ROBERT PESTON: Inside out

ROBERT PESTON: Inside out - I recently needed some financial information on shipping group P&O and instinctively turned to the internet and the company's web site to find it. Typing 'PandO.com' would surely take me there. But, lo, I was offered an exc

by ROBERT PESTON, editorial director of Quest (www.csquest. com)E-mail: rpeston@collins-stewart.com.
Last Updated: 31 Aug 2010

I recently needed some financial information on shipping group P&O and instinctively turned to the internet and the company's web site to find it. Typing 'PandO.com' would surely take me there. But, lo, I was offered an exciting range of artificial limbs from Prosthetics and Orthotics Inc.

I then played around with every possible combination of P&O's name, but to no avail. Eventually, I resorted to old technology and rang the company - to be given the address 'P-and-O.com'. Now, why didn't I think of that?

The web will one day revolutionise the relationship companies have with their shareholders and potential investors, and with their employees. But very few companies seem to be making the most of this distribution channel. On the whole, their web sites range from the muddled through to the irrelevant, to plain dull.

Take BT's web site, www.bt.com, which contains vast amounts of information. I turned to it when looking for the number of mobile phone customers it has worldwide. This is an important statistic, because it is possible to put a price on each client and aggregate these to produce a value for its wireless business. It is in BT's interest to highlight this number, as it can be used to demonstrate that the company's shares have been chronically undervalued.

But try as I might, I could not find the number. I scoured a series of pages of 'Facts at your fingertips', to discover that 'BT operates around 144,000 public payphones in the UK' and that the 'first coin-operated phone box was installed in London in 1906'. All very fascinating, but hardly key investment metrics.

Once again I resorted to the telephone and spent two days talking to BT's press office. Eventually, one of its PR people established that the relevant numbers were indeed on the web site, hidden away in an online presentation to analysts. Without his help, they would have been impossible to find.

It is arguable that BT's web site is an accurate reflection of BT's culture. The picture it gives is of a company obsessed with its public-service past and very confused about its commercial future. But this is not the image that BT's board should want to project to the world.

I figured that Vodafone's web site would be vastly better, since this company has run rings around BT in worldwide telecoms markets over the past few years. But www.vodafone. com also left much to be desired. Like all the best web sites, it has a 'frequently asked questions' section. I reckon that the most frequently asked question is 'will mobile phones give me brain cancer?' A confident company would tackle this head-on in its main point of contact with the outside world. Not Vodafone.

My fundamental criticism of most company web sites is that they are unimaginative. What companies have done is to take their published literature and dump it on the net. Thus, countless annual reports can be found in PDF format - hardly a leap forward in communication with the outside world.

A bold company would host discussion groups of its shareholders; provide frequent updates on company trading, subject to stock exchange listing requirements and company law; provide regular online Q&A sessions with senior executives and directors; supply background information on industry developments; and provide links to third-party commentary on the company.

Some companies provide a few of these services. None that I can find provides all. The general inadequacy of sites has been highlighted by Merchant, part of the Brunswick PR group, which advises clients on the content and design of their investor relations communications material.

In association with ProShare, the private investor lobby, Merchant has developed a corporate web site benchmark, identifying 76 elements necessary for the perfect site. It has also looked at the web sites of the FTSE-100 companies - with depressing results.

Less than half of all FTSE-100 companies gave a compelling reason for investing in them; only 5% stated whether data on the site was audited; only 20% gave information on managers below board level; more than a fifth gave no information on their prospects; 60% provided no links to outside commentary; almost a third had no separate page on vital financials.

The web is hardly new any more, so this is unimpressive. Forward-looking businesses have an opportunity to form a closer and deeper relationship with their shareholders. And the prosaic benefit should be a reduction in their cost of capital, since a clear correlation exists between shareholders' confidence in management and share price performance.

Meanwhile, I direct the BT board to one of its online fingertip facts: 'The phrase 'the penny's dropped' dates back to the days when operators waited for callers to put a coin in the public payphone box before connecting to their call.' Don't tell us the origin of the expression, just demonstrate that it's happening at BT.

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