MicroStrategy to Bar Reporters From Annual Meeting
By Ilaina Jonas Wednesday June 14 5:31 PM ET
NEW YORK (Reuters) - MicroStrategy Inc. (NasdaqNM:MSTR - news), the software company whose recent stock collapse after restating its earnings made tabloid headlines nationwide, will try to limit further public scrutiny when shareholders gather Monday for its annual meeting.
In a move called unusual by investor relations experts and corporate law specialists, MicroStrategy has banned reporters from the meeting. Only shareholders may attend the June 19 meeting in Herndon, Va.
``It's not going to be open to the press,'' said Michael Quint, spokesman for the Vienna, Va.-based company. ``That's just the decision that we've made.'' He would not elaborate.
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Although many companies don't open their annual meetings to the general public, MicroStrategy's press ban is an uncommon move, said Louis Thompson Jr., chief executive officer of the National Investor Relations Institute, or NIRI. ``It's fairly unusual to close it to the media,'' Thompson said.
Others said the move creates the perception of trouble.
``It's not a good sign,'' said Frank Goldstein, a partner with the Washington law firm Brown & Wood who has represented shareholders, companies, dissident shareholders and independent directors. ``You can't have a thriving healthy company and be cutting off the press. It simply signals your company is in difficulty. In the end of the day, it generally does you more harm than good.'' COURTING, THEN SHUNNING THE PRESS
MicroStrategy was warm to the media when it was a hot property -- a tech high-flyer, a darling of the Nasdaq with a stock price that topped out at $333 in March, up nearly 2,900 percent from a June 1999 initial public offering price of $12.
Chief Executive Michael Saylor courted the public and the press, appearing on ``60 Minutes'' and in a Newsweek profile.
And in March, amid aggressive publicity, he unveiled plans to donate $100 million to launch a free online university to reach millions of people worldwide.
Then on March 20 the roof fell in.
That day, the company said it would restate its earnings for the past two years -- cutting its 1998 profit by more than half and restating 1999 from a profit to a loss -- to rectify past revenue recognition practices.
In one day, the stock lost more than 60 percent. Saylor was dubbed by one tabloid as ``the $6 Billion Man'' -- his personal loss for one day.
Shareholders filed lawsuits, and the Securities and Exchange Commission began an investigation into the matter.
MicroStrategy shares closed Wednesday at 42-1/4, down 9/16 on the day. The stock has rallied somewhat since bottoming out around 17 in May -- down 95 percent from its March high.
At the meeting the company will ask stockholders to approve PricewaterhouseCoopers -- the same accounting firm that audited its previous earnings statement -- as its independent auditors for the current fiscal year.
Representatives from the accounting firm are scheduled to answer stockholder questions at the meeting, according to the company's proxy statement. THOUGH OFTEN PERFUNCTORY, SHAREHOLDER MEETINGS CAN GET TESTY
Annual meetings generally are forums for managers to discuss their companies' performance and for investors to ask questions. Many attract little attention and most come off without a hitch.
But on occasion they can be scenes of protest and shareholder disharmony. Sometimes companies circle the wagons, but still let reporters in, even if they don't welcome them.
Last month, AT&T Corp. (NYSE:T - news) executives wouldn't meet with reporters, a reversal from the previous year when its stock was 28 percent higher and Chairman C. Michael Armstrong presided at a press breakfast, extolling Ma Bell's rosy future.
In April, at tobacco king Philip Morris Cos. Inc.'s (NYSE:MO - news) shareholder meeting, reporters were barred from talking to shareholders and movements were restricted at the meeting.
Federal securities rules do not require companies to open their meetings to the public. Virginia, MicroStrategy's home state, also has no rule governing access beyond shareholders.
Still, many companies now broadcast annual meetings over the Web to reach far away investors, NIRI's Thompson said.
Quint, MicroStrategy's spokesman, said only shareholders attended last year's meeting. The company, whose stock had not yet begun its meteoric rise, had not yet caught the press's eye, and no reporters asked to attend.
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