Mondavi winery gets its financial word out online.
Its a chilly fall morning at the 34-year-old Robert Mondavi Vineyard, and in their offices high atop a warehouse filled with casks of wine, the duo that constitutes the companys entire investor relations department has everything under control. Jeanette Bowling, the companys investor relations coordinator, sips from a mug of steaming coffee as she responds to e-mail from shareholders. Bob Philipps, the vice president of IR, twiddles with his phone cord while he chats with a company official about uploading the latest quarterly earning reports to the Robert Mondavi Corp. Web site.
Flash back a couple of years, and the scene would not have been nearly as harmonious. Most likely, Philipps and Bowling would have been scrambling to get the latest financial information posted to the site in time to meet government-imposed deadlines and to satisfy impatient securities analysts. Chances are, one or both would have been on the phone with an outside Web site hoster, trying to get information posted faster. Neither would have had much time to return investor e-mail.
Whats changed? Two-and-a-half years ago, officials at the $500 million winemaker decided to outsource the management of the IR portion of their Web site to a service provider that specializes in IR sites. For Mondavi, the decision has turned out better than a prime reserve cabernet. Not only has the company saved more than $750,000 in hosting charges, its also kept government regulators satisfied while managing to attract three times the number of analysts it had before the site went live.
For many small and midsize companies, outsourcing IR Web sites to the growing number of service providers that specialize in investor sites makes all the sense in the world. Like Mondavi, many dont have the internal staff to keep up with new regulations that require prompt posting of financial information.
Help From Some Friends
Mondavis first effort to use the Web to get information to investors and analysts began in 1997, soon after the company created its first IR office under Philipps. Until then, analysts and prospective shareholders seeking financial information were encouraged to contact the companys chief financial officer, who would return their inquiries whenever time permitted. Philipps decided to look for an outsourcer that could help him move financial information to the Web.
"We were an entire department of two people," Bowling said. "We wanted so much for the new site, but there was no way we could do it by ourselves."
Initially, however, Philipps and Bowling opted to outsource the site production to a small San Francisco-based Web hoster, one not focused on IR. That turned out to be a mistake. For roughly $37,000 per month, the hoster built a mostly text-based site that had no interactive features. To make matters worse, every time Philipps or Bowling wanted to change a sentence or upload a press release, they had to wait weeks for the hosting companys customer service representatives to respond.
At the same time, Philipps said, it was becoming clear that such delays could end up putting Mondavi in regulatory hot water. In 1997, the Securities and Exchange Commission began considering new regulations that would require companies to disseminate financial earnings reports to analysts, journalists and the public promptly and simultaneously. The rules, called Regulation FD, went into effect in October of this year.
Finally, one day in early 1998, Philipps had had enough. He began searching for a hosting services provider that understood IR sites. He investigated IR hosting offerings from PR Newswire, of New York, and Shareholder.com, of Maynard, Mass, two companies that had begun specializing in hosting IR sites. He selected IR Online, a hosting service provided by CCBN.com Inc., of Boston.
The cost of CCBNs IR hosting service$12,000 per monthwas a significant savings for Mondavi. More important, however, is that CCBN allows Philipps and Bowling to post updated information to the Mondavi site almost immediately. Working from a drag-and-drop template on their browsers, the Mondavi officials can update the site from their offices. CCBN also supports a wide range of static and interactive services. Shareholders can browse financial information, including earnings reports, stock quotes and forecasts for the year ahead. They also can surf announcements about upcoming events, subscribe to e-mail alerts about breaking news and listen to live audio feeds of the companys weekly conference calls for analysts.
While Philipps is quick to praise CCBN for all of this, he also indicates that the company is far from flawless. For one thing, CCBNs template update technology requires clients to design and develop graphics on their own. As a result, Philipps notes that he spends an additional $6,000 to $7,000 per month on graphics and branding services. CCBN officials said they plan to enhance their drag-and-drop template tool to do a better job of handling graphics.
Despite the unforeseen expense, Mondavis new IR site has been a big hit. Shareholders are logging on like never before (more than 200 per day), and the number of analysts covering the company has increased from five in 1997 to nearly 20 today. Most analysts now access IR information through the departments Web site, and many give rave reviews, noting that the new IR site puts Mondavis department right up there with departments at larger public winemakers, such as Beringer Wine Estates Holdings Inc., and E. & J. Gallo Winery. Judy Hong, an associate in the equity research division of The Goldman Sachs Group Inc., has been following Mondavi since 1996 and said the companys commitment to its IR Web site is a sign that the company wants to reach out to the people who matter most.
"Instead of calling them for this kind of information, something we had to do in the past, today we can just go online and find stuff there," Hong said from her office in New York. "For analysts like myself, for institutional or retail or even individual investors, thats an incredibly important tool."
Shareholders like the site, too. Ralph Warner, a shareholder whos been leading tours at Mondavis Oakville, Calif., vineyard for 22 years, said the site was the "best thing" hed ever seen from Mondavi online and admitted that he uses it to check the companys stock price 10 to 15 times per day.
Even Philipps might admit that thats a bit excessive. But that doesnt mean hes going to stop enhancing the IR site. Soon, hell be able to use the site to broadcast video downloads.
"Making wine is just about as low-tech as you can get," Philipps said. "With that in mind, theres always room for technological improvement on our end."