Under pressure from regulators, investors and the broader public, the corporate earnings conference call is fast emerging as one of the most useful new resources for CI professionals. The conference call has graduated from the pre-Regulation Fair Disclosure (Reg FD) era, when it was used, at least in part, to enforce a system of restricted, minimalist disclosure. Reg FD was passed by the SEC in October 2000, requiring public companies to broadly disclose information in a timely manner to all investors, not just selected favorites. (See detailed information at the SEC site http://www.sec.gov/rules/final/33-7881.htm.)

Today the conference call is a staple of corporate communications used by the overwhelming majority of public companies to cast an increasingly rich perspective on issues of greatest importance to CI professionals. Conference calls today feature in-depth, probing Q&A on financial and operating performance, competitive trends and financial projections, strategic opportunities and vulnerabilities, to name just a few of the common themes.

Conference calls are likely to continue growing in popularity, and the medium seems poised to take on greater informational value and analytical depth.   One reason for this is that greater transparency is increasingly seen as an important step toward restoring investor confidence.

Perhaps more importantly, recent SEC regulations such as Reg FD have placed fresh emphasis on full and equitable disclosure as a legal duty of public corporations. And since companies cannot disclose material information to the privileged few, it is in their interest to provide the richest possible disclosure in a public forum to minimize the risk of selective disclosure in the course of non-public dialogue with the investment community.


A bit of history

One could argue that before Reg FD, many companies did not make truly important corporate information (and management’s perspective on it) publicly available; rather, they reserved it for private conversations with Wall Street elites. What resulted was a system of tiered disclosure:

• Level 1: Bare-minimum, sanitized, mostly-factual information (essentially, the company’s “party-line”) was placed in press releases
• Level 2: Conference calls generally restricted to institutional investors and analysts, and provided more detail, more candor, less obfuscation.
• Level 3: granted access to the select few analysts and investors. This is where these companies engaged their preferred audiences in private discussions of information that really mattered – concrete earnings and revenue projections, trends in particular line items in balance sheets and income statements, upcoming developments.

However, even with the growing importance of the conference call as a disclosure and guidance medium, information overload is the major impediment to using this medium as a competitive intelligence resource.  The volume and complexity of material corporate information is increasing dramatically, as new regulations mandate greater transparency and broader dissemination.  And the limitations of the conference call’s audio format only complicate this challenge: you cannot skim an audio conference call or perform an automated search for the most relevant content.