NEW YORK: Tyco International's chief financial officer Mark Swartz began a recent weekly conference call with investors by announcing smugly that the company's last few conference calls had been a bit "boring,and this would be the last call until Tyco announced its quarterly earnings in two weeks.
His statement was tantamount to a boast that Tyco's crisis IR strategy has been considered a success. The Enron-scarred company's weekly teleconference had been part of an approach - which the company developed jointly with Kekst & Company - designed to rebut Wall Street rumors that it was hiding accounting irregularities.
Those rumors, and some media reports, sent Tyco's stock reeling early in the year as investors adopted a "sell-now-ask-questions-later
mentality in the wake of the Enron debacle. However, since the weekly conference calls began on February 13, the stock has experienced much less volatility, and the Tyco rumor mill has slowed considerably. Indeed, some investors and analysts were recently heard moaning that the weekly exercise was no longer necessary.
"We were happy that one of our investors was recently on CNBC saying that they were now bored to tears by the calls,
Tyco's chief strategy officer Brad McGee, who heads the firm's in-house IR effort, told PRWeek.
"We think the boredom is a great sign that we have successfully answered the rumors, and now people are back to focusing on our fundamentals."
Tyco is a Bermuda-based conglomerate that manufactures an array of products, including security alarms and telecommunications equipment. Tyco also has a unit that lends and invests capital in other companies.
Tyco was especially vulnerable to rumor and speculation because of the complex nature of its diverse businesses, as well as its growth through acquisition. The firm has been known to make up to a dozen acquisitions a year, and its complicated balance sheet was a potentially easy target for rumormongers.
"Tyco is a complex company with some parts that many people don't completely understand,
said Jeffrey Corbin, managing partner at PR and IR firm KCSA Worldwide. "So I'm sure their IR people counseled them that it would be best to go through every issue with their investors in a proactive effort to talk more and answer the critics head-on."
The conference calls, which were hosted by CFO Swartz, each began with a prepared statement that attempted to rebut any rumors or reports that had emerged during that week. That was followed by a Q&A that saw questions from sell-side analysts, individual and institutional investors, and some of the company's most vocal critics. Among the critics were some Tyco short-sellers - speculators who had placed a bet in the market that Tyco shares would decline.
The company said it has suspended the weekly calls because interest has waned dramatically - the last few meetings garnered an audience one-twentieth the size of the first call. Nevertheless, Tyco said it's ready to reintroduce the calls if the stock once again falls prey to innuendo.