Five impacts of Mobile that IR people just cannot ignore
By Rodrigo Garufi - Investor Relations Consultant, MZ Group - IRGR‘s Global Coordinator
That smartphones and tablets are revolutionizing the world is no news but do you have the faintest idea about the pace of this transformation and its impact on the investor relations programs of companies? First, let us analyze the results of three important recent surveys, which serve as the basis for this article:
2- In Brazil, smartphone sales have been practically doubling each year - totaling 4.8 million in 2010 and 9 million in 2011, while estimates for 2012 put sales at over 16 million. According to the International Data Corporation (IDC), if the current growth pace continues, Brazil will be the world’s fourth top nation in number of smartphones by 2016. The same is the case with tablets. To put things into perspective, user acceptance was twice faster for the iPad than for the first iPhone model: it took just 50 days to reach the mark of 1 million iPads sold, compared to about 100 days for iPhone. In addition, it is estimated that more than 140 million tablets will be sold worldwide in 2013, which is practically the number of desktops.
3- The annual survey conducted by IR Global Rankings found out that companies are rapidly adapting themselves to the new electronic platforms in two ways: (i) first, by adopting practices that deal with social media by creating communication channels with these devices and monitoring techniques; and (ii) second, by creating applications known as "Apps", targeted at investors and the market, as well as annual reports.
But how are investors and companies reacting to these changes?
1- Greater access to information - more precise data, more companies, and greater depth: Companies around the world are providing increasingly more information while, at the same time, search mechanisms and databases focused on collecting financial information are becoming increasingly more consistent, precise and accessible. Therefore, instead of guessing that information requested during a meeting, make your life easier and access the IR App of your company. After all, the App was created exactly for this purpose, wasn’t it? If you don’t find the information you were looking for, at least you ended up thinking of information that should have been available in the application.
2- Speed, speed and more speed! Social media, forums and high frequency trading all have the same objective: dissemination and use of information at very high speed. The choice of whether or not to join the social networks simply does not exist. Your company is there, investors are posting their comments with or without the presence of and monitoring by the investor relations area. Also, did you notice that brokerages offer trading platforms for all types of smartphones? Yes, it’s true. There are investors who no longer wait for the meeting to end to decide on what to do with the equity.
3- The demise of paper: companies are increasingly disseminating their presentations through electronic means. Individual meetings presented 100% through electronic means are already commonplace. In fact, even group meetings are held 100% electronically. We are reaching a point where for financial market professionals, not owning a table is akin to not having a mobile phone ("What do you mean he doesn’t have a tablet? Are you sure he works for an investment fund?" an incredulous sell side analyst once asked). There are systems, such as Boardvantage, which have simply eliminated paper at Board meetings. Gone are the days of the mad rush to print and bind the voluminous books of Board meetings’ minutes. Now, all one has to do is upload the files and the Directors’ tablets get updated with the latest information, anywhere in the world with a single Internet access. All this more quickly, easily and safely than if it were through the ‘motoboys’ (bike-riding couriers).
4- Increase in coverage: Though practically all market players complain about it, the increase in coverage is on the path of no return. Both the sell side and buy side analysts have truly expanded their coverage universe in terms of both companies and sectors. For some, this increase represented a certain ‘juniorization’ of the investment analysis and portfolio allocation processes. Only time will tell if this theory is right. But one thing is for sure: companies that earlier had no chances of sell side coverage or of appearing on the radar screens of many investment funds are now enjoying their place in the sun.
5- The new mainstream: The São Paulo-Rio de Janeiro-New York-Boston-London circuit, as it is right now, is still far from change in terms of visits to large investors by Brazilian companies. Nevertheless, many investment funds have become more accessible, thanks to the factors described above. Whoever was bold enough in their IR planning will certainly not regret visiting funds based in Chicago, Los Angeles, Santiago, Frankfurt, Edinburgh, Hong Kong, Singapore, Seoul and Tokyo or even (and why not?) Porto Alegre! Remember: planning sufficiently in advance makes travel-related operating expenses a lot cheaper.