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Spoon feed analysts public information

This should not have been a surprise to me, but I was shocked when I first started dealing with analysts as an analyst relations (AR) professional with the number of analysts who never bothered to check my company’s public information. Yeah, it was OK that they never read the marketing content on the website. But they also never perused the quarterly financial statements even when they were basing part of their analysis on the financial strength of my employer and very visibility stating the “facts.” Here is an example. 

A Gartner analyst sent me a courtesy review copy of slides for an upcoming Symposium presentation. One the statements on the “Challenges and Strengths” slide was that the margins for a particular business were a “challenge.” Huh? This particular division had consistently improved its margins – year-over-year and quarter-to-quarter – for ten straight quarters. What was going on? That was when the light bulb went “Click!” for me. The analyst had not read the quarterly statements. So I put together a simple table that extracted a few relevant financial facts for the business group going back four years. It showed the challenges the business had early on, but then it illustrated the consistent, never wavering progress for 2.5 years. After reviewing the simple table consisting of public information, the analyst moved margins from “Challenge” to “Strength.”

That was a win for AR, but it outraged me that a former colleague was making public speeches about a company without bothering to check the facts. Yes, perhaps this was a bit naïve of me. Once I took a few deep breaths and calmed down, I set about spoon feeding this analyst and the other Gartner analysts in the same research area the basics about this particular business group’s financials. Every quarter I would add to the aforementioned table the facts about the business group’s financial performance. Then I would extract from the press release and public transcript of the earnings call, those statements about the business group that were made by the CEO and CFO. There was no NDA information and nothing that was not available on the investor relations page. After I got the rhythm down, it would only take me a few minutes to do. But once I started spoon feeding this public financial information to this particular analyst team, problems that we had been having disappeared.

Unfortunately, this was not an isolated incident with a particular group of analysts. I started finding more examples of analysts from many firms who admitted during client inquiries that they had not “got around” to checking the relevant financial facts. This then launched a regular program of extracting key financial information for specific parts of the company and sending different extracts to different analysts based on their coverage – leveraging the “Personalized Outreach” aspect of the Analyst Hierarchy of Needs.

Analysts that do not seek out public information are one type of Problem Analyst that confronts AR teams. Luckily, this type of Problem Analyst can be easily resolved by spoon feeding the analysts information that they should seek out themselves.

SageCircle Technique:

  • Never assume that an industry analyst is reviewing relevant public information
  • Develop a program to spoon feed relevant facts to analysts
  • Schedule inquiries to confirm that the analyst received, reviewed and absorbed the information. Do not ask “Did you read the email” in a confrontational manner, rather use the inquiry to ask their opinion about the data. Knowing this question in advance typically leads the analyst to review the information in order to be prepared.

SageCircle Advisory clients can schedule an inquiry to discuss setting a program of extracting public information for analysts and see examples using financial statements.

Bottom Line: Even experienced AR professionals can fall into the trap of Myth #1: Analysts know Everything and not think to provide analysts with relevant public information. It is critical that AR review their company’s publicly available information, extract it and send it to top analysts. While annoying, this technique reduces the possibility that analysts will make ill-informed statements about your company.

Question: What are your examples of analysts making pronouncements that were clearly created without using publicly-available facts?

Related problem analyst posts:


5 Responses

  1. Hang on, if we in AR do the analysts’ job, can we have a pay rise and also have the right to edit what they write up?

    More seriously, I feel over the last few years there has been more pressure in some firms on analysts to churn more reports and that translate into the fact that they collect facts by sending questionaire around.

    For a MQ or a wave, we’re being sent now spreadsheets sometimes over 20 pages to fill. While I understand that part of it is due to a more rigourous methodology to answer vendors concerns, it results in much of the research work being pushed to the AR teams. Some firms painstakingly verify the information while others just accept what they get from vendors.

    And then, we have to buy the report back… Isn’t it ironic?

  2. […] Where lies the boundary? Posted on Wednesday 27th August 2008 by Ludovic Interesting post by Carter Lusher from Sage Circle lasty week: Spoon feed analysts public information « SageCircle Blog […]

  3. There’s a responsibility angle to this question but there’s also an impact question. There’s no doubt that the professional analyst should be reasonably expected to have a very broad grasp on publicly available information and also be plugged in to channels that gives them insights into things that aren’t necessarily publicly available. However, what’s the impact if there are gaps in their knowledge base? To the analyst, at least in the short-term, there’s very little consequence. In client situations they can bluff, hide or otherwise compensate for gaps in their knowledge base. Heck, they can even acknowledge it. We’re only human (contrary to popular opinion) and there are going to be gaps. So we can skate on by. Conversely, what’s the impact to the vendor and the AR professional? For the vendor, it can be significant, leading to a misrepresentation of the vendor’s position or equally bad but more sinister, the omission of the vendor from consideration in contexts where they should have had consideration. For the AR professional, the consequences can be personal. Answering “how could the analyst not know about blah” is an uncomfortable position. You may be totally right that the analyst should have known about it but if you didn’t personally assure that they did and in a contextually relevant fashion (you knew they were writing the report, didn’t you), then your job perception is at risk.

    So clearly it’s the analyst’s responsibility…and the AR professional’s risk. In that setting, it’s pretty clear where the real burden lies.

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