There are over 2,200 stocks listed on the NYSE and over 3,000 stocks listed on NASDAQ and guess how many have blogs for their investor relations areas? The answer is one – Dell Shares is the only corporate investor relations blog that I have been able to find. I think that the fact there is only one blog in this area (you can find blogs in other areas, be it CEOs, sales or product teams, etc) is indicative of the mindset most corporations have about investor relations. In most organizations, IR is trapped in a box of regulations and legal liability. Moving outside the box requires more time, effort and political capital than it’s worth. For example, in one organization where I previously worked, it took a year of lobbying to get the concept of quarterly earnings conference calls approved. Once approved, the scripts for the calls were reviewed by the CEO, COO, CFO, Controller, General Counsel, securities law counsel, outside securities law counsel, Treasurer, internal auditor, external auditors and at least 6 other people. Needless to say, by the time the final document was ready, it was pretty bland mush. Try thinking about how blogs translate into this type of environment and you see why most companies don’t even try. Blogs are supposed to be quick, spontaneous and resonate with the voice of the writer. Good luck to that under the foregoing scenario.
Evidently Dell takes seriously its image as a technology provider and is out in front on this development. I’ve spent some time over the past few days looking at their blog and I think they do some things well. First, they are timely and responsive. They seem to write about developments quickly and respond to comments rapidly. According to a statement made by a Dell spokesman at the 2008 NIRI conference, their position is that in establishing a blog they did not need to change their disclosure policy or get prior approval of each posting from their legal department. Rather, their view is that the blog is merely another extension of what they do everyday in investor relations, either on the telephone or in person. They are aware of the things that can and cannot be said and in writing on the blog simply adhere to the same guidelines as they would in other channels of communication.
The communications person in me cheers this attitude. Phrases such as “IR workers of the world unite! You have nothing to lose but your lawyers!” run through my brain. Of course, having practiced law for ten years, the other half of my brain says “Yeah, but if you screw up with an analyst on a phone call you always have the chance to call him back and correct yourself, or, if you’ve inadvertently given them non-public information, to ask him to treat what you’ve said as confidential. When it’s on the world wide web, it goes out to the whole world and you’ve created a written record of your mistake.” I guess all technological advances come with attendant risks.
Secondly, I think Dell is bringing more information to a wider audience. They refer to this as a democratizing of investor information and I certainly think they are moving in the right direction. They have made video clips available on the blog with members of management discussing some of their more obscure business initiatives (what the heck is virtualization anyway?). All of this helps to gets information, which before was available only to large institutional investors out to a wider audience. This is one of the major benefits of the web. Business school professors refer to this as disintermediation. To put it plainly, you get your information direct from the source, and not filtered through others. I applaud them in their efforts to date to get information out to a wider group of investors.
Naturally, in my self-appointed role of investor relations critic at large, there are several things that I think they might be able to do better. First, in reading the blog, I didn’t get a real sense of Dell as an organization. I think that Dell has a tremendous opportunity through its blog, to put a human face on a highly complex organization. Thus far, the posts to the blog have been governed by the issue du jure without any effort that I can make out to explain the organization as a whole, which I think would be helpful to the average investor visiting the blog. Turns out there is a good introduction to Dell on the Investor Relations web site in the form of an interactive letter to shareholders from Michael Dell, but it required navigating back to the Dell home page and three further clicks to get to the letter. It seems strange to me that there is no direct link between Dell Shares and the IR web site, as there is a link going the other way.
Related to this I think that Dell has an opportunity to save themselves a great deal of repetition and time by creating a series of explanatory blogs about the areas of their business that generate the most questions from investors. I see the beginnings of some of this with the video clips with interviews of business segment managers, but as they are a very large and complex organization, more can be done.
Next, as you might expect, everyone is relentlessly on message in their posts. I can understand why this is, but it can make for some bland reading. If I were an equity analyst, the blog is not where I’d go to try and find any nuggets of information, although it would be required reading. Maybe it would help if someone would exhibit a sense of humor once in a while.
To a certain extent, I’m picking nit with all of this. Dell deserves a lot of credit for establishing their blog. In tech-speak, they have achieved first mover status. While I believe that good things will accrue to them as a result, as with many things in investor relations, it may be hard to measure, and probably only in retrospect.