicator. Given that its business is all about communications that’s not a good thing.

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