UPDATE: Limelight Networks has responded to this article in the comments below.
US INVESTOR relations departments that continue to issue full-text press releases are not only wasting their shareholders’ money, they’re also shooting themselves in the foot by ensuring that their websites will fail to meet “recognized channel” status under the SEC’s new guidance for company websites.
To prove the point, let me give you an example from yesterday involving Limelight Networks, Inc. (Nasdaq: LLNW), a company that — irony of ironies — is actually in the business of making sure companies’ websites are go-to resources by “enabling the next wave of Internet business and entertainment.”
After regular market hours, Limelight issued its second-quarter results in a full-text news release that it paid a PR wire service to distribute. Various journalists and bloggers who follow the company wrote about the results and linked to its earnings release.
But instead of linking to the release on Limelight’s IR website, which they would have done had Limelight taken advantage of a new option the SEC has made available, they linked to the release that the PR wire service distributed to Yahoo!’ s website.
 |
| Instead of linking to the release on the company’s website, most investment websites and blogs linked to the release on Yahoo! This could impact the company’s ability to meet the “recognized channel” threshold for Reg. FD. |
Among the websites linking to the Yahoo! version of the company’s release included:
- Barron’s Tech Trader Daily, a blog by the Dow Jones owned weekly newspaper.
- Seeking Alpha, one of the top investment sites on the web these days.
- Silicon Alley Insider, which is run in part by former Internet analyst Henry Blodget.
Other publications, such as paidcontent.org, owned by the UK’s Guardian Media, linked to other versions on Limelight’s earnings release on other sites.
In fact, I couldn’t find a single blog or website linking to the version on the company’s own website.
Without “backlinks,” hard to argue your site is a “recognized channel”
So why does this matter? Because if Limelight ever wants to save money by being able to use its website for disclosure under Regulation Fair Disclosure (Reg. FD), the SEC says it will have to show in part that its website is a “recognized channel” for investors and the market.
And if few market participants link to the company’s website, it will be hard for the company to argue that it’s a place investors think to go when they’re looking for information or news.
Backlinks are the accepted measure of authority on the Web. Google’s search algorithm relies on them heavily, as do other search engines and directories.
But if you’re issuing full-text releases, your information appears in numerous locations and much of the authority accrues to the PR wire service and its distribution partners rather than to your company. In Limelight’s case, Yahoo! is clearly the “recognized channel” and not the company website.
Actually, it’s a little worse for Limelight because it’s in the business of delivering web content via their own network. They’re providing technology to support the video and other content for the Olympic Games on NBCOlympics.com.
If any company should be hosting its own press releases and other web content, you’d think it would be Limelight.
IRWebReport.com was founded by Dominic Jones in February 2001 to promote best practices for online investor relations communications. In July 2010, the site had more monthly visitors than IR Magazine and IR Alert combined, according to Compete. We would like to thank our readers for their continued support and interest.
I handle Investor Relations for Limelight Networks. We have been following the SEC on this matter for quite some time (including reading all of the posts on this site), and are very serious about building out our website as a “recognized channel” for our investors.
However, our earnings announcement date was only FOUR days after the SEC issued its position on the matter. The number one investor relations concern in any earnings period is ensuring we disseminating information accurately and quickly to our investors.
While we discussed the option of a “notice-and-access” release for this earnings period, we ultimately agreed that we needed more time than just a few days (including a weekend) to fully implement our approach. More than likely, our investor base has not heard of “notice-and-access” yet, and we didn’t want to rush into its use without more research or investigation into the informational needs of our investors, and without building out a destination site to accommodate these needs. Four days did not afford us the time to fully consider this and take action.
Ultimately, this is about having a complete and well-thought out long-term strategy to transition communications without disruption, and not about being “the first on the block” to rush into a new distribution method.
I think its unfair to criticize us for not implementing a new, and relatively untested approach, only four days after an SEC decision on the matter — especially without contacting us first to understand what our plans actually are.
Hi Paul,
Good points. Unfortunately, someone had to be the example. The post isn’t meant to single out one company. Limelight just happened to issue its earnings release yesterday, and just happened to be noteworthy enough that some people felt it was worth writing about.
I needed an example of a very common problem and Limelight just happened to be there at the time. Limelight’s business added a twist to the story and made it more interesting.
I didn’t ask for comment because I didn’t think it was necessary because Limelight is just an example and could be almost any company. I’m glad you took advantage of the ability to comment here. That’s to be applauded because I don’t know of another IRO who would have the confidence to do that.
Your points about not having the time to implement a notice-and-access style release are good. You are right, it is important to tell investors what you are going to do before you do it.
So, sorry Limelight was the example, but now I’m glad it was.