In the current economic climate, reaching an international audience of investors has become even more important for US-based companies.
Advanced Micro Devices (AMD) has made its name on processors and chip sets that make consumer electronics and other technologies work quickly and efficiently. Despite the fast-paced digital industry in which AMD operates, the international IR effort at the company has been much more deliberate.
"We run a targeted program that is... much the basis of our IR outreach, which is US-centric and Europe-centric mostly," says Ruth Cotter, director of IR for AMD. "We've been slower to market in Europe than I would like, but we want the US to be up to speed."
Cotter has been with AMD for more than six years, and had originally planned on making an IR push into Europe after two years with the company. Instead, AMD's entrance into Europe was made three years ago, when it was determined that the efforts in the US had created what Cotter calls a "care and maintenance shareholder program" that met the company's standards.
In 2003, AMD hired Thomson Financial to help devise its targeted program - one that would keep existing relationships with investors and execute an in-depth analysis to find potential ones based on a number of criteria, such as valuation of AMD versus broader market indices and versus its peers. Applied to its international aspirations, the shortlist of current targets includes AXA Investment Management and Barclays.
Fact-finding trips abroad were the first step, but with only 3% of its investors based in Europe at the outset of the effort, the company's ultimate goal was - and still is - steady growth of that percentage.
"[Our investor base] is never going to be a 50-50 balance, and that's never going to be a goal of ours," Cotter says. "But if we had closer to 25%, we would be... happy."
As globalization has shrunk the size of the world, the IR efforts of some of the world's companies have expanded, widening a business' actual and potential investor base. American companies are turning their sights beyond the US borders, frequently to Europe where money is more plentiful, given this country's current economic tumult, and the investment approach is less frenetic.
In the midst of the global movement of investment dollars are the IR pros working to foster relationships and turn international prospects into investors. IR programs that travel abroad must be both earnest and strategic, taking into account differences between cultures and investment styles.
"In the US, there's a neurosis of quarter over quarter," Cotter says. "In Europe, they talk about the three- to five-year story; what's on the horizon, the markets, strategy within the corporation, [etc]. In the US, with the hedge funds, people tend to talk on a one- to three-year horizon. Even with the long-term [investors], it's a 12-month horizon. The European focus has helped with stabilizing our shareholder base."
AMD's entree into the European investment world was eased by a few factors. Cotter is originally from Ireland, giving her immediate cultural insight, and the company has manufacturing facilities in Europe, so some of its targets were already familiar with the company.
"Computers are something people use every day, so it's... easier for people to understand our story," Cotter says. "The advantage is people are already familiar with our product. There's definitely brand identity."
But perhaps, most importantly, the growth of London as the financial center of Europe has made it so that trips overseas can be handled with increasingly less travel.
"Our approach is very proactive," Cotter says. "We try to share as many things that we do with as many people as possible. The centers we need to visit are actually decreasing in Europe."
Cotter and other members of the AMD management team make two trips per year, splitting the continent into two regions with London as the base: The north includes London, Dublin, Edinburgh, and Oslo; the south includes London, Frankfurt, Geneva, Zurich, and Milan.
Surprisingly, keeping in line with US regulation when venturing out has not been an issue for AMD. As a US-based company, it is bound by Sarbanes-Oxley (SOX), Reg-FD, and other federal rules, and the international audiences it has been communicating with don't react negatively when those constraints come up in conversation.
"Overseas, the investor base is... sophisticated and up to speed on SEC regulation," Cotter says. "When we leave the US, we behave the same way we do in the US. It's interesting too - they understand when you can't or won't answer a question, whereas in the US, you have to point out the regulatory restrictions."
As the quest to increase the company's European investor base continues, there have been both domestic and international antitrust issues involving its competitor Intel. The FTC's recent investigation into Intel was influenced by a lawsuit filed by AMD. Cotter notes that it is a topic that comes up in some investor meetings, both domestic and international, but that the company sticks to the message that it is not looking for any special treatment, only for antitrust laws to be enforced. And, the company is in "recovery mode," according to Cotter, after a year lacking in new product launches.
"2007 is recognized as a year where AMD had execution missteps," Cotter says. "We've had to readjust our story, re-evaluate targets, and then go and reach out."
Gillian Karran-Cumberlege, a partner with the Brunswick Group who heads up the IR practice in the UK, says the firm is seeing more US companies looking for international shareholders, but US businesses largely have a different goal from those in other countries.
"In many ways, I think IR has always been cross-border for a majority of markets outside of the US," Karran-Cumberlege says. "UK IROs have always looked to the US and had to contemplate how to target US investors. Companies taking a listing for the first time in the US or UK are listing more as a passport to belong to the international community. They're demonstrating that they can comply with international standards. US companies are actively looking for capital outside the US."
While the firm says that SOX has deterred some investors from coming to the US, building personal relationships and being mindful of varying concerns among investors is really where strategy comes into play for global IR.
"Overseas can be more of a stakeholder approach," says Steven Milunovich, a Brunswick Group partner that handles IR in the US. "Investors here are still pretty bottom line. Overseas, it's a little less pointed, focused on [things like] CSR, employees, and unions. US companies... have to be prepared."
Conversely, for foreign-based companies trying to get into the US investment community, credibility is paramount. In fact, zeroing in on US regulations might be a good thing.
"The way to eliminate trust issues is not to have them," says Tom Rozycki, head of CJP Communications' IR practice. "The regulations that the New York Stock Exchange and the Securities and Exchange Commission initiated are a good way to build that trust. We've counseled our clients across the board that the most stringent standard that exists is the one you should aspire to."
WeissComm Partners and its client, Progenics Pharmaceuticals, had to work within the confines of both the federal regulatory rules and drug regulations when it began taking its IR campaign international to introduce Relistor, a new drug that treats opioid-induced side effects.
Progenics has been going to Europe to speak with investors since 1993. Yet, no matter the audience, as a US public company, it is bound by US regulations. Moreover, once a drug is approved by the Food and Drug Administration, the company must speak about the drug based on what the label says.
However, working with pharmaceuticals gives the company a reason to sit with investors, domestic and abroad, to explain the details about Relistor. The firm and company can also use third-party expert opinion. Positive results published in The New England Journal of Medicine, for instance, can go a long way.
"Every investor has a different level of... understanding, and being able to sit down with a scientific adviser in Europe is much appreciated," says Richard Krawiec, PhD, VP of corporate affairs for Progenics.
A company with a $500 million market cap, Progenics capitalized on its relationship with its Relistor corporate partner, pharma giant Wyeth, to get the word out to investors overseas beginning May 2007.
"Our goal, and one that WeissComm has helped us with whenever we mentioned this product, is that Wyeth will get the lion's share of the mention, but we want 'and Progenics' [mentioned too]," Krawiec says. The company has gotten coverage in The Wall Street Journal because of the relationship.
In addition to media outreach and in-person visits at road and financial shows, Progenics has used technology to talk with overseas investors. The team has executed several webcasts and is planning satellite symposia and presentations to be held in the next year or two.
Normally, cost can cause problems for small- and mid-cap companies. AMD's Cotter pointedly states: "If you're a smaller company and you're challenged with your resources, I would recommend reconsidering whether you need an international program."
However, The Investor Relations Group (IRG), which deals exclusively with IR for companies with market caps below $500 million, both inside and outside of the US, found ways to overcome resource shortcomings through technology.
"We work on targeting through the media and heavily utilizing the Internet and worldwide releases," says Dian Griesel, CEO of IRG, which works with companies such as Easy Link and Digi. "We work the Internet, [which] has made reaching the world so much easier."
Though many companies concentrate IR efforts on the US and Europe, it would be remiss to ignore emerging markets like China. Many of the IROs spoke with said that explaining the rules of the US financial game poses one of the biggest hurdles for these novice companies. There's also the issue of differing communications styles. Ogilvy PR says it handled 10 Chinese IPOs in the last year and it has a few more on tap for this year.
"We're seeing a pipeline there, helping them navigate the US capital markets," says Thomas Smith, SVP of IR at Ogilvy. "We're helping them with full transparency and messaging to US investors. It is a challenge with some international companies... with cultural issues and language barriers you have to overcome."
And certainly, US companies are looking to get a foothold in these far-flung countries that are watching their fortunes grow.
For some companies, conquering Asia is still a long-term goal.
"We're privileged to be located in Silicon Valley," says AMD's Cotter. "We get a lot of traffic... from Asian bus tours that come through. My expectation is that Asia will take a long time. I'm guessing we can have this conversation in five years."
International IR Issues:
Many international investors are not used to the more direct, aggressive nature of US hedge fund professionals. US investors also tend to focus on short-term goals versus the European inclination to think three to five years into the future
Many in the financial world know the US has strict financial guidelines. However, talk about a global accounting standard is mounting. Recently, a New York Times story looked at a possible US federal proposal intended to make the US a more desirable place to invest, but, critics say, would weaken rules that were passed because of Enron-like malfeasance
With fuel costs at an all-time high and every investor's desire to come in contact with an organization's management, international IR can be expensive. Technology, like videoconferencing, webcasts, and even a robust corporate Web site, which some experts say attracts more investors than other visitors, might be the answer