How to build investor trust Featured

9:44am EDT July 22, 2002

We hear a lot about online stock trading these days, but are only beginning to learn how electronic communication is being used by publicly-held companies as an investor relations tool.

At Metatec International, our business is global information distribution. Therefore, we must — and do — embrace technology that fosters open dialogue with investors and helps them understand our business and our markets. Recently we successfully used the Web’s chat rooms and our own site to counteract highly charged opinions about Metatec’s performance when integration of an acquired company caused a temporary negative impact on profitability.

Some organizations harbor serious concerns about putting sensitive company information online, according to a recent survey of 500 companies conducted by the National Investor Relations Association. As a high-tech company, however, Metatec’s natural grasp of digital communication creates less inherent fear of using it for public interaction.

Having a definite strategy for proactive use of electronic communication and deciding ahead of time what we can and cannot do online lowers our collective corporate anxiety. It also creates an atmosphere that allows us to communicate freely within certain limits of the law and reason, thereby creating trust and strengthening relationships with investors.

Our experience with entering Web chat rooms is a good example. Many of these investor-run chat areas became hotbeds of contention and cynicism when Metatec recently experienced a dip in profitability due to infrastructure investment and the acquisition of a former competitor, Imation Corp.’s CD-ROM business.

Our corporate communications department stepped right into the fray and clearly explained the situation from management’s perspective, inviting questions from the chat room community.

The invitation to open communication burst the negativity bubble almost immediately, and many investors not only came away with a new understanding of Metatec, but also an elevated opinion of the quality and dedication of its people. Even Metatec’s legal counsel praised the program as an example of fair and equal disclosure and a good method of impartially and equally disseminating information.

The chat room experience gave birth to the investor’s Q&A column on the Metatec Web site (www.metatec.com), one of our most successful communication programs. Investors e-mail questions to Metatec and quickly — typically within 48 hours — receive forthright, no-holds-barred answers that are posted online. Metatec also operates an investors hotline and I participate regularly in analyst conference calls that are also available on the Web.

Before implementing this more open contact program, Metatec only received occasional calls and sporadic inquiries from current and potential investors. Now, those inquires have climbed to two or three a week, most with multiple questions about everything from performance results to the implementation of new technologies in our business.

To be sure, participating in the sometimes unpredictable Internet dynamic can be a double-edged sword. Communication must hew to SEC rules, be swift, responsible and measured, and, ideally, emanate from an investor relations or communications officer.

However, we must remember that in a world in which information is increasingly decentralized and accessible, people rely less on “expert” opinion and more on direct experience. Companies meeting the possibilities and perils of broadband communication head on and with foresight stand to prosper most.

Jeffrey M. Wilkins is chairman, CEO and president of Metatec International, based in Dublin.