Last January, top executives of C-Cube Microsystems Inc. conducted a conference call with about 60 people, mostly analysts and portfolio managers, to discuss the company's performance for Q4 1998. Three months later, when the Milpitas, Calif., maker of digital video systems and chips announced its Q1 1999 results, the number of listeners had swelled to more than 1,500--analysts, investors, journalists, and anyone else with an interest in the company.
Why the huge increase in listeners? Because C-Cube broadcast its April conference call live on the Internet. What's more, another 1,000 Internet users accessed a replay of the call from the company's Web site.
Internet technology is transforming the quarterly earnings call from a clubby insider's chat to a worldwide news broadcast. In the process, it's leveling the playing field for individual investors. "We firmly believe that institutional investors and individual investors should have access to the same company financial information," declares C-Cube CFO Walter Walczykowski.
And so does the Securities and Exchange Commission. In a March 1998 speech, SEC chairman Arthur Levitt called for an end to the dissemination of material financial information in conference calls that are closed to the public. The SEC is reviewing situations in which selective disclosure may have occurred, and the agency may eventually tighten its disclosure rules.
This concern over selective disclosure dovetails with the widespread adoption of technology that makes conference calls easily accessible by most Web users. Three providers that offer Internet teleconferencing are Corporate Communications Broadcast Network, StreetFusion (formerly C-Call), and Vcall Inc. Vcall says the number of calls it broadcasts over the Web is growing at more than 100 percent a quarter; in April alone, it broadcast more than 200 events.
Web conference calls are inexpensive to host. C-Cube, for instance, paid less than $1,000 to simulcast its conference call using V-call, says CFO Walczykowski. Web listeners need only a set of speakers and audio software, such as RealPlayer Audio, which can be downloaded from the Web (www.realplayer.com).
In addition to guarding against selective disclosure, Web conference calls reduce the number of phone calls to the investor relations department, says Tyler Thatcher, director of investor relations at Iomega Corp., a Roy, Utah, disk- drive manufacturer. That's a boon for a company like Iomega, where more than 70 percent of the stock is owned by individual investors. Web calls also limit misinformation in Internet chat rooms. "When people [who discuss the stock] in chat rooms are closed out, they tend to speculate and create rumor," says Thatcher.
Not everyone is sold on the concept. Some firms are afraid that discussion will have to be dumbed down for a mass audience. Jim Foltz, director of financial relations at National Semiconductor, which airs its conference call on the Web using StreetFusion, admits that calls can be less "nitty-gritty" because of the varied audience.
"The dynamics are different," explains Foltz. "We are less likely to spend a lot of time on a minute detail, like a small change in an accounting treatment." To maintain the quality of discussion, most companies are simply simulcasting their regular calls, which means Web listeners can eavesdrop but not participate.
Many analysts and portfolio managers are also resisting the move to the Web. A recent member survey by the Association for Investment Management and Research found that 63 percent objected to allowing even the media to participate in conference calls.
Others worry there may be legal considerations that haven't been tested. Ciber Inc., an IT consulting firm based in Englewood, Colo., has balked at making its conference calls available on the Web, though it participates in other investor communications over the Internet. CFO Richard Montoni is concerned that allowing people to listen but not speak could bring claims of partiality.
Still, experts predict companies will have a tough time excluding Web listeners from their conference calls. "There are well over 7 million online investors that are pushing the envelope for real-time information," says Louis Thompson, CEO of the National Investor Relations Institute, in Vienna, Va.
Providers of Internet broadcasts enable Web users to eavesdrop on company earnings discussions.
chart omitted Electronic Data Interchange
EDI on the Web
In the late 1980s and early '90s, electronic data interchange (EDI) earned a reputation as a tool that giant retailers and manufacturers forced on their hapless trading partners. The latter had to master a set of complicated rules, invest thousands of dollars in EDI translators, and pay $50 or more per month to a value-added network (VAN) to transmit the transactions. For small companies, the EDI bar was frequently too high.
Thanks to the Internet and a new generation of software, the VAN can be avoided and the interchange rules can be greatly simplified. Packages like TradeSite, from ForeSight Corp. (www.foresight-edi.com), and Harbinger Express, from Harbinger Corp. (www.harbinger.com), now enable simplified EDI transactions over the Web. This approach allows host companies to leverage their existing EDI systems and gain compliance from all their trading partners, large and small.
The host company installs the software, which ranges in price roughly from $60,000 to $150,000, on its Web server. Trading partners can then use an ordinary Web browser to access the software over the Internet, and can fill in simple forms with the browser to initiate EDI transactions. The software translates the data from the browser forms into legitimate EDI data and transmits it to the host company's EDI system.
Ball Corp. implemented TradeSite for about $200,000, including the cost to link the software to the company's accounting, marketing, and manufacturing databases. Ball is using TradeSite for both large and small trading partners, according to Natalie Henderson, EDI systems team leader for the Westminster, Colo., firm, which makes plastic bottles, metal cans, and food containers.
"We have a lot of information in our systems that our customers would love to have on an ad hoc basis--things like inventory levels," she says. "For example, one customer needs to know bottle inventory levels on Saturday afternoon, to make production decisions for Monday morning."
Henderson is sticking to strict EDI standards for now, but sees TradeSite as a potential customer-service tool. "We have multiple divisions, all with their own databases," she explains. "TradeSite can act as a central repository for all [inventory] data, and make it available to customers almost in real time." -- John J. Xenakis
Platinum Software Corp., a leading supplier of midrange accounting software, has changed both its name--to Epicor Software Corp. (www.epicor.com)--and its strategic direction, toward enterprise resource planning. These changes were occasioned by Platinum's acquisition in late 1998 of DataWorks Corp., a vendor of manufacturing and scheduling software.
According to Mike Pennell, vice president of product marketing, Epicor will offer four product lines: Vantage, for custom manufacturers and job shops; Avante, for make-to-order and mixed-mode manufacturers; Platinum for Windows, a midrange LAN-based accounting product; and Platinum ERA, an ERP solution for manufacturers and nonmanufacturers.
The company is confident it can develop, market, and support four different product lines. But David Caruso, an analyst at AMR Research Inc., says history isn't on Epicor's side: "Of the ERP vendors I've seen that have multiple product portfolios, none has been successful." -- J.J.X.
Two commonly used application-development tools--Seagate Crystal Reports and Microsoft Corp.'s Visual Basic--are now easier to use together, providing a way to do faster, cheaper decision-support development.
Crystal Reports has long been a favorite tool for interrogating corporate databases and producing regular reports in an easily understandable format. But it's relatively expensive ($395 a seat) if you need a lot of copies. Also, it has its own user interface, which analysts must master before they can pull out the right data and format a report.
Crystal Report's new support for Visual Basic (VB), Microsoft's programming language and environment, solves both problems. A VB programmer can develop an easier-to-use report tool that calls Crystal's run-time engine through a so-called ActiveX interface. The kicker is that the run-time engine and interface are free--that is, they can be distributed without paying an additional license fee to Seagate. Once the VB application is developed, that can be handed out gratis, too.
In short, this means that an entire decision-support application can be developed once by a VB programmer using Crystal Reports, and distributed throughout an organization for no additional charge.
However, although VB is considered by many to be easy to use, its difficulties shouldn't be underestimated, says Richard Campbell, a Vancouver-based computer consultant. "You can't really dabble in Visual Basic if you're not a programmer," he says. "I can't tell you how much money I've made when someone gets a college student to get something to work, and then they have to call me in to clean up the mess." -- J.J.X.