Reg FD Makes Firms More Forthcoming, But Some Opt for Pretaped Conferences

“It really doesn’t add a lot to have someone from [investor relations]
reading the text that’s already available,” said Morningstar pharmaceutical
analyst Amy Arnott.

ConAgra’s decision not to hold live calls makes some who follow the
Omaha, Neb., company angry.

“It’s a lousy way to deal with investors,” said George Dahlman, food
analyst at U.S. Bancorp’s Piper Jaffray unit. William Leach of Banc of
America Securities said the practice “creates a shady atmosphere.” Said
Eric Katzman of Deutsche Banc Alex. Brown, “It’s unbelievable.” All say
ConAgra is the only big food processor they follow that doesn’t hold live
quarterly calls.

ConAgra said the analysts have it all wrong. By precluding questions
from the handful of Wall Street professionals typically on live calls, the
company contends that it won’t shortchange others not listening in.

“Our position is that we are going to create a means by which we will
communicate fairly and evenly with all our investors,” said Timothy P.
McMahon, ConAgra’s senior vice president of communications.

After every quarterly recording, ConAgra executives field dozens of
calls — be they from Wall Street professionals or the average little guy,
Mr. McMahon said. Sometimes those sessions can last all day. Last year a
member of a small investment club in Alaska ended up chatting with ConAgra
Chairman and Chief Executive Bruce Rohde, who happened to be in the room
when that call came in, Mr. McMahon said.

ConAgra Is Diligent About Answering Questions

Analysts critical of its prerecorded calls said that ConAgra is diligent
about answering their individual queries — although the analysts remain
uneasy about the process.

Call-in questioning “allows them to pick and choose which calls they
take, the order in which they take them — and you’ll never be able to pin
down if it’s the same story told to everybody,” Mr. Dahlman at Piper
Jaffray said.

Mr. McMahon noted that ConAgra posts answers to numerous questions about
its earnings on its Web site. But some analysts counter that such carefully
edited information isn’t the same as hearing a CEO or chief financial
officer respond to a real-time question on a live broadcast.

Sometimes conference calls that don’t include immediate, on-the-line
feedback can lead to confusion — as Wal-Mart learned last spring. On its
recorded call an official used the words “double-digit” to characterize
second-half earnings expectations.

Hearing that, analyst Emme Kozloff of Sanford C. Bernstein &
Associates assumed it meant at least a 13% earnings increase. But after
talking to the company, she learned that the company was indicating a 10%
or so rise. As a result Ms. Kozloff reduced her estimate, and Wal-Mart’s
stock fell more than $2 a share that day amid investor confusion.

Mindful of such situations, U.S. Bancorp spokesman Steve Dale said the
Minneapolis bank prefers live calls because “it gives us the ability to
address our results and answer questions in a more timely manner.”

Several analysts said a big plus to live Q&A on conference calls is
to hear what their colleagues are curious about. Others may raise questions
of which they hadn’t thought.

Regulation FD’s primary draftsman, former SEC general counsel Harvey
Goldschmid, said the rules “left room to do prerecording or only issuing a
press release. But,” he added, “in terms of good corporate policy and
legally, the more you open yourself up to public questioning, the
better.”

But those favoring taped remarks say they have their reasons. Mellon
Financial said it went to a recorded call that can be accessed at any time
in response to analysts. “Many in the investment community have told us how
busy they are,” said Ken Herz, spokesman for the Pittsburgh bank. Partly
that is because Mellon typically announces earnings on what is known as
“Super Tuesday,” when several big banks release numbers.

Explaining why the newspaper publisher has never had quarterly calls,
Washington Post Chief Financial Officer John (Jay) Morse said, “We just
don’t have that many analysts who call us, or that many shareholders.”

As for GE, spokesman David Frail said the company hasn’t seen the
necessity of live quarterly earnings updates since it communicates in many
other ways. Still, he added. “If we hear from enough people that they would
like to have it done, we will certainly give it consideration.”

Write to Richard Gibson at
dick.gibson@dowjones.com[11]

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