EARNINGS reporting practices are evolving and becoming more complicated as companies increasingly integrate social media channels into their distribution circuits — and one good example is the closely watched technology bellwether Cisco Systems Inc. (NASDAQ:CSCO)
Yesterday, Cisco reported its Q4 2010 results after the regular Nasdaq trading hours but during a very active after-hours session that saw more than 13 million shares trade. That amounts to almost 20% of the regular session’s volume.
The results announcement followed two parallel tracks:
- The traditional method of a full-text PR wire release at 4:05pm ET, followed by an 8-K filing at 4:20pm ET and then an earnings conference call at 4:30pm ET; and,
- A social media distribution that incorporates several different channels, including YouTube, Twitter, Facebook and the company’s blog, The Platform.
Since the focus here is on the new, I’m going to walk through the sequence of Cisco’s social media activities, which are coordinated by Cisco’s PR department. At the end I’ll look at ways that Cisco can improve the process.
1. Social media news release
At around 4:05pm ET, Cisco’s PR department posted a nicely formatted version of the company’s earnings release on the Cisco newsroom website. This release is different from the one that feeds into Cisco’s investor relations website via Market Wire and Comtext.
The newsroom version of the earnings release includes several great features. For starters, its formatted in relatively clean HTML with financials in HTML tables. This makes the release both more readable than the IR website version, and it’s easier to copy and paste or import the financial tables into a spreadsheet.
The release includes an embedded YouTube video address by CFO Frank Calderoni and a photo that links through to Cisco’s Flickr account, where you can access more images. For online journalists and bloggers, having easy access to collateral that they can embed in their articles makes the company’s information more attractive to write about, and it enables the company to get its message across in its own words.
Sharing widgets are an important feature on Cisco’s newsroom pages. In this case, people with Facebook and Twitter accounts are able to quickly alert their friends and followers to the news release. At the time I grabbed the screenshot below, the release had been tweeted out to an audience of around 20,000 just through the 31 tweets. That’s not to say all of those people actually saw the message, but it demonstrates the power of social sharing to spread important information and earnings announcements. In contrast, the IR website version of the release was referred to in just two tweets.
2. YouTube channel
Cisco’s CFO Frank Calderoni was featured in our list of 5 CFOs who use video to communicate with investors. Cisco has now set up a new account exclusively for earnings-related videos at http://www.youtube.com/user/ciscoearnings Previously, Cisco posted the videos on the CSCOPR account (they still are), but they’d quickly get lost among the almost 800 videos that Cisco has on that channel.
As I write this about 5 hours after the video was published, YouTube reports that the video has been viewed 288 times. Cisco has left comments open to signed-in users on YouTube.
A key reason to use YouTube or other video sharing services is because they let people do what I’ve done below – embed the video in their posts. This exposes the company’s message to a wider audience, ensures that accurate information is easily available, and it encourages coverage, which is important as more financial content moves to the web and new blogger-analysts emerge as influencers.
At 4:10:30pm ET, Cisco used its account on Twitter @ciscosystems to send the message below, which linked to the earnings release on the company’s online newsroom.
Unfortunately, Cisco missed an opportunity to direct its tweet to its most interested audience –– investors who follow the company on StockTwits. By following @StockTwits and including $CSCO in the tweet, Cisco’s message would have been seen by investors who were actively following the news. StockTwits messages are also indexed by Bloomberg.
4. Blog post
Fourteen seconds after the tweet, Jennifer Greeson, Senior Manager, Corporate PR posted a short item on Cisco’s corporate blog The Platform. This consisted of a quote by CEO John Chambers and a link to the earnings release on the newsroom site.
At 4:42pm ET, a link to the earnings release on Cisco’s newsroom was posted on the wall of Cisco’s Facebook page, which has more than 80,000 fans. As I get set to publish this, the item has been “liked” by 54 people.
Of course, when you publish on Facebook, anyone can post comments, like the one you see in the screenshot below. It’s actually quite funny.
Two ways Cisco can improve the process
1. Improve timeliness and time stamping
The earnings release distributed via Market Wire at 4:05pm ET took more than 5 minutes to populate popular websites like Yahoo! Finance and Reuters.com. This is unusually slow and I don’t know exactly why this is. The typical delay is around 80 seconds.
Cisco’s first alert to followers that the news release was posted on its website came via Twitter at 4:10:30pm. That was a full 5 minutes after the news had already been tweeted by user @oktobernv, who sent the first public notice of the results via the tweet you see below at 4:05:44pm ET.
Companies should always be first with their own news. It doesn’t make sense in this context to enable third-parties to be first and to dictate the tone. This is even more important in Cisco’s case because of the company’s business.
If you don’t think a few minutes matter, consider that in the period between when oktobernv broke the news and when Cisco told people the news was on its website, the stock had fallen 5% on volume of more than 3 million shares.
It’s important for companies to recognize that after-hours trading is now extremely important. In practice, Nasdaq doesn’t close until 8:00pm ET, so releasing results at 4:05pm is not much different from releasing it at 10:00am or 2:00pm. In total, after hours volumes for Cisco on the day were 13.5 million shares, or about 20% of the regular session’s volumes.
As you’ve probably noticed, I pay careful attention to the timing of the various disclosure items. As companies move more of their public disclosure communications to the web, accurate time stamps become vital. They provide an audit trail of sorts and can be valuable evidence in the event of a regulatory probe or lawsuit.
I noticed while researching this post that none of Cisco’s time stamps in its feeds actually reflects the correct time information is posted. For instance, the blog says they posted the item about the earnings release a full hour before the results were actually announced. It looks like the blog’s clock was not adjusted for daylight savings time. Again, this might seem like a minor matter, but it won’t be when there are four lawyers staring at you across the table.
2. Make the IR site more competitive
Investors have little reason or need to use Cisco’s investor relations website to get information about the company’s earnings. For one thing, the user experience is inferior to that of the PR department’s newsroom. Another issue is that Cisco is still sending out full-text releases via a PR wire when it could be driving people to a richer web experience on its website with an advisory release.
The one item investors might want to use Cisco’s IR website for, the earnings call webcast, requires you to register, which creates an entirely unnecessary barrier when people can access the call without registering on many other websites.