Microsoft: What to Do, or What Not to Do

In recent months, several companies have made the switch from using paid PR wire services for releasing financial disclosure over to using their own websites and resources for disclosure. The New York Stock Exchange changed its rules this past year, no longer requiring that companies use press releases as a means of disclosure. This explains why companies are slowly starting to drop the middleman. Microsoft is the latest company to do this. Should others follow suit? Or should they stick to what works now through traditional methods?

Before Microsoft fully made the switch, it sent out an advisory to notify investors that the company would no longer be using a paid PR wire service. The advisory included a link to Microsoft’s IR website, indicating the new location for announcements. The IR website will now be the main resource for investors and other stakeholders to obtain information. RSS feed, e-mail alerts, and other links are incorporated into the site as tools. According to Dominic Jones, Microsoft has followed the guidelines of 2008 provided by the SEC by announcing how and what would be disclosed from their company.

From the perspective of Cathy Tamraz, chairman and CEO of Business Wire, the terms of Regulation FD are being used very loosely in Microsoft’s case. She states that Microsoft sent out an advisory the day before earnings would be released to the IR website, without identifying a time for the release. In the SEC’s 2008 Interpretive Guidance Release, it states that companies can disclose earnings on corporate websites, if that is the recognized method of disclosure, apparent to others, and have been that method for some time now. Microsoft announced that its corporate IR website would be used for disclosure the day before releases were ready. Was this enough time to be considered a standard source for disclosure? Another problem that Tamraz noticed with Microsoft was that the releases were not all simultaneous, causing confusion and concern among investors.

Perhaps PR wire service companies are just bitter that they are no longer needed. They make most of their profit off of financial disclosure releases and will lose a lot of money if companies ditch them. Business Wire has already retaliated by refusing to distribute any advisory statements. Perhaps Microsoft did jump too quickly into web disclosure and it was a little uncoordinated in releasing earnings, but cutting out the middleman saves money.

Microsoft: setting an example of how you can do things your way, or an example of how to lose your PR wire company?