The Swinging Pendulum

 
There was a time when most investor relations professionals had either financial journalism or public relations backgrounds and applied their specialty communications skills to publicly traded companies.
 
Then there was a wave of IR executives entering the field with finance, investment banking and analyst backgrounds. What such backgrounds may have lacked in writing and mass communications skills typically were offset by technical financial acumen.
 
Now, yet another new surge of IR professionals is surfacing as Roger Pondel reports in a recent bylined article for NIRI’s IR Update titled, “The Road to the C-Suite.” Pondel also points out in the embedded video that these new IR folks not only have the financial chops, but are equipped with the necessary DNA to understand the more complex world of today’s media.
 
While today’s new-wave pros typically are on career tracks in IR, those who entered the field from financial roles may well be headed back to their roots. But no worries, in many cases, they are traversing the path to becoming CFO.

 

George Medici, gmedici@pondel.com
 
 

Resisting Temptation to “Like This”

No hoods

No Hoodies (source)

As I mulled this post while prying my seven-year-old out of bed this morning, I also wrestled with all of the brouhaha surrounding the pending Facebook IPO.  Something just did not sit right.  Then it hit me.  I have seen this show before.
 
Facebook’s global adulation is understandable, and well earned.  One in eight people on the
planet use it.  That’s an unfathomable audience that is now interconnected. But as the reports during the IPO process reach their crescendo, two large questions loom:  1) Does Facebook’s advertising really work; and 2) Should the company be valued at $100 billion?
 
Don’t get me wrong, I want to see the company succeed, badly.  I am dying for some good news.  But the more our collective anticipation builds, the more I worry.  Is there a clear rationale for this target valuation or is it hubris?  Are we more enamored of simply breaking an IPO record, or are investors using sane judgment?  And should California really be thinking it can potentially narrow its budget deficit with increased taxes from the many new resident millionaires that will materialize from this transaction?  I get the feeling we are putting too much value on this event, and we might be in for some disappointment.
 
As my son and I had our breakfast, an opinion piece in today’s Wall Street Journal titled “Jenkins:
The Zuckerberg Challenge
” sustained my anxiety.  The author too postulated that apart from enviable 2011 ad sale revenues totaling $3.2 billion, a chasm exists between this and Facebook’s estimated target valuation.  He also provides heaps of praise for the seemingly endless possibilities that lay before the company, which I can’t deny.
 
But as a newly public company, Facebook’s iconic leader Mark Zuckerberg will need to be more transparent with the company’s operations and growth strategies than ever before.  Demonstrating that its ad engine provides real value to its customers and a putting a keen focus on generating profits will be paramount. He now has to answer to many more people that own his baby, and should the stock price fall below the IPO level, the barbarians surely will arrive at the gate.  Which makes me wonder why the company is aiming for such an immediate high valuation in the first place.  “Under promise and over deliver” has been a mantra that has served many CEOs well.
 
As I make my final inspection of my son’s school clothes it also occurs to me that Mr. Zuckerberg might want to leave his signature hoodie at home and don a suit now and then. Growing up is hard, but if you want a $100 billion valuation, you need to play the part.

 

– PondelWilkinson, investor@pondel.com
 
 

Presidential Celebrity Appeal

President Obama and George Clooney

President Barack Obama discusses the situation in Sudan with actor George Clooney during a meeting outside the Oval Office, Oct. 12, 2010. (Photo credit: wikipedia.com)

Yesterday, President Barack Obama flew to Los Angeles to attend a fundraising dinner hosted by actor George Clooney.  The $40,000-a-plate soiree is expected to bring in $15 million for the president’s reelection campaign.
 
While that’s a nice chunk of change, it really is a drop in the bucket to anyone either running for president or trying to get reelected.  The media buzz, however, can be worth a lot more–or not.
 
The Oval Office has had a long love affair with Hollywood, starting back before the famed 1938 meeting between First Lady Eleanor Roosevelt and 10-year-old actress Shirley Temple.  Celebrities and presidents always got along nicely, as long as they shared the same
politics.
 
Americans love movies and the star actors that shine in them. A litany of entertainment-based TV shows and magazines demonstrate a huge market opportunity for the celebrity segment, which means lots of potential voters like to watch or read news about their favorite actors.
 
No doubt there is a risk-reward factor by aligning with a celebrity, especially if
you’re the president.  Fortunately for Mr. Obama, George Clooney scores high in the DBI Index, a ranking that measures the ability to influence brand affinity and consumer purchase intent.  Basically this means Clooney is an admired, trusted source.
 
The reality is that an alliance with Clooney probably won’t get President Obama more votes this November.  The American public hopefully will vote on a presidential candidate’s political platform, rather than solely by the company he or she keeps, although George Clooney seems to be a pretty
cool guy nonetheless.
 
What Thursday’s fundraiser will do, however, is give the president more cache and a broader reach to voters who may not necessarily tune in every Sunday morning to get the latest scoop in Washington, DC.
 
Just like in the corporate world during proxy season, in politics, votes are the highest currency, too.

 

– George Medici, gmedici@pondel.com