Has Intel brought innovation to Investor Relations?

Intel generated a fair amount of positive feedback from the investment community following its decision to publish – in advance of the recent earnings conference call – the CFO’s prepared remarks. The rationale was simple: to better prepare the audience and allow more time for interactive Q&A with management. 

We have always counseled clients that the conference call remarks should not regurgitate the press release and MD&A.  Analysts consistently tell us they don’t want that; they can and do read the materials themselves.  The remarks should provide context, insight and explanation on key metrics, not a painfully long review of every line item in the financial statements. And the call is an important opportunity to discuss operational progress, review performance against strategy, and outline upcoming milestones.

So, should you follow the Intel model next quarter?

A couple of thoughts:

• First, keep in mind that a company as large as Intel could cover A LOT of ground in its prepared remarks, so brevity is a must.
• Second, the company is covered by 44 analysts! To give as many as possible an opportunity to ask even a single question within a one-hour call, they need to maximize the Q&A portion.  For issuers with just a handful of analysts, the Q&A period can go very quickly – almost too quickly.  (From our experience, the buy side will listen but rarely ask questions.)  Some aspects of the quarter may not be addressed on the call unless management does so proactively.
• Third, the Intel approach likely requires more preparation time and more people involved in the process to ensure the remarks are well-written and properly formatted. And also consider that tone and delivery communicate important information to the audience, much like non-verbal cues are important in a face-to-face meeting.  Does management sound confident or tentative?  That being said, listeners will be more interested in their ability to answer tough questions on the fly than to read scripted comments.
• Finally, consider that Intel is incredibly well-followed by the sell side, buy side and media and active in communicating its story to the Street. For many companies, the quarterly conference call is one of the few times during the year where they have a captive audience to communicate their story.

Whether or not the Intel model is right for you, there are a few takeaways for all issuers:

• You don’t need to review every financial detail on the call – in fact, this approach may have the opposite effect and cause you to lose your audience;
• Longer doesn’t mean better – keep the comments relatively high-level and brief (10-15 minutes is a decent benchmark), engaging in more detailed discussions only where they are meaningful to the audience; and
• Listen to feedback from your analysts and consider their preferences.

This entry was posted on Friday, October 23rd, 2009 at 11:06 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.