Newsweek Japan September, 2001 "Perception Audits: Gauging Shareholder Sentiments" By Brian O'Connell Is image everything? Some U.S. companies think so. Such companies are turning to perception audits that evaluate how shareholders and potential investors view them. "Nearly every company that I have ever worked with has had a different perception of itself than that of its constituents," says Susan E. Walker, president of Brandon Communications, a Sunnyvale, Calif. Investor relations consultant. "What a perception audit does is to provide a snapshot of how external audiences view the company, so that companies can take an objective look at the way they are truly perceived." The company can then use that snapshot to help to build a roadmap that will allow it to begin to mold and shape those perceptions to their advantage, Walker adds. Companies mostly use perception audits to understand how their most critical initiatives are perceived by Wall Street - from product launches and management changes to acquisitions and corporate restructurings. They're also a big help for senior management when conducted ahead of annual meetings, and annual reports or when preparing for other shareholder materials such as conference calls, press interviews and investor conferences. "When it comes to investor behavior, perception is reality. The audits that we've done over the past three years have given us an unbiased view of how our investors believe we are running our business,1 explains Steven Khail, director of investor relations at Manitowoc Company, a Sharon Merrill Associates client.  Perception audits are especially important during declines in the stock market. "In a down market, investors seem more willing to sell at the slightest negative news," adds Khail. "If you have established a baseline of how your investors perceive the company through an audit, you have a better gauge of how investors are likely to react to a particular piece of news." According to Walker, perception audits can cost anywhere from $10,000 to $100,000, with the average price about $25,000. Audits can take anywhere from eight to 12 weeks, she adds. CBS News Market Watch June 11, 2000 Avon's China Woes No Help To Shareholders By Brian O'Connell Here's three words you haven't heard in the same sentence. China, pyramid scheme, and the Avon Lady.  But they're three words that have shareholders of Avon Products shaking their fists at Wall Street lately. Avon Products (AVP), the world's number one direct seller of cosmetics and beauty-related items, suffered a minor meltdown on its stock in early June as the Chinese government temporarily forced the Avon Lady to peddle her wares outside Chinese borders in late April.  The government lifted the ban in early June, but not before some significant damage was done to Avon stock. Of the company's $5.1 billion in annual sales, 1.5% of it is generated from the Chinese market, where the company has high hopes for future growth. But during the ban, Avon's stock dove 10% to 80 1/8 before rebounding slightly to 83 1/8 the day the restrictions were lifted. "It was a huge blow for Avon, which is the largest Western direct marketer in the country," said Susan Kaplan, president of Wellesley, Mass.-based Susan Kaplan Financial Services. "To have their means of functioning taken away there -- even temporarily -- is enormous."  Why the ban? Chinese officials maintain that direct marketers -- defined by officials as those companies that sell to networks of personal acquaintances -- were targeting the countries' poor and uneducated. Worse, direct marketers were spawning "cult-like" devotion among Chinese consumers to the recent wave of door-to-door salespeople. China's State Cabinet issued the ban on April 22, in an attempt to "safeguard the normal economic order and social stability", according to a circular released by the Chinese government on April 23. China had suspended the licenses of direct marketers before, in 1995 and 1996, weeding out hundreds of companies that didn't meet China's strict government standards. Chinese officials reportedly had grave concerns about citizens being manipulated by direct marketers. Fears arose over the recent rising tide of pyramid schemes -- scams where Chinese consumers buy overpriced goods and products that cannot be returned. As a result, a high-priced game of musical chairs resulted, with a daisy chain of consumers trying to sell the goods to their friends, co-workers and neighbors. The last consumer stuck holding the goods pays the freight while the direct marketing companies that launched the ploy pocketed the cash. One scam involving Shanghai-based Suzhou International Cemetery Co. sold an estimated 100,000 "plots" where citizens ashes could be interred for $275 each. Ultimately, only several hundred of the plots were used. Chinese officials maintain they were primarily after unscrupulous, multi-level (and often domestic) direct marketers like Suzhou, and that prestigious Western companies like Avon, Mary Kay Cosmetics and Amway were innocently caught in the crossfire. No evidence exists that suggest any American companies participated in the pyramid schemes. "I don't think you can single Avon or Amway out, but I think the direct-marketing strategy that they built their businesses on is anathema to the Chinese Government," said Bernard Horn, a portfolio manager at Boston-based Polaris Capital Management. "These strategies do require salespeople to purchase their own inventory that doesn't have anywhere to go." Further fueling the ban direct marketers, Horn added, is the current oversupply of product in China. "All of that inventory is causing deflationary pressures, a situation that government leaders want to avoid a much as knocking the pyramid schemes out of business," he said. After a firestorm of protest in Washington, D.C., the Chinese government relented in early June and allowed Avon back into its good graces -- with a catch. The company could resume its China operations on June 15, but only under the more closely-monitored classification of a wholesale or retail business. That meant no more door-to-door selling. Avon would have to turn its 75 sales offices into retail outlets to serve customers. Taking the high road, Avon officials praised the decision and maintained its commitment to China. "We have made a long-term commitment to the Chinese market and we look forward to working with the Chinese government to ensure that ethical companies like Avon have the opportunity to build productive, profitable businesses there," said James E. Preston, Avon's chairman and chief executive officer. Looking to put the China problem behind it, Avon immediately announced plans to open a new manufacturing plant in Conghua in the southern Chinese province of Guangdong. Avon has already invested more than $70 million in China since entering the market in 1990 (the first American direct marketer to do so).  But will the money be a smart investment in the long run? Many Westerners think so. "The opportunity for a great marketing company like Avon in China is huge," said Harold Evensky, a Coral Gables, Fla. financial planner. "I just returned from China and saw first-hand the commercial boom that has erupted there. Vendors are selling Chairman Mao cigarette lighters fifty-feet away from his tomb. That market will take off and Avon is smart to stay there." Better Homes and Gardens Family Money March, 2000 Title: Ticker Symbols? More than Just a Four-Letter Word These Days By Brian O'Connell On Wall Street, as any veteran investor can tell you, things often aren't what they seem. That goes double for the noble stock ticker symbol, which has endured for over 150 years as a public company's calling card to its Wall Street audience. It used to be that company's slapped the first one, two or three letters that most closely matched the company name on its ticker symbol. Ford Motor Company, for example, was and has been simply identified by the letter "F" in Wall Street shorthand since its inception.  But stock ticker symbols are getting a marketing makeover these days to grab a bigger slice of the public spotlight. Tap in "YUM" on your stock-tracking Web site and you find Tricon Global, owner of Taco Bell. Or "VCR", which flashes Sensory Science (formerly Go-Video) on your stock screen?  "The stock ticker symbol is a lot of things to people," explains Ed Brachocki, senior vice president at Scottsdale, Arizona-based Sensory Science. "In our case, we wanted our ticker symbol to be memorable and entertaining and to make people smile." Officials at like-minded companies agree. "You've got to reach Main Street as well as Wall Street," offers Lynn A. Tyson, vice president of investor relations at Louisville, Kentucky-based Tricon Global. "When we go out to investor fairs people remember us from YUM. It doesn't matter if it's a retail or institutional investor, they remember us." Ticker, Shmicker -- Just Get us On the New York Stock Exchange Free advertising? Sure, Savvy public relations? You bet. Has it always been this way? Um, not exactly. True, the spotlight shines more brightly on the stock symbol in the era of the do-it-yourself investor. But ticker symbols have a pedigree that any Vanderbilt would be proud of. Ticker symbols appeared in 1844, shortly after the introduction of the telegraph machine. Wall Street fell in love with the symbols immediately, as stock prices could be transmitted by brokers in seconds instead of days. Full names of companies were used at first, but that proved unwieldy. Frustrated wire operators began transmitting stock prices with the company name in shorthand, and a revolution was born.  About 25 years later, just after the Civil War ended, the first stock ticker machine began clacking away in New York City. At the turn of the century, newspapers began tracking stock prices via ticker symbols on their business pages. A millennium later, you can still find stock tickers in newspapers. But it's also generated electronically online on business web sites like The Motley Fool, CBSMarketwatch.com, and a host of others. Here's how stock symbols work. Each stock traded on global exchanges is identified by a short symbol. For example, the symbol for Citigroup is "C". Similar abbreviations are used for stock options, mutual funds and many other securities.  Ticker symbols get reused on different exchanges, so you'll sometimes see a qualification ahead of the ticker symbol. For example, the symbol "C:A" refers to a company traded on one of the Canadian exchanges (Toronto, to be exact) with the symbol A. The stock quote services on the web usually understand this notation.  Stock symbols are designated by one, two, or three or more letters for a reason. A ticker with three letters or fewer indicates the company trades on the New York or American exchanges. Tickers with four or five letters trade on the Nasdaq, Nasdaq Small Cap or OTC Bulletin Board markets. When you run into a stock ticker symbol with five letters, there's usually a story behind the company. If, for example, a stock ticker symbol has an "E" at the end of its name is considered by the Securities and Exchange Commission to be delinquent in filing key regulatory documents. A "Q" tells a more troubling story -- it's the scarlet letter that tells investors a company is in bankruptcy proceedings.  Of "LUV" Letters and "UGLY" Ducklings The trend toward more unique, marketing-oriented stock ticker symbols is a recent one. To stand out in a competitive market environment, the thinking goes, it's best to give investors something to remember you by. "The marketing department is taking over," says Harold Evensky, financial planner and principal at Coral Gables, Florida-based Evensky, Brown, Katz & Levitt. "All you have to do is look at all the "dot coms" in company names to see that. I just had a client who bought shares in a company because its stock ticker symbol matched her daughter's name." Others agree, adding that memory retention is a big factor in everyday investor's portfolio decisions. "Your average investor doesn't know the names of most stock symbols -- they can't match one with the other," says Susan Kaplan, president of Kaplan Financial Services, a Wellesley, Massachusetts-based financial advisory firm. "But the most requested stocks I get tend to be the ones with interesting symbols that match a company's name or business. Southwest Airlines' symbol, "LUV", is huge." More and more companies are taking their telltale stock ticker symbols and positioning them as the centerpieces of their marketing plans. Take Tricon Global, where Taco Bell's owners have incorporated the YUM symbol into its corporate strategy. "Not only do people associate YUM with us," adds Tyson, "but it's proving to be a great symbol here inside the company. We have what we call "YUM" bucks where we give stock option incentives to our store managers. We're sticking the YUM symbol in front of more of our business programs and it's working out well for us." If nothing else, people remember the name. As Steve Darak, senior vice president at Ugly Duckling, a Phoenix, Arizona budget rental car company, says "either they like it or they don't. But they remember it." His company's stock moniker? UGLY.