Google’s recent announcement that it is revamping some of its investor-relations processes may open the way for other companies to streamline their own.
One key change: Google will no longer distribute financial news through newswire services, such as Business Wire and PR Newswire, but instead will post it solely on its own IR Website. “We felt it made a lot of sense, given that we’re a technology company and that we announce virtually all of our company news on our blogs,” says a Google spokeswoman.
While this approach has been allowed since August 2008, when the Securities and Exchange Commission (in an update to Regulation FD guidance) approved company Websites as acceptable disclosure vehicles under certain circumstances, few companies have made the switch.
Google’s imprimatur may prompt more companies to at least consider releasing financial news via a Website only. “This is another example of where Google is on the leading edge of the marketplace, and I think you’re going to see more companies adopt similar practices over time,” says Michael Littenberg, a partner with Schulte Roth & Zabel.
What qualifies a company’s Website as a “recognized channel of distribution” according to the SEC? A number of factors are involved, including whether a company normally posts news to the site, keeps the site current, and makes the news prominent and easily accessible to a broad audience. Site traffic and media attention are also considerations, as is the use of “push” technology, such as RSS feeds, that can alert the public to the presence of a new posting.
Google CFO Patrick Pichette also announced during the company’s first-quarter earnings call that the search giant will eliminate an additional Q&A session with analysts that it had been trying out since last year (the company said the questions often duplicated those asked in the primary call) and that CEO Eric Schmidt would no longer participate in earnings calls, leaving Pichette to lead them. Google is not the only company to have its finance chief leading quarterly earnings calls without a CEO present. Apple, AT&T, and Costco, among others, take that tack.
Still, the practice is far from the norm. “A lot of companies don’t do it, because they want people to see that the CEO is strategic and doing a good job,” says Mary Beth Kissane, a principal at investor-relations consultancy Walek & Associates. “But if you have a good CFO and [he's] doing the job — why not?”