The COVID-19 pandemic has impacted all aspects of our lives. It’s easy to feel overwhelmed amid a sea of information, but it’s paramount to focus on the health and safety of loved ones, family and co-workers. My partners and I founded Blueshirt in 1999, right before the tech stock bubble, and we’ve helped guide companies through the highs and lows of major financial events over the past 20 years.
Under normal circumstances, the last week of March is when most companies on calendar fiscal years are in the quarter-end quiet period prior to reporting earnings in late April to mid-May. However, these are anything but normal circumstances, and some companies have already chosen to publicly comment on the impact of COVID-19 on their businesses. While every company and situation is unique, there are cases where the correct path is to thoughtfully and proactively communicate how management teams are dealing with the crisis ahead of regularly scheduled earnings reports. Information regarding how management is approaching the problem is a reasonable expectation from investors, and communication in times of duress is appreciated by all stakeholders. Below is a sample of some of the thoughts and guidelines we are giving our clients:
- We are experiencing an unprecedented phenomenon. For one of the first times in history there are serious imbalances in both supply and demand globally, coupled with a major health crisis. Monitoring and tracking actions other companies are taking and how they are communicating is critical. Blueshirt is tracking all relevant financial announcements and providing this information to clients regularly.
- Among companies that have chosen to communicate thus far, the most frequent financial content has been:
- Withdrawing or updating current quarter and/or full-year guidance
- Addressing liquidity concerns and tapping credit lines
- Suspending dividend payments or share buyback programs
- We expect an increasing number of public companies will proactively say something to reassure investors and other stakeholders. We recommend that it is done in a Reg FD-compliant manner either through filings, press releases or pre-approved social channels. We expect the level of financial information and disclosure will vary widely.
- Most planned non-deal roadshows, analyst days, and annual shareholder meetings have gone virtual. Frankly, we have seen mixed levels of effectiveness of these meetings, mostly due to market volatility, but we expect this trend to continue after the crisis. Many investors still prefer voice calls rather than video.
- We believe many companies will shift their guidance strategies. Annual guidance may no longer be possible as demand from both consumers and enterprises will be very difficult to model confidently and deliver credibly.
- CEOs should take the opportunity to assert leadership while focusing on the human element of the crisis and articulating the long-term durability of their businesses. Several levels of contingency and tactical planning must be communicated clearly, but strategic thinking for the long-term is critical.
- Blueshirt has already worked with two technology company clients that were forced to report earnings while working remotely. Every company must prepare for their next earnings call to be managed remotely, both from a technology and human standpoint.
We are facing uncertain and difficult times. Let’s not lose sight of the fact that many of us are fortunate to work with some of the most brilliant entrepreneurs and the best companies in the world. We can all be a part of the solution. As with each crisis before it, COVID-19 will have a lasting impact on every element of our society, and there is likely to be significant pain and suffering from a health and financial perspective. Over time, the markets will rebound and IPOs will return. It is how we act during the crisis and how we take care of one another that is truly important. We can take the opportunity to emerge as better companies and better people.
Alex co-founded Blueshirt in 1999. The firm has advised on more technology IPOs than any other agency. Alex has helped guide the IPOs of many Internet, software and digital media companies and has participated in numerous high-profile M&A transactions in the technology sector.
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