Why it’s still a bear market for investors
Against all the trends one industrial giant has made over its home page to appeal to stock analysts. The share price hasn’t looked back, but it’s not an investment to follow, says David Bowen.
A trend in corporate websites that I have come to take for granted is the move away from a focus on investors. If I see a site that is full of numbers on the home page, I can guess it is due for a radical facelift and that soon a new cuddly image will burst onto my computer screen. But now I’ve found a company moving in the opposite direction – away from cuddly, towards numbers. Maybe it’s right and everyone else is wrong?
PotashCorp of Saskatchewan may not be on the tip of all our tongues, but if you know about fertiliser, you know about Potash. It is not only the world’s largest fertiliser enterprise by capacity, according to its website, but it “delivers the highest quality earnings in the fertiliser universe”. With turnover of more than $5bn, it is big by anyone’s standards.
I came across the site a couple of years ago, and was impressed. It had an excellent investor relations area, but also made a point of trying to get a softer message across. To see what it looked like, use the Wayback Machine at archive.org to bring up the home page in early 2007. It had a cheerful palette of colours displaying six sections: About PotashCorp, For our investors, For our customers, Our sustainability, Our governance and Learn about fertilizer. This last had sub-sections such as Kidsweb and ‘There’s WHAT in my food?’.
In other words, it was using its site to get the facts across, but doing it in a way that made all ‘stakeholders’ feel included. The colour scheme was friendly, the talk of sustainability showed a caring face, the use of ‘our this’ and ‘our that’ was pleasantly informal and the jokey items in Learn about Fertilizer also helped massage the message. ‘We’re not a wicked multinational,’ the home page said. ‘We’re a big friendly teddy bear.’
The company was following a trend. When corporate websites grew up in the Nineties, they were generally driven by two departments: human resources and investor relations. Careers sections tended to have a life of their own, so corporate sites were often built around financial information. PotashCorp was typical. Use Wayback to look at its site in June 2005, and you will find a home page dominated by the latest quarterly announcement.
Enter the teddy bears
But this was a time when some companies were realising that the web was no longer just an add-on, but the biggest publication they had. They started doing market research, and found that while people looking for jobs were indeed big users of the site, investors were not – in numbers at least. They also tended to find that many more customers visited their corporate sites than they had assumed. A soft image suddenly seemed to make sense – future employees and customers would surely be attracted more by a friendly teddy bear than a dollar-nosed beast.
Two examples. Use the Wayback Machine to see Unilever’s home page in June 2004. The first two stories were ‘Niall Fitzgerald to present at Goldman Sachs conference’ and ‘Antony Burgmans’ AGM speech on preference shares’. Look at it now and they are ‘Celebrating age and beauty’ and ‘Deli-cious!’; the colours have gone from dull to a riot of pastels.
But it is not just consumer companies that have been thinking in this way. BOC, the UK-based industrial gases group, found that its site was aiming at the wrong audience; where it used to be pointed at investors, now it is serving customers. BOC has since been bought by Linde, but the new customer focus is still glass clear.
Back to PotashCorp. Look at the home page now. It still has the same sections but the ‘Our’ has gone from the section headings. The look is plain – black, white and pale green. At the end of February the main panel rotated between three speeches by chief executive Bill Doyle (‘on Bloomberg’s In Focus’, ‘at the Morgan Stanley 2008 Basic Materials Conference’ and ‘on CNBC’s Fast Money’) and ‘Coming soon: 2007 annual report’. This last is accompanied, rather oddly, by a picture of Chinese food, but otherwise this is a buttoned up, besuited page: Unilever circa 2004.
Why the slamming into reverse; the wilful fighting the trend? I rang Potash to find out. The helpful public relations manager was surprised I was surprised, but said there was a simple explanation: Potash has very few customers and the investor section is the most used part of the site. There will soon be more emphasis on careers, she said, but the site’s fundamental job is to keep analysts and investors happy.
This does not explain why the company changed its emphasis in the first place, but it does have one big lesson. If you make something useful enough, it will be used. I have talked to many investor relations officers about the web. Their line tends to be that while a site is essential for releasing information simultaneously, it is not a prime channel for talking to the really important people: analysts and fund managers. They need to be pampered like Roman emperors, and that is best done in person.
Exceptional to the rule
Potash has proved my IR contacts are wrong. The real point about its site is not what is on the home page, but the quality of the investor section. It was exceptional in 2005, and it is exceptional now.
It includes a ‘Why invest?’ section, which is a comprehensive background primer on the joys of fertiliser. Market information includes a map showing data from around the world, as well as charts on ammonia margins, the ocean freight index and more. Management views has video after video of Mr Doyle in praise of fertiliser. Add the usual, such as comprehensive earnings information, and it is easy to see why analysts really will go to the site before picking up the phone to the investor relations team. It does not matter that we are only talking about a few dozen people as targets; they are the most important few dozen people in the world.
But did Potash really have to give up its fluffy home page to keep them happy? Well. its share price has gone from $55 to $165 in the past year, so something has had an uplifting effect. Mainly the surge in demand for raw materials, I imagine, but also possibly an even keener focus on earnings per share. Share prices are not moved by websites (yet), but if the redesign reflected a new concentration on keeping analysts and investors happy, maybe there is an indirect link between the two.
Still the wrong call
On the whole though, I think the company has made a mistake. The PR manager told me there would be more emphasis on attracting employees in the future. Job seekers are a notoriously soft lot, and really will be affected by the web home page – most likely their first exposure to any company. Would they rather work for a sunny, caring, inclusive employer or for a commercially-obsessed cash machine?
Analysts and investors, on the other hand, will care little what a company’s home page looks like, as long as its financial information remains as strong as ever.
So keep the excellent information, bring back the fluffiness, and everyone will (should) be happy.
First published on ft.com 29 February 2008
First published on 05 March, 2008