As something of a counterexample, consider Vitesse Semiconductor. I was with Vitesse for a few of their rockiest years, when the company disclosed that they had been backdating employee stock options and had some past financial accounting problems regarding revenue recognition. (I left the company early this year because my job had moved to California, and I didn't want to move or commute.) This led to the company failing to file public financials for a couple of years because they needed to restate so many of their past financial reports. As a result, the company was delisted from NASDAQ and remains on the pink sheets. The former high-flyer of the late 90s, whose stock price exceeded $100, is now trading for less than $1.
Now, many companies got caught up in the options backdating scandal, and for various reasons most of these companies were not hit has hard as Vitesse. But at the end of 2007, I believed that Vitesse had survived the worst of it, that they were close to restarting public financial announcements and, most importantly, they had a strategy for growth and profitability into the future. So at that time, I bought a bunch of shares of the company at $0.84 per share.
The company finally released public financials at the end of September. Those financials showed what I had anticipated, that the company was on the road to recovery. Yet yesterday, the company's stock closed at $0.18. Even if we consider that the broader market is down say 50% in the last couple of months, that might mean the company would otherwise trade at $0.36.
What's happening? More importantly, where's it all going?
That's exactly the problem, there's no real way to know. The company website only has product releases and announcements of upcoming investor presentations, and not very many of either of those. Yet I suspect lots of things are going on within the company that people would like to hear about. Where's the forum for sharing or discussing that information?
Well, there's always the finance discussion boards, like this one on Yahoo Finance. But these finance boards are just full of people shouting epithets at each other, or pumping the stock. That's not what I'm talking about.
I'm not even talking about financial information, necessarily, but product information, technology and market discussions, application stories, or the company's view of the world. What did they learn at their last trade show? What does the company want to be when it grows beyond this current financial mess? That's all opaque to an outsider.
In that thundering silence, the stock continues to plummet.
There are lots of technical tools available, including blogs, forums, or podcasts. Why doesn't CEO Chris Gardner podcast? Or Tony Conoscenti, VP Product Marketing, Martin Nuss, VP Technology and Strategy, or CFO Rich Yonker? A biweekly podcast would be a great way to demonstrate leadership and reengage with customers and investors.
Vitesse used to be a dominant leader in their space and still has some strong capabilities. By improving their external communications, they could begin to reestablish thought leadership.
There are several marketing agencies helping companies like Vitesse to redefine external communications beyond traditional PR or, more broadly, to establish communities. One local one is Room 214, who appear to be doing some pretty cool community things. How do I know? I don't for sure, but that's the feeling I get from their blog.
Because they're communicating ...
2 comments:
According to the Pew Internet Study, less than 19% have downloaded podcast and less than 3% on a regular basis. While blogs and podcasts are effective in reaching the "plugged in" people, the channels may not be the sufficient. The bigger problem is having a conversation with the silent majority who simply vote with their dollars instead of talking to you.
Thanks for the comment, Rags. I agree that podcasts are a narrow channel.
In the case of Vitesse, however, I believe it would be an effective channel to at least their investor community. For a relatively small company, they have a fairly involved investor base. In fact, their investors established their own website in the absence of communications from the company. You can see it at http://vitesseinvestor.com/.
For the broader community, including customers, a blog on these same topics could be quite effective.
In the absence of a company voice, their market will fill the silence, and not necessarily in the best interests of the company.
Tracy
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