NEW YORK: As the US stock market remained closed for a second straight day on Tuesday, IR and financial communications executives were busy helping companies devise contingency plans.
Some companies, including Pfizer, Thomson Reuters, and McGraw-Hill decided to postpone their third-quarter earnings reports to later this week because of Hurricane Sandy.
Delaying an earnings report requires detailed communications plans, said James Palczynski, senior MD at ICR. For example, a company has to coordinate with the exchanges, the wire services that issue earnings releases, the companies responsible for filing SEC documents, and teleconference providers, as well as updating the public on its intentions, all within an adequate notice period.
Palczynski said ICR generally advised its clients to postpone earnings reports to ensure that all analysts, investors, and other interested parties could participate. One analyst on the East Coast was trapped at home after the storm because of a fallen tree in his driveway, Palczynski said, and many others experienced power outages or mass-transit shutdowns in cities such as New York and Washington DC.
“Investor relations is about numbers and getting value out of stock, but it's also about people and how helpful you are to Wall Street,” Palczynski said. “Delaying an earnings call to make sure everyone is able to participate goes right to the heart of that. You would never see an earnings report on a Saturday or a holiday because the market is closed and it wouldn't be efficient. A short delay is not a big deal.”
Yet other agencies helped clients, especially those based in other regions, proceed with earnings reports on Monday and Tuesday despite an international market slowdown because of the storm. Ford and MetroPCS were among the corporations that reported earnings on Tuesday. Some companies included statements in their earnings releases assuring investors that they remained accessible during the market close, said Claire Koeneman, EVP at Hill+Knowlton Strategies.
“I think people understand the gravity of shutting down because of safety reasons,” Koeneman said. “We really haven't seen a huge downfall [in trading].”
Dix & Eaton advised many clients to proceed with earnings reports and continue business as usual because of employees' ability to work remotely, said vice chairman Keith Mabee. On a couple of earnings calls Tuesday morning, participation was strong, he said. Investor activity remained robust early this week due to many companies falling short of earnings expectations, he added.
“Because more companies have missed earnings expectations this quarter, people are concerned and looking for underlying trends. It has led to more questions and more probing,” Mabee explained.
The New York Stock Exchange, NASDAQ, and BATS Global Markets said the stock market will reopen Wednesday. IR executives predicted volatile trading activity for the rest of this week because of a confluence of factors, including recovery from Hurricane Sandy and the impending presidential election.
“There's a lot of pent-up trading demand. It could be a really interesting and bumpy week,” Mabee said.