Last January, top executives of C- Cube Microsystems Inc. conducted a conference call with about 60 people, mostly analysts and portfolio managers, to discuss the company’s performance for Q4 1998. Three months later, when the Milpitas, Calif., maker of digital video systems and chips announced its Q1 1999 results, the number of listeners had swelled to more than 1,500–analysts, investors, journalists, and anyone else with an interest in the company.
Why the huge increase in listeners? Because C-Cube broadcast its April conference call live on the Internet. What’s more, another 1,000 Internet users accessed a replay of the call from the company’s Web site.
Internet technology is transforming the quarterly earnings call from a clubby insider’s chat to a worldwide news broadcast. In the process, it’s leveling the playing field for individual investors. “We firmly believe that institutional investors and individual investors should have access to the same company financial information,” declares C-Cube CFO Walter Walczykowski.
And so does the Securities and Exchange Commission. In a March 1998 speech, SEC chairman Arthur Levitt called for an end to the dissemination of material financial information in conference calls that are closed to the public. The SEC is reviewing situations in which selective disclosure may have occurred, and the agency may eventually tighten its disclosure rules.
This concern over selective disclosure dovetails with the widespread adoption of technology that makes conference calls easily accessible by most Web users. Three providers that offer Internet teleconferencing are Corporate Communications Broadcast Network, StreetFusion (formerly C-Call), and Vcall Inc. Vcall says the number of calls it broadcasts over the Web is growing at more than 100 percent a quarter; in April alone, it broadcast more than 200 events.
Web conference calls are inexpensive to host. C-Cube, for instance, paid less than $1,000 to simulcast its conference call using V-call, says CFO Walczykowski. Web listeners need only a set of speakers and audio software, such as RealPlayer Audio, which can be downloaded from the Web (www. realplayer.com).
In addition to guarding against selective disclosure, Web conference calls reduce the number of phone calls to the investor relations department, says Tyler Thatcher, director of investor relations at Iomega Corp., a Roy, Utah, disk- drive manufacturer. That’s a boon for a company like Iomega, where more than 70 percent of the stock is owned by individual investors. Web calls also limit misinformation in Internet chat rooms. “When people [who discuss the stock] in chat rooms are closed out, they tend to speculate and create rumor,” says Thatcher.
Not everyone is sold on the concept. Some firms are afraid that discussion will have to be dumbed down for a mass audience. Jim Foltz, director of financial relations at National Semiconductor, which airs its conference call on the Web using StreetFusion, admits that calls can be less “nitty- gritty” because of the varied audience.
“The dynamics are different,” explains Foltz. “We are less likely to spend a lot of time on a minute detail, like a small change in an accounting treatment.” To maintain the quality of discussion, most companies are simply simulcasting their regular calls, which means Web listeners can eavesdrop but not participate.