electronic resistance.

The Internet offers unique and powerful investor-relations advantages. So why aren't more companies making the most of them?

Though many companies are enhancing their web-enabled investor-relations capabilities, the Internet remains a largely underutilized IR tool. While the web offers IR professionals obvious advantages that can save time, money and manpower, what's more important is that it lets companies communicate with huge numbers of investors in real time, directly and consistently, without the filter of analysts, the news media or competitors. No other medium offers such range and reach.

And there's strong evidence that the web is growing in sophistication as an IR tool. Company web sites continue to evolve from "brochure-ware" to interactive, content-rich resources. A June 1999 survey by the National Investor Relations Institute, for example, shows a 10-percent jump in the number of companies offering real-time webcasts of analyst conference calls, while another 35 percent of companies are considering offering such calls. However, fewer than 10 percent currently use the Internet to broadcast annual meetings. And just 37 percent offer an online version of the company's annual report -- the low-hanging fruit of IR on the web.

Not surprisingly, there's a correlation between how valuable IR officers perceive the web to be and how they use it. To those who go beyond the basic annual report to provide webcasts, management presentations and more, the web obviously is indispensable. They use it as frequently -- and occasionally more -- than traditional IR vehicles like printed materials, the telephone, fax and face-to-face interaction. For them, the web is valuable today, and its future value will be limited only by their ingenuity.

One IR professional at a manufacturing company, for example, sees strong growth ahead for electronic roadshows. "For lesser-known companies such as mine, it's a great opportunity to get portfolio managers to hear your story in remote markets where you're unlikely to take the CEO for a visit," he says.

Providers of stripped-down IR web sites, however, are content to let others set the pace. They use their uninspiring traffic tally as an excuse for continued under-use of the medium. Why throw more time and money, some reason, after a communications vehicle so few are using? But a lackluster site might be worse than no site at all. Forrester Research claims 40 percent of users who have a negative first experience won't return.

Traffic Report

But how much volume are we really talking about -- and who's clicking the mouse? In November 1999, says Caycee Hawley, director of marketing communications at CCBN.com, a Boston Internet technology company, each of the live web sites it maintains for 950 of its clients received an average of 9,000 hits. Sites with multimedia features, such as conference call replays and PowerPoint slide shows, experience substantially more hits than those that only display text and data, according to CCBN.com. So, while the IR section of a company's web site naturally is driven by the amount and quality of investor information companies make available, high-traffic sites are almost assured to be content rich; low-traffic sites are likely to offer little more than electronic versions of company literature.

And it's not just individual investors who want more from IR on the web. "Analysts are disappointed by the quality, timeliness and specificity of financial information provided on the Internet," says Thomas Bowman, president of the Association for Investment Management and Research. According to a 1999 AIMR study, 65 percent of respondents agree that easy access to information by way of a corporate web site aids accurate analysis of the companies they cover. But just 21 percent rate the timeliness of information as "good" or "outstanding."

Louis Thompson, president of the National Investor Relations Institute, says the AIMR survey contains a clear message for IR officers. "IR web sites are being accessed by financial analysts and portfolio managers at a much higher rate than most people realize," he says. "Yet these sites are often found wanting for timely information. Two years ago, the use of IR web sites by analysts and portfolio managers was relatively low. Today, it's a different story. [Analysts] are telling companies to put information on their web sites as opposed to mailing or faxing it to them."

Stumbling Blocks 

As the Internet has grown more pervasive, two of its major roadblocks to quick and easy communication -- bandwidth, or the amount of data flowing through connection lines, and connection speeds -- are less of an issue and will continue to improve. Remaining obstacles to greater utilization are universal accessibility, fear of the web itself and concerns over litigation risk. While innovation will continue to drive down the cost of computers, and in turn extend web access to more users, it's largely up to the IR profession and the firms they represent to confront and manage the other fears.

Companies that embrace the web for IR, including 3Com, Yahoo! and Microsoft, recognize that its value extends far beyond eliminating faxes and phone calls. The web lets them do exactly what IR is intended to do -- to answer the question on every potential investor s mind: Why should I invest in your company? IR officers must convince management of the web's virtues, understanding that today, information is everything. It's the company's choice whether it wants investors to get information from another source on the web - or to get it directly from the company.

According to Mike Reilly, a former investor relations officer for Reuters Holdings turned consultant, depending on corporate attitudes, the kind of shareholders being served and budget constraints, IR sections of corporate web sites should include:

* Access to the CEO, either by e-mail or a chat room. (You can e-mail IBM's Lou Gerstner, for example, and it's said he reads and responds. But this might otherwise be impractical, so e-mail generally goes directly to the IR department.)

* "Personalizing software" that creates information from the site according to visitor-created profiles. Texas Instruments' site (www.ti.com) has this capability.

* Text in multiple foreign languages. (Microsoft's site, www.microsoft. com/msft, provides its financial tables in four languages and converts data into six currencies.)

* Pointers to either onsite or offsite marketing and product sections, stock quotes, SEC filings and industry-related pages. (www.excite.com, Excite's web site, offers a list of analysts who follow the company and a calendar of key events like earnings release dates and conference call notices.)

* Speeches and white papers.

"A well-designed, content-rich site sends another message -- that you want to communicate well," notes Reilly, who has more advice posted at www.hallyenterprises.com/best.htm.

As of now, though, IR on the web faces a "catch-22" Undoubtedly the disclosure of more investor information will increase traffic to corporate web sites (and provide other benefits, including leveling the playing field for individual investors). Yet so long as reservations about making greater use of the Internet persist, the amount of investor information will be slow to increase, and corporate IR web sites will likely make gradual, rather than revolutionary, changes.

Christopher E Allen is a contributing editor at Financial Executive.

Straight From the Horse's Mouth 

What some companies are putting on their IR web pages -- and why.

AFLAC (www.aflac.com)

Someone at AFLAC tracks the number and duration of IR hits, but Director of Investor Relations Sean Roberts isn't interested. "The data aren't making me do it" he says. Rather, he thinks, the web is "the future." AFLAC -- an international holding company that insures over 40 million people worldwide -- posts analyst call transcripts and is looking into webcasting calls. "Our site could be more creative," Roberts notes, "but you don't wait [for long downloads]; you don't need a sound card or speakers." Sites should aim for the middle-end user, he adds, neither too advanced nor too simple.

COORS BREWING COMPANY (www.coors.com)

The simplicity of Coors' IR site is intentional. "The web is underutilized by Wall Street and underutilized by us as a result," says IR Manager Dave Dunnewald. So you'll just find annual reports, a company "facts and figures" section, downloadable corporate history brochure and a link to the current stock price.

DOW CHEMICAL COMPANY (www.dow.com)

Visitors spend about seven minutes on this site, and up to 3,500 people log on per day. The week after the company posted its latest annual report and proxy statement, it had 20,000 more page views than normal; new information is always a draw. Dow broadcast the CEO's address to shareholders at its 1999 annual meeting live; the speech is archived on the site. Management's remarks following quarterly earnings are posted. And shareholders can cast their proxy votes online.

INDIVIDUAL INVESTOR GROUP (www.indi.com)

A new management team at this 10-year old company recently used the web to tell its turnaround story to investors. CFO David Allen says, "We invited stakeholders to ask us questions -- up to 50, total -- and said we'd respond in a straightforward manner." Both the queries (grouped in four categories -- strategy/competitive; valuation; financial-oriented and other) and the answers are posted. "We're clearly on record as to what the issues are and what we're doing about them," Allen says. "This communication has been well-recognized by the people who follow us." But, because of its labor-intensive nature, Allen isn't sure whether the company will go this IR route again. "We did it to correct a problem," he explains. "But is it the right return for the investment? Maybe not on an ongoing basis."

LUCENT TECHNOLOGIES (www.lucent.com)

Lucent says its IR section is the most visited part of its web site, accounting for roughly more than half of all sessions. Its "stock-ticker" feature (20-minute delay), annual report and financial "highlights" pages -- including revenue breakouts and consolidated financial statements by business units -- are the most popular. Traffic jumps as a result of earnings reports, the issuance of proxies, M&A announcements and other major corporate news.

3COM (www.3com.com)

3Com embraces the web as a way to communicate to investors and analysts. The site includes a business strategy area (which reviews the company's market position, mission, target markets and strengths), corporate timeline, investor FAQs and an archive of management slideshow presentations, so individual investors can see what management is telling analysts who follow the company.