That Posting From the CEO Actually May Be Legitimate
By JASON ANDERS and CARRIE LEE
THE WALL STREET JOURNAL INTERACTIVE EDITION
It's no surprise that many corporate officials pay
attention to what investors are saying about their companies in online message boards. And though some public-relations firms counsel their clients to steer clear of the rumor-filled and often nasty online discussions, executives are increasing logging on to talk directly with investors. Consider David N. Kunkel, an executive vice president of PSINet, a big Internet service provider based in Herndon, Va.. He started posting comments on boards devoted to PSINet on Silicon Investor (http:www.techstocks.com) and Yahoo (quote.yahoo.com)a year ago as a way to get the company's message out to investors at a time when its stock was struggling."We've got a lot of information that gets put out on the Street. But the individual investors ... weren't getting the message. They weren't getting the same quality of information that the analyst community was," he says. Mr. Kunkel has become so faithful to online participants that he found himself posting messages on Thanksgiving Day this year."Telecomguy, I had some information for you on gross margin, and misplaced it," he wrote on Silicon Investor, referring to a participant by his online handle. "Have not forgotten. Am home with family and turkey, so I won't get it until next week."
The appearance of executives from established companies like PSINet on message boards is a bit of a departure from what has been seen in recent years. While tiny, speculative companies -- including many whose shares are quoted only on the loosely regulated OTC Bulletin Board -- have used message boards to promote their stocks, larger companies steered clear. Among executives who have joined Mr. Kunkel in the online realm: Delbert Yocam, chief executive of Inprise, a Scotts Valley,
Calif., software firm formally known as Borland International;
Russell Horowitz, CEO of Go2Net, the parent company of Silicon
Investor;
and Peter Q. Davis, chief executive of the Bank of Commerce in San Diego. Mr. Davis posted a message at the Motley Fool site within America Online in September reassuring investors who were
smarting from a nearly 50% drop that the bank's stock suffered
during the summer. "There are no problems ... that would
account for the stock's recent drop," he wrote at the time. Mr.
Davis says his postings never stray beyond what has been previously disclosed in press releases, and all are reviewed by a
lawyer. Richard George, a director with the Public Relations
Society of America in New York, says companies can expect an
enthusiastic response when they reach out via the Net.
"Any time you have a well-trained, high-ranking official in a
company that's willing to participate in a forum, it's a positive for the company," he says. "Good public relations is a two-way street." Still, many public-relations firms still advise clients
to avoid the boards. "To engage in the discussion can be very
problematic," says Josh Pekarsky, a partner at Kekst & Co. in New York. A company that decides to answer innocuous questions can be drawn into difficult situations. "So many of the
questions are wild or speculative. Then, if you don't answer, people interpret [that as a tacit reply] and act on it. It's a very slippery slope." Kekst at times has advised clients to get involved in message boards, in a limited way. In one case, a client beset with what it viewed as inaccurate message-board matter posted a message advising readers to visit the company's Web site for official information. Others shun insider participation under any circumstances. "We absolutely would advise our clients not to. You just don't know what participants'] interests are," says Herbert Corbin, managing
partner with KCSA Public Relations Worldwide, in New
York. Mr. Corbin says KCSA monitors chat groups and message boards for its clients, but doesn't respond to them.Investors, of course, also face risks in believing posts that are signed with the name of a corporate executive. Because of the anonymity of the Net, there is no easy way to tell if the posting is legitimate. Meanwhile, some companies have tried to steer the online discussion in a more covert way. Tim Smith, a manager at
NRW Interactive, a unit of Niehaus Ryan Wong in South San
Francisco, Calif., says his firm trolls the boards for discussions about clients, and then sometimes feeds information to the clients' online defenders. The hope is that the companies' champions will, in turn, post that positive information on message boards. All of this hasn't stopped the online world from paying attention. A posting from a company executive can be viewed as something of a hidden jewel on the boards, offering the hope of inside information. To keep track of these sightings, a message board was created on Silicon Investor for participants to swap stories,called "Companies Whose Management Post to SI."
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