For anyone who can't get there.................. Little Guys Can Get Big Picture
By Clicking 'Virtual Roadshows'
By ROBERT E. CALEM
Special to THE WALL STREET JOURNAL INTERACTIVE EDITION
Many individual investors have discovered the Internet as a good source
for company financial information.
But much of the relevant material that is
publicly available on the Internet is limited
to generic company profiles, stock charts
and other historical snapshots.
Traditionally, only Wall Street
professionals, such as brokers, investment bankers or mutual-fund
managers, have been able to get up-to-the-minute and forward-looking
financial data directly from company decision makers, at financial industry
conferences or at so-called roadshows -- in which company executives
take to the road to promote their firms to professional investors.
Now, however, some finance-oriented sites
-- including Direct Stock Market, DirectIPO
and Wit Capital -- are aiming to correct the
imbalance by allowing small investors the
same kind of access to company
presentations given to professionals, including
industry conferences and so-called virtual
roadshows that feature on-line audio or video
presentations.
Some of these presentations are archived, but
a growing number are being offered in a
real-time environment, allowing individual
investors to trade on the information as soon
as it's presented. To view either kind, all an
on-line investor needs is a common Internet
browser and downloadable audio/video
player software, such as Microsoft Corp.'s
NetShow or RealNetworks Inc.'s RealPlayer.
Growing interest in these types of roadshows
and individual investors' insatiable thirst for
investment information are expected to
increase the number of these on-line presentations in the coming year.
"I definitely see as a trend the proliferation of information only available to
institutional investors being available to individual investors," says Douglas
Gerlach, author of the "Investor's Web Guide" (Lycos Press, April 1997)
and a director of the National Association of Investors Corp.'s Computer
Group.
Virtual roadshows were first introduced late last year, according to
Michael Gazala, a senior analyst at Forrester Research Inc. in Cambridge,
Mass. In 1996, Mr. Gazala notes, the Securities and Exchange
Commission decided the Internet was an acceptable medium for
distributing information about private-placement offerings, behind
password-protected Web pages, to professional investors.
Last March, the SEC issued a "no-action letter" to MSNBC Desktop
Video, a subsidiary of MSNBC, allowing that company to transmit
corporate roadshows, with video and audio presentations, on its private
network to professional investors who are issued passwords by the lead
underwriter.
That show was followed last July by another SEC no-action letter allowing
NetRoadshow Inc. to transmit roadshow material to so-called qualified
investors -- wealthy individual investors, portfolio managers and
institutional salespeople -- and underwriting investment banks at its Web
site, who would have to use passwords issued by an underwriting
investment bank.
Small investors were shut out of the events until Nov. 5, with the live video
Webcast, available for viewing on-line without password, of the
second-annual Micro-Cap Equities Conference in Houston. The
conference was attended in person by 450 investment bankers and fund
managers -- and by more than 4,100 individuals on-line, according to Clay
Womack, chairman and chief executive of Direct Stock Market Inc., the
Santa Monica, Calif., company that organized and hosted the on-line
component of the event.
Moreover, Mr. Womack notes that the on-line attendance figure
accounted only for the day of the event. Archived videos of the
proceedings, available at Direct Stock Market's Web site, have since been
viewed by thousands of individuals, he says.
Next March, Direct Stock Market will Webcast the Los Angeles Venture
Association's Annual Capital Conference.
And beginning in January, Mr. Womack says, Direct Stock Market will
expand its Webcasts to include individual company roadshows. Besides
streaming video of executives' presentations, many virtual roadshows will
include slide presentations and chat sessions, he says.
DirectIPO, based in Marina Del Rey, Calif., also plans to expand into
Webcasting roadshows. Matthew Stasior, vice president of business
development and co-founder of DirectIPO, says during the first quarter of
next year the company hopes to offer an on-line presentation in
conjunction with a what he calls a "pre-IPO" for a privately held firm.
However, small investors will be barred from the password-protected
event.
But Mr. Stasior believes eventually such roadshows could be made
completely public -- that is, without the need for passwords -- if the SEC
allows it.
Right now, Mr. Stasior notes, the SEC has approved only the Webcasting
of certain roadshow presentations to a limited audience of qualified
investors who have been issued passwords. He believes the SEC also may
allow DirectIPO to include its registered members in the qualified investors
group, Mr. Stasior says.
"I believe this may become the preferred way of the industry to do
roadshows," Mr. Stasior says. "So I do believe this will proliferate ... and I
think you'll see the SEC slowly expand the rules to allow the Internet in."
On-line investment bank Wit Capital Corp. is set to offer its first virtual
roadshow at its Web site this week, says founder Andrew Klein. And Mr.
Klein says Wit Capital intends to adhere to SEC regulations by building all
of the roadshow's multimedia elements, including audio and video
presentations, as well as an interactive question-and-answer segment, into
the prospectus for Sandbox Entertainment, a company Wit is taking
public. Additionally, Mr. Klein says, the prospectus only will be available
at the Wit site; it will not be available as a printed document.
Mr. Klein hopes to offer at least four or five more deals and roadshows at
the Wit Web site soon, he says. "We think it's going to make a big
difference to small investors" to have access to such roadshows on the
Web, he says.
Nevertheless, advocates for individual investors and other financial
industry professionals aren't entirely convinced. Many caution novice
investors about making financial decisions based on a company's
promotional presentation.
"I'm bullish in general on any kind of information that's being made
available on the Web," Mr. Gerlach of National Association of Investors
says, but he notes that "if it encourages people to act without doing due
diligence, that's not good. You still need to do your homework on whether
those companies are worth investing in, and not be fooled by the flash of
the Web."
Some believe the growth of on-line conferences and roadshows could be
detrimental for individual investors who aren't sophisticated enough to
understand the information provided.
Barbara Roper, director of investor protection for the Consumer
Federation of America in Washington, D.C. says she favors on-line
financial presentations, but she remains wary. "I don't think there's any
question that people tend to give maybe excessive credence to information
they get on-line," Ms. Roper says, adding that the Internet information
providers often give little basis for the reliability of the information.
Institutional investors would not be inclined to make investment decisions
based solely on the information provided at a roadshow, asserts Brad
Hammond, president of NetRoadshow in Atlanta, Ga., whether the
presentation is in person or on-line.
The SEC's no-action letter allowing his company to put roadshows on the
Internet was issued because the audience would be buyers at the top 15
U.S. investment banks, Mr. Hammond says.
"The value of the roadshow has always been for management to get in
front of large potential buyers and review the information that may not be
fully detailed within the prospectus," he says.
"You open up Pandora's box with unlimited liability by making it available
to everybody," Mr. Hammond says. Therefore, he doesn't believe on-line
roadshows that are open to individual investors will proliferate on the Web
in 1998.
But Mr. Hammond does expect a increasing number of financial-industry
conferences to be Webcast for individual investors in the coming year, and |
