A NYSE Euronext official has called Bloomberg’s scraping of non-public earnings releases from the websites of The Walt Disney Company (NYSE:DIS) and NetApp Inc. (NASDAQ:NTAP), which caused huge volatility in the stocks of both companies, “good reporting” by the newswire and shameful of the companies.
Writing on the NYSE Exchanges blog, Ali O’Rourke, a Director of the Global Corporate Client Group for NYSE Euronext (NYSE: NYX), rehashes the stories we first broke over a month ago detailing how Bloomberg was able to pick up unpublished earnings release information from the companies’ corporate websites by using a web crawler or simply guessing the unpublished URLs based on the companies’ past ones.
Without attributing her information to anyone, O’Rourke writes:
Here’s the scenario: It’s earnings day and the IRO is gearing up to publish the company’s release and start the conference call. The company’s tech team gets an early copy of the release and in preparation, sets it up with its own secret URL (to be revealed in the press release). It’s important to know that the tech team isn’t very creative. To keep things simple, they use the same “secret” URL from last quarter, but change the end of the address to read 3Q10 instead of 2Q10. Unfortunately for them, Bloomberg’s technology (and probably some others) is very smart and the morning of the expected announcement, the news outlet begins sweeping the internet for a press release at a URL similar to the one used last quarter. The technology even knows to check for an updated “3Q10” in the address. Aha! Two hours before the company is ready to announce their earnings, the news runs on Bloomberg.
Sound crazy? It’s not. It’s likely what happened to both Disney and NetApp last quarter and rumor has it, several others.
NYSE hardly ‘very creative’ itself
There are a couple things wrong with her scenario, however. First, the “secret URL” isn’t revealed in the press release. It’s just the web address where the release is published on the company’s website after it’s distributed via a PR wire service. Minor point.
The second, bigger issue is that it’s typically not the “tech team” that is making these mistakes, but lower level communications folks who haven’t been given the resources or technology they need to do their jobs properly.
And part of the reason they don’t have the tools they need is because the NYSE has done little or nothing to impress upon its listed companies the importance of having good websites.
In fact, the exchange has been extremely reluctant to even allow companies to use their websites for disclosure. Up until a year ago, it was insisting that they send their news via faxes, emails or hand delivery to a select group of mainstream media outlets.
And up until April, some of the contact information the NYSE listed company manual provided for these chosen media outlets was wrong (PDF of SEC rule approval).
So, it’s little wonder that some companies haven’t invested in good website content management systems. The message from the NYSE has been that company websites are not important.
Yet that doesn’t stop the exchange now heaping scorn on the hapless companies.
Says O’Rourke: “What do the regulators think of all of this? They are inclined to say it was good reporting on the part of Bloomberg and shame on you, public company, for not protecting your information better.”
Clearly, though, there’s more than enough shame to go around.