IF AN earnings release distributed by a PR wire on behalf of the world’s most-watched public company fails to arrive on the world’s biggest investing website and no one notices, does anyone pay attention to press releases anymore?
That’s precisely what happened January 18 when Apple Inc. (NASDAQ:AAPL) reported its first-quarter earnings amid intense investor and broader public interest. The company paid Business Wire to distribute the much anticipated release to the market at 4:30 pm ET. But the release failed to arrive on the company’s pages on Yahoo! Finance, the world’s most popular finance website.
It wasn’t until almost an hour later at 5:25pm ET that Yahoo! Finance confirmed to me on Twitter that the release was missing and they were working to put it up. I had contacted them after noticing that Apple’s release was AWOL.
And this is not the first time that Apple’s earnings release via Business Wire has failed to show up on Yahoo! Finance. The same thing happened in the previous quarter. At that time, I contacted Apple’s PR department and they couldn’t explain the problem.
Of course, errors happen all the time and that’s not really what makes this story remarkable. The astonishing thing is that this is Apple and Yahoo! Finance were talking about — and no one except me seems to have noticed or cared.
If no one sees or uses them, are they still Reg FD compliant?
Thousands of US companies collectively spend millions each quarter dutifully sending out their earnings releases via paid PR wire services believing that investors rely on these services to receive the information. They also believe that using this expensive form of distribution ensures that they are complying with the US Securities and Exchange Commission’s Regulation Fair Disclosure (Reg FD).
The problem is, if investors aren’t in fact using PR wire releases to receive company disclosure information then it may not be prudent for companies to continue relying on PR wires to meet their Reg FD obligations. The onus is on companies to either file the information with the SEC or use alternate methods of dissemination that are in fact used by their investors.
Other research I’ve done on a range of companies of different sizes that have used PR wire releases containing trackable links suggests that it’s not just Apple’s releases via PR wires that investors are ignoring. From what I’ve seen, paying a PR wire to distribute your releases to hundreds of destinations is largely pointless because they’re generally ignored.
The click traffic I’ve seen on publicly trackable links in releases – typically from the free bit.ly service – shows that most people get their information directly from companies’ own distribution lists or websites.
EDGAR filings most prudent to ensure compliance
In light of this, it seems that the most prudent disclosure dissemination process would be to eliminate any compliance doubt by filing earnings releases and other disclosure information with the SEC’s EDGAR database, and then emailing the same information to subscribers and posting it on the company’s website. Doing that would fully satisfy a company’s Reg FD obligations.
One of the major benefits of this approach is that EDGAR distributes the information to the financial media like Bloomberg, Reuters and Dow Jones, which all subscribe to the SEC’s privatized EDGAR Dissemination System (EDS) managed by Keane.
In fact, the first mention of Apple’s Jan. 18 earnings release on Yahoo! Finance was actually an SEC filings alert fed to Yahoo by EDGAR Online Inc., which is a separate company from the SEC that subscribes to the EDS and distributes filings to several websites.
The EDGAR database also offers free individual feeds for every insider and company that files information on EDGAR (you’ll find Apple’s feed here). That means any website, including Yahoo! Finance, could just get its public company information directly from EDGAR at no cost.
Of course, if people aren’t reading PR wire releases then they probably aren’t going to read releases via EDGAR either. But at least public companies will have the comfort of knowing that they’re meeting their compliance obligations – and saving millions at the same time.