Critics say Sun's internet earnings release not flawless

Jul 31, 2007

Delays in accessing news raise Reg FD issues

NEW YORK -- Newswire executives found problems with Sun Microsystems' earnings release yesterday via its IR website, then put out the message that a company self-publishing results seems a poor substitute for their tried-and-true distribution channels. For months, Sun CEO Jonathan Schwartz had been telling investors and the media about his controversial plan to use his own corporate website for disclosure. He gave it a trial run on Monday, releasing earnings on the web 10 minutes before putting them out on the wires.

Business Wire's senior VP for global media Neil Hershberg said he and several of his colleagues couldn't access the release for a full five minutes after its posting. 'Their servers seemed incapable of handling the load,' he says. Schwartz suggested last week that internet release of earnings is a possible path for other companies and that we may not be far from 'ceasing to issue traditional press releases altogether.' But delays for those accessing the information could mean big problems in an era when seconds can matter in trading decisions. 'To have that kind of a lag favors investors who are fortunate enough to get through,' says executive VP Michael Lissauer.

The wire services pioneered the technology to deliver news at the same split second to investors worldwide. It's free to users and fairly low cost to those putting out the information. Their protocols are also audited regularly unlike corporate web sites. The SEC hasn't said whether a corporate internet site meets the requirements for the release of material business information under Reg FD, though Sun is pushing the agency for approval. Business Wire, for its part, has met with the SEC to communicate its opposition. Warren Buffett, CEO of Business Wire's parent company Berkshire Hathaway, asked the agency to place newswire president and CEO Cathy Baron Tamraz on any advisory panel convened to discuss the issue, Lissauer says.

Sun didn't take questions about problems information-seekers may have had yesterday. But spokesperson Shawn Dainas did say in a prepared release: 'As a result of our ongoing dialogue with the SEC, there has been great interest around using the internet as a means to more openly communicate material corporate information. We are excited to be at the forefront of this conversation, and we plan to use Sun's website and Jonathan's blog.to report other important company information in the future. The internet will increasingly become the accepted platform for providing timely information of importance to shareholders and the public.'

By Anna Snider