Archives for posts with tag: Google

Linkedin just had an article about the best places to work today. The usual suspects are listed: Google,  Facebook and Amazon and some newer, and surprising  ones to me,  Uber (lots of bad press and legal issues)  and Tesla (who makes no profits and may run out of money, not gas.)

But was really struck me was how few of the top companies even existed 25 let alone 10 years ago! The ones that remain have changed a lot: Time Warner (magazines to cable), JPMorgan (a dozen mergers later started as Chemical Bank) and Disney which looks like it may be around forever and never age like Mickey Mouse!

Fortune magazine had an article that stated that 88% of their 500 largest firms from the 1950’s are gone and predicted that 40% of today’s largest firms will be gone in 10 years.

Since I constantly advise graduates and young people where to work, this got me thinking. People used to get a job right out of college and then retire there 40 years later with a good pension. None of this is true today for millennials.

In my book, I stressed that as one moves up in their careers, they needed to study beforehand the leadership and culture of the next company they wanted to work for to try to gauge their personal fit and thus improve the chance to succeed. Now I believe that even graduates and young working people need to do this plus reading all they can about their targeted potential employer. What is their overall strategy, how sophisticated are they on technology and social media, are they well financed? And is their own business model sustainable or will they be the next industry subject to what we increasingly call disruptive innovation, like Uber to taxicabs?

Even though young graduates may work for a half dozen or more organizations in their career, they need to try to look down the road to try to figure out if their next employer will even be around! I believe this new group of millennials are better equipped and more comfortable, than my generation ever was, to research and analyze all the available, on-line information that now.  After all it is their future world. This may also be one of those few areas where most well meaning parents are just not able to help. Looking for your first job or your next job has always been difficult and in this rapidly changing world it just got harder!

The Wall Street Journal recently had two separate articles that discussed how large, public firms regularly meet in private with security analysts who make recommendations to the public to buy or sell their stock. The articles point out how this practice may be technically at odds with the concept of fair and equal disclosure that is part of the Security and Exchange Commission (SEC) regulations.

One article was titled “Google Tries Opening Up to Analysts”. The story is that Google had always gone their own way in not meeting with or disclosing things such as financial forecasts with security analysts.  With a new CFO who came from the banker firm of Morgan Stanley, Google is now doing “briefings” with the analyst community. The objective is to make Google more transparent and help analysts build their financial models to predict its future stock price. And Google’s stock is up recently versus other tech firms.

The other WSJ article was called “Investors Price Face Time with Bosses”. It spoke about how firms such as Proctor & Gamble and GE meet regularly with security analysts. One meeting led an analyst to conclude that P&G’s current Chairman may retire, a fact that was not officially announced until months later. The article further stated that, last year, GE had 70 such analyst meetings with GE senior management present and about 400 meetings in total. Again the hope of the companies is to have the security analysts favorably recommend their stock to the public.

This all sounds great, like a win-win situation. Well, as a retired CFO myself, I can offer a few thoughts and maybe raise a few concerns.

Early in my CFO career, it was very common for public firms to travel to New York and have private meetings with the security analysts who “followed” or recommended your stock to the public. Then the Security Exchange Commission (SEC) published Regulation FD. This is called the “fair disclosure” rule that public companies must disclose material information to all investors at the same time. The idea was to prevent large bankers from trading on the basis of the information they obtained in private meetings to the disadvantage of the rest of the stock-buying public. Overnight most private meetings were gone. Even industry conferences were made available instantly on webcast or by downloading the presentations. Now doesn’t that sound logical and “fair” based on the SEC’s goal with Reg FD that everyone gets the same information at the same time?

Apparently, per these articles, many companies are back to the old private, one-on-one briefings with their favorite analysts. Now the articles were quick to point out that these meetings “tiptoe around the security laws” and that companies can avoid problems by just repeating what is already in the public domain or by just adding “new, nonmaterial information.”

Having sat in on Too many of these security analyst meetings, I can tell you what some of the issues are:

1. What is important or material new information and what is not? A very fine line.

2. Few of us can remember and repeat exactly the wording in our several hundred page quarterly SEC reports that are in the public domain. And exact words and inferences are critical at times for fair and full disclosure.

3. The worst problem is having your Chairman or CEO at these meetings. Some Chairmen/CEOs love talking and will expound at length to any security analyst’s question. Or, they will basically tell their CFO or Investor Relation person to provide whatever information the analyst is seeking. A slippery slope. And as one article points out, it is “easy to trip” and give out new information to a small, non public audience.

4. Finally, some security analysts are true professionals and treat information as confidential only to be used in working on their financial model or in their next report that becomes public information. But some analysts, like some other self-proclaimed wizards of the banking world, have no concept of confidentiality or how to manage the many conflicts of interests that can arise daily in their work. I once had a large bank security analyst who “followed” my public company and a major competitor suggest that our two firms merge and that he would be glad to organize a meeting!

Like a lot of business people, I believe we have too many government regulations in too many different aspects of our lives. Regulation FD at least made sense to me, but only if everyone is playing by the same rules as to what financial disclosures can be made, to whom and when.

We create rules to respond to each new financial crisis we encounter. But like a pendulum swings, we tend to ignore or try to avoid following them after awhile. At least until the next financial crisis!