Note: I’ve added more specifics around the sequence of events around Sun’s release, including adding a screenshot taken from Yahoo! Finance which shows times various news items became available there. I’ve also added a link to a PRWeek article that provides a more balanced report than IR Magazine. I’ve also added an update about Business Wire’s CEO getting her facts wrong.
By Dominic Jones
I GUESS it must be hard to write anything negative about PR wire services when they are one of your biggest sources of advertising revenue.
IR Magazine, which typically will carry at least two full-page ads from PR wire services in every issue, has done a hatchet job on Sun Microsystems’ Web-first earnings release process on Monday.
Headlined critics say Sun’s internet earnings release not flawless, it starts like this:
Newswire executives found problems with Sun Microsystems’ earnings release yesterday via its IR website, then put out the message that a company self-publishing results seems a poor substitute for their tried-and-true distribution channels.
And it includes unattributed padding like this:
The wire services pioneered the technology to deliver news at the same split second to investors worldwide. It’s free to users and fairly low cost to those putting out the information. Their protocols are also audited regularly unlike corporate web sites.”
Is that reportage or opinion? Who says they “pioneered the technology” to deliver news? Tell that to Reuters and Dow Jones and Bloomberg.
And “fairly low cost,” by whose definition? IR Magazine‘s or the news wires’? And who says corporate websites are not audited. Show me your sources.
Biased nonsense that’s not fit to print in a publication I’ve previously called the IR industry bible. I take that back.
PR wire services and friends see gravy train crash coming
Here are the facts as I know them:
Sun’s news release was accepted by the SEC’s publicly accessible Edgar system at 4:00:58pm EST Monday. Everyone had access to it at the same time. Sun met its Reg. FD requirements right there and was not obliged to do anything more.
At 4:01pm EST, the news was on Yahoo! Finance, the world’s biggest investment website, courtesy of Edgar Online. No cost to Sun or its shareholders for that service. (If anything can be learned from this it’s that Edgar Online is sitting in a sweet position and has remarkable technology.)
Media like Reuters, Bloomberg and Dow Jones didn’t need PR Newswire’s release to write their stories. They got the news direct from the SEC or Sun’s website. And they were happy to do so.
The first media story on Yahoo! Finance was from MarketWatch, which appeared at 4:11pm EST, about the same time that Sun’s PR Newswire release was posted to the site. Reuters was next at 4:14 pm EST, according to the screenshot we took at the time (see below).
I haven’t seen any analysts or investors standing up to complain about the process. And I’m sure they would have if it was an issue.
The only ones whining are the PR wires and their friends. They’re scared there’s an end coming to the gravy train, the notorious free lunches, golf outings, full-page ads, and the rich sponsorships that all come courtesy of vague regulations and rank and file shareholders.
Why are regular shareholders subsidizing short-term traders and PR wire businesses?
Sorry, but Regulation Fair Disclosure is not for the benefit of Business Wire, Warren Buffett or IR Magazine.
Reg. FD exists to ensure that retail investors have the same access to material information as investment pros.
On Monday, everyone had access to Sun’s earnings release at precisely the same time — 4:00:58pm EST on July 30, 2007 at this web page. It worked.
Another thing — 99.9% of retail investors don’t care about milliseconds. They aren’t program traders or hedge funds with neural networks. Wire services cater to the needs of a small group of people whose short-term trades are made more profitable on the backs of regular shareholders.
Companies, and ultimately all of their shareholders, pay PR wire services to distribute their news via private feeds so that a few wealthy investors — who don’t pay for the service — can profit.
How is that fair? It’s not. If short-term traders want sub-second delivery, let them pay for it. Why should I and every other shareholder with a day job subsidize them?
Who was first to point out there were execution issues?
Were there problems with Sun’s execution on its website and in its RSS feeds? Absolutely, and I was the first one to post that fact in an update to my original story about Sun’s announcement that it would by-pass the wire services for Reg. FD.
Sun’s website folks were slow in posting the information to the company’s website. I suspect they wanted to be doubly sure they didn’t get the information up before the Edgar filing was done. They played it safe.
Unlike Business Wire’s senior VP for global media Neil Hershberg, a disagreeable ambassador for one of Warren Buffett’s companies, I discerned no server issues.
No. If we learned anything significant on Monday, it’s that we don’t actually need wire services for Reg. FD or any other kind of regulated securities disclosure for that matter. Investors don’t and the media doesn’t either.
Edgar and Yahoo! Finance and RSS and email and company websites and the stock surveillance departments at the exchanges (with their power to halt stocks if they think it’s necessary) work really well.
Best of all, they don’t cost shareholders anything extra.
Update: PRWeek covers the same story, but in a much more balanced and objective fashion.
Update 2: Cathy Baron Tamraz, President and CEO, Business Wire, has posted an erroneous item on Business Wire’s blog that ignores the fact that Sun’s release was posted to Yahoo! Finance by EDGAR Online at 4:01pm. She also falsely states, as you can see from our screenshot above from Yahoo! Finance, that Reuters only filed at 4:16pm instead of 4:14pm as our screenshot proves. And she ignores the fact that MarketWatch filed at 4:11pm, the same time as Sun’s news release via PR Newswire was sent, meaning that MarketWatch couldn’t have been using the PR Newswire copy of the release to write its story. That’s relevant because Business Wire and its peers claim you need to use them to reach these news organizations. Clearly, Sun’s process proves that’s not true.
By the way, we were taking screenshots precisely because we anticipated that the wire services would be out to discredit Sun and the process. They have a lot to lose and we just figured someone had better try to provide an independent record. As for Cathy’s claims of experiencing Error 404 messages, that has nothing to do with servers being down or clogged. It means the page she was trying to access did not exist on the server, which was responding to her request and so couldn’t have been down. She should provide some proof that Sun’s servers were down or not responding before making those accusations. We can prove the opposite, independently of Sun.
Let’s see how quickly Business Wire corrects their inaccurate information and acknowledges they were wrong.