IR Closeup (continued)

February 23, 2004

To the editor:

A. Gary Shilling's column “Dissing Wall Street” (March 1, 2004) in which he suggested companies fold their investor relations departments and stop taking their story to the investment community could not be more misguided, at any time, but particularly now in this era of lost investor confidence.

As companies deal with some 18 new disclosure-related regulations stemming from the Sarbanes-Oxley Act, the investor relations officers are playing a critical role in translating information that may be fully compliant with the new rules into information that is clear, concise and comprehensible to investors. This is no small task given the strong tendency of lawyers to focus on regulatory compliance instead of information transparency.

Mr. Shilling suggests that an effective investor relations effort is only relevant when a company is raising capital, issuing stock, or engaging in acquisitions. The objective of investor relations is to build awareness of a company so that the investment community can determine its fair valuation. Investor relations is not about sales.

Finally, we completely agree with Mr. Shilling that senior management needs to spend most of its time tending to the company's business. However, instead of folding their tents, investor relations officers need to be given access to information, along with authority and autonomy, so that they can actively communicate with the investment community on behalf of the CEOs and CFOs.

Louis M. Thompson, Jr.
President & CEO
National Investor Relations Institute
(703)506-3572
lthompson@niri.org

February 25, 2004

To the Editor:

A. Gary Shilling's column (“Dissing Wall Street,” dated 3/1/'04) inaccurately characterized the interrelationship of publicly traded companies with institutional investors. First, he opened by advising companies not to curry favor with Wall Street. Currying favor misses the main point. In a post Sarbanes-Oxley world, key objectives to attain fair disclosure should be for management to achieve open transparency and to foster strong communication with investors.

Second, he suggested that analysts should be content to arrive at their investment conclusions by gleaning whatever determining factors they need from published quarterly and annual reports plus regulatory disclosure documents. Such a narrow vision ignores the fact that analysts and portfolio managers owe a duty to their clients to build as thorough a fundamental framework of knowledge from which to derive a reasonable basis for their investment decisions. Often that means that analysts find it imperative to contact companies to, for example, clarify ambiguities in reported data, gain additional insights into marketing strategies, reconcile changes in accounting policies, etc.

The most efficient and expeditious conduit for obtaining such information is through an investor relations staff. Mr. Shilling argues that talking to analysts is an unproductive use of senior management's time. I counter by arguing that it's an unproductive use of my time to wait for a CFO to respond to a voice-mail or e-mail inquiry when I'm hoping to find the one or two (or handful) of pieces of the investment decision puzzle that I may be desperate to find. Enter the investor relations staff: IR officers relieve top management of much of the drain on the latters' time to handle communication, and they usually provide far more prompt replies to the Wall Street analyst community. Don't fold the IR tent. On the contrary, equip it with the necessary resources and up-to-date knowledge of company operations, etc., so as to provide a robust investor outreach program.

Click here to read the Forbes article.