Avoid These Disastrous Earnings Call Screw-Ups
Earnings calls are simple. A CFO reads some financial data, and friendly stock analysts ask him a few questions. The format and technology are decades-old.
But earnings calls have one weakness—humans.
All earnings calls depend on a human operator to authorize call-in guests, introduce the CFO, and put questioners on the line. A single off-site operator’s miss-pressed button can embarrass a multinational company with thousands of employees.
We use experienced operators so that these mistakes don’t happen to our clients. But we do hear about major earnings call screw-ups—usually from an IT person looking for a new vendor.
As we set up our new client, they tell us what went wrong. Here are a few of the most frequent culprits.
Analysts Ditch The Call When It Starts Way Late
A team of human operators must verify the identity of everyone who calls in. Conference call companies usually staff one operator for every 10-15 attendees who will join the call.
But some service providers cut costs. Then, if one earnings call gets more attendees than anticipated, they don’t have enough staff to answer the phones for other calls happening at the same time.
If all the operators are tied up, they might have to delay the call while they scramble to complete the verification process.
Now the CFO, already nervous about her presentation, has to wait, and wait, all the while getting more anxious—especially if she is about to deliver bad financial news.
Meanwhile, you’re wasting the valuable time of stock analysts you’re trying to impress. We’ve heard of delays lasting as long as 20 minutes. Some analysts simply drop out.
The Operator Mispronounces The CFO’s Name
Some vendors employ offshore operators, or operators living in rural parts of the US. Certain names aren’t as familiar to these operators as they might be to someone living in a major city. Other operators don’t exactly mispronounce names, but they speak with an accent that makes them difficult to understand.
It’s bad enough if the operator mispronounces the name of one of the analysts calling in—your investor relations team has spent months cultivating their relationship with this person, and suddenly someone who doesn’t even work for them undoes all that work by getting their name wrong.
But when the CFO has to correct her own name on the call she’s meant to be running? That’s a black eye for the company, and for you.
Good operators have a chat window open with the investor relations team to check the pronunciation of any unusual name they’ll have to say out loud. And good companies hire operators who speak “newscaster-style,” with only small traces of an accent.
An Angry Ex-Employee Hijacks The Call
Your investor relations team will tell our operator who they want to authorize to ask questions on the call. But the operator still has to connect that person.
We heard of a case at another provider where an incompetent operator heard the wrong name, and gave the floor to a disgruntled former employee. He enjoyed the opportunity to harangue the CFO about recent layoffs.
The operator mercifully cut the angry caller off after a few loud and uncomfortable seconds. But the incident rattled the CFO, making a difficult job even tougher.
Instead Of The CFO’s Pre-Recorded Message, The Operator Plays The Wrong File
Many times the CFO isn’t speaking live on the Earnings Call. Instead, they’re just standing by while a pre-recorded message plays. Pre-recording the earnings information usually helps the CFO give a better presentation. They’re more relaxed, knowing that if they don’t like how they emphasized certain phrases they can record the call again. We recommend it.
When it’s time to play the file, the operator is the one choosing it. If he selects his iTunes playlist, your earnings call could turn into a speed metal concert.
It’s a simple matter of competence, but some vendors use inexperienced operators on these calls. It may be their first time facilitating a message like this.
The CFO Is Interrupted By The Operator’s Gossip
Few conference call operators care about the revenue projections of corporations. They may slide away from the call and do something else. Sometimes, they forget to put themselves on mute.
We heard of a case where the CFO couldn’t make himself heard above the din of an office gossip session between call operators.
An experienced operator won’t put an important earnings call on hold. They’ll monitor the call for problems—not cause them.
Echoes In The Company Conference Room Make The Whole Call Unintelligible
Office conference rooms are not symphony halls. You may not realize it now, but something about the CFO’s voice, or the position of the phone, can cause annoying echoes during your call.
The solution is simply a practice run the day before a call. We recommend it as a way to get everyone familiar with the tools used on the call and to eliminate technical or audio glitches.
Is Your Earnings Call A Ticking Time Bomb?
When earnings call disasters happen to publicly-held companies, it’s embarrassing. Still, no analyst is downgrading Exxon stock because of a mispronounced name or two.
But for privately-held companies and partnerships, glitches like these really can hurt the business. Investors will question a small operation’s competence if they fail to execute something as simple as a telephone call.
Many vendors use a different, inexperienced operator on every earnings call. That means every time, a new person has to learn how your CFO says her name, which analysts should be given priority, and the unique flow of your company’s call. Inevitably, one of these inexperienced operators will make a mistake.
Good vendors match you with the same operator on every call, so your calls actually get better as you do more of them. Because of this familiarity, your risk of failure should actually go down over time, not up. If you’re stuck using a vendor where you feel it’s only a matter of time before a terrible mistake occurs, then it’s time to find another provider.
IT departments often pick their day-to-day conference call vendor to handle earnings calls. It’s an easy choice. But the low-cost vendor that’s the right choice for 99% of the calls made at your company may not be the right choice for an earnings call.
Don’t put your company—or your job—at risk.