Nearly two months after suffering a devastating cyberattack, Sony decided last week to delay its earnings report – a move that IR pros say is almost never seen from companies of its size and one that would usually have negative implications for analysts and investors.
Sony said on Friday that it will miss a stock-market deadline for issuing its third-quarter results but will hold briefing sessions for the media and analysts on February 4, the original date scheduled for the earnings report. The company will only provide estimated figures for the performance of movie subsidiary Sony Pictures Entertainment, while all other divisions will report final numbers.
The company’s Los Angeles studio had shut down part of its internal network to prevent further damage from the hacking, which began in November and led to leaks of executives’ sometimes offensive and embarrassing emails and confidential employee information. Sony said in a statement last week that the financial impact from the hacks was "light."
Sony has asked authorities for an extension of the deadline for submitting final results from February 16 to March 31.
From an investor relations perspective, communications pros told PRWeek that Sony is handling the situation logically, transparently, and with adequate notice.
"Sony could have easily leaned on the fact that the whole world is aware of the attack they suffered and probably could have delayed this without putting any information out, so it is commendable they are actually going out there with some estimates," says KCSA Strategic Communications managing partner Todd Fromer.
ICR cofounder and CEO Tom Ryan adds that he does not see investors panicking in response to Sony’s decision.
"When a company is transparent about why they are delaying an earnings report, and the reason is understandable to investors, there doesn’t tend to be suspicion in the market that the company is hiding something or that something is wrong," he says.
That doesn’t mean Sony’s work is done. It must continue to provide information to investors until the final results are available, according to Devin Sullivan, SVP at the Equity Group
"The general risk in this situation is that you don’t give investors something to consider, and that is not what is happening here," he says.
Yet although IR pros say they agree with Sony’s decision, that doesn’t mean it is without risk. Generally, when companies delay earnings calls, there are negative connotations, explains Fromer. For the most part, the public expects numbers to be filed in a timely fashion and for those numbers to be "rock solid."
"If I am one of the major players in the entertainment and electronics industry and I know my peers and competitors are going to be reporting earnings, these are large sectors within the global financial markets," he says. "Having competitors’ numbers out there before yours could affect your company – especially if there is a general trend in those numbers."
Ryan adds that a delay can also put the credibility of Sony’s management at stake, which in turn can hurt a company’s market valuation. This could lead to investors selling their stock or panicking, creating volatility in the marketplace.
"This kind of delay doesn’t happen every day, so it can be something that riles the market if it is not handled properly," Ryan says, adding that although Sony has a good excuse this time, it "only gets one bite of the apple" to delay.
"If they were to extend it or change it again, that would create worries among investors as to the problems around the scenes," he says.
In the long run, communicating with investors about the company’s earnings results should be a secondary issue for Sony. Sullivan says the company’s main concern should be talking about how it plans to beef up cybersecurity.
"Sony should be focused on how material the impact was to their results and how specifically do they plan to address this or avoid any future disruptions," he explains. "They need to make it clear what type or scale of investment is going to be required to safeguard this from ever happening again."
A Sony representative could not be immediately reached for comment.
Sony’s response to the cyberattack also shows how IT security is fast becoming a greater focus area for companies. The way Sony handles it could be a blueprint for others facing similar circumstances, Fromer adds
"Sony has to set the precedent from an IR standpoint," he says.