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Internet lessens relevance of annual meetings for newly public "New Economy" companies.

Business/Internet Editors

NEW YORK--(BUSINESS WIRE)--May 15, 2000

Ernst & Young and Nasdaq release survey of

206 dot-com companies that began trading on the Nasdaq in 1999

In the age of ubiquitous digital information, the need for annual shareholder meetings is diminishing by the nanosecond. This is especially true of newly public "dot-com" companies, trendsetters not only in the use of the Internet for business but also for the distribution of financial information.

A survey conducted jointly by Ernst & Young LLP and The Nasdaq Stock Market(R) reveals that a substantial majority of the "new economy" companies that began trading on the Nasdaq in 1999 believe annual meetings are less relevant than they used to be. According to 47 percent of the chief executive officers, chief financial officers and investor relations managers polled, the advent of the Internet has radically changed the way investors access company information, making annual meetings less effective as vehicles for the timely dissemination of financial and operational data to shareholders.

"Most of our individual investors can obtain information in a more timely manner through our Web site and other financial sites, while institutional investors don't wait for the annual meeting to ask questions of management, they just pick up the phone and call us," summed up a respondent.

"Shareholder meetings are still relevant," said another of the companies, "but need to change with the times and with technologies."

The evolution of the Internet, in part fostered by some of the companies surveyed, has made the option of Web casting the shareholder meeting a growing trend. Forty percent of the companies surveyed either have decided or are considering plans to broadcast the shareholder meeting on the Web, to expand the impact of the event and increase its value to the company and the shareholders.

However, the adoption of other new technologies to make the meeting an interactive experience is still extremely low, for example, only 1 percent of the companies surveyed said they would allow shareholders to ask questions of management via e-mail during the meeting. The percentages grow to 14 percent and to 27 percent respectively, if you include those companies that allow shareholder input via e-mail before the meeting. However, almost half of the companies surveyed said they would not allow shareholders to vote their proxies online.

Because interaction with management is still valued, traditional annual meetings will not disappear in the near future, Ernst & Young concludes. "New economy companies still need to address face-to-face some of the same questions that confront traditional "brick & mortar" companies, as well as issues especially applicable to the .com world," said Jim Hassett, vice chairman of Assurance and Advisory Business Services for Ernst & Young.

Ernst & Young publishes an annual-guide entitled Subjects of Interest to Shareholders. In the 2000 Annual Meeting edition, Ernst & Young concludes that the four most common subjects for questions expected at the meetings this year involve growth plans, competition, earnings trends and availability of capital. These topics apply to all public companies, the firm finds, but as the survey respondents report, for newly public Nasdaq companies the focus this year will be on growth and finance in particular.

Copies of the guide are available by contacting Ernst & Young's communications department at (212) 773-7192.

Background: The survey was conducted during the week of April 10, 2000 via e-mail and fax. A third of the 206 new economy companies that started trading on the Nasdaq in 1999 answered a brief questionnaire circulated via e-mail and provided written commentary about their perception of annual shareholder meetings. The survey results are available on Ernst & Young's Web site: www.ey.com.

Ernst & Young (www.ey.com) is one of the world's leading providers of dot-company services in assurance, consulting, corporate finance and tax. More than 95,000 people around the world act as creative catalysts, joining forces with clients to do all it takes -FROM THOUGHT TO FINISH(TM)- to achieve positive, significant change. E&Y pioneered the development of advanced solutions that connect clients, partners and employees with E&Y resources and knowledge to help them rapidly reach their goals. Ernst & Young refers to the U.S. firm of Ernst & Young LLP and other members of the global Ernst & Young organization.

The National Association of Securities Dealers, Inc., is the largest securities-industry, self-regulatory organization in the United States. It is the parent organization of The Nasdaq Stock Market(R), The American Stock Exchange(R), and NASD Regulation, Inc. For more information about the NASD and its subsidiaries, please visit the following Web sites: www.nasd.com; www.Nasdaq.com; www.amex.com; www.nasdr.com; or the Nasdaq NewsroomSM at www.Nasdaqnews.com.
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Date:May 15, 2000
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