A GROWING number of US companies are cutting costs and driving more traffic to their investor relations websites by using PR wire services to distribute alerts and links instead of full-text press releases.
Advisory news releases are distributed via PR wires to tell investors a company has posted new information on its website and to direct them to it via a link. They are one of the key tools in our new online disclosure model, in which companies use them to establish their websites as recognized channels of disclosure, one of the prerequisites for a Reg FD compliant company website.
Although a few companies have been successfully using advisory releases for several quarters, the process got a boost in April when Google Inc. (NASDAQ: GOOG) used an advisory release for its Q1 2010 earnings release. Now other companies are following Google’s lead amid growing IR community interest in corporate disclosure via the web.
A few days after Google’s much discussed move, Silicon Valley-based SVB Financial Group (NASDAQ: SIVB) advised investors via PR Newswire on April 21 that it would use an advisory release the next day to direct investors to its Q1 2010 earnings release on its IR website and concurrently submit the information in an 8-K.
Earlier, Marathon Oil (NYSE: MRO) announced on April 6 that it would no longer issue full-text releases for any material news. Instead, the company said it would use a “notice and access” process, a term IR Web Report first used in 2007 to describe the advisory release process. To avoid confusion with the proxy delivery process of the same name, we no longer use that term.
More recently, Investors Real Estate Trust (NASDAQ:IRET) used an advisory release for its June 30 earnings release. In this case, the company chose to link from the advisory to the 8-K filing on its IR website that contained the earnings release.
These latest examples add to the increasing number of companies that are using advisory releases for their earnings results, including among others BGC Partners (NASDAQ: BGCP), Tellabs Inc. (NASDAQ:TLAB) and Expedia Inc. (NASDAQ: EXPE).
Self-publishing tools may boost adoption
While the use of advisory releases is gaining traction, it is still an emerging practice and companies have yet to settle on common practices. Some of the examples thus far has left much to be desired in terms of usability.
In most cases, cost savings seem to be the primary driver for companies using advisory PR wire releases. The other main benefits – improved communications with investors and compliance insurance – don’t appear to be priorities for companies at this time.
However, adoption and process improvements could be just around the corner now that Thomson Reuters and Nasdaq OMX have both announced new self-publishing tools for IR website managers. Both of these companies support the use of advisory releases as part of a web disclosure process.
The self-publishing tools give company website managers the ability to more precisely control when and how their advisory releases are distributed and what investors experience when they follow the links in the advisories to companies’ websites.
As with all new processes, companies are still trying to iron out the kinks. However, one thing is clear: advisory releases are here to stay.
- In our latest guidelines, The New Online Disclosure Model, we explain how companies can use advisory releases as part of a broader online dissemination system that can improve compliance and communications effectiveness. The guidelines include template advisory releases for both scheduled and unscheduled disclosures.