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A New Age of Financial Disclosure
August 01, 2007

Earlier this week several members of my team were deeply involved in the innovative disclosure of Sun Microsystems' quarterly earnings results. Sun chose to release its numbers via its Web site and RSS feeds ten minutes prior to more traditional dissemination via PR Newswire.

Sun's CEO Jonathan Schwartz announced his intention to distribute the news in this manner via a blog entry the week before - "a small, but exceptionally symbolic change" was how he labeled it. An opportunity for every constituent to receive the news at once and for free. In my view, a prelude to the direction of things to come.

Not surprisingly, executives at the paid wire services are coming unglued by this development. One executive even went as far as to call Sun's move a return to the 'dark ages of disclosure." Sounds to me a bit like the dinosaurs bellowing at a coming ice age. If there's one thing we've seen in this business it's that the Internet breeds innovation and demands evolution. Sun's decision to distribute it's news via its website should serve more as a wake-up call for the paid wires rather than a battle cry.

RegFD calls for the simultaneous disclosure of material information to all investors. A pretty simple concept to grasp, no? In my professional opinion, Sun's recent distribution conformed with both the letter and the spirit of the law. None of the pundits have said otherwise, I might add.

Not only was the information available to all via a free and open Web-based resource...and the location and release time for that information pre-announced...the procedures were backed up with a simultaneous filing of a Form-8K with the SEC. For those of you watching the clock as the news rolled out, you may have noticed that by 4:01 pm (ET), the same time Sun posted the results on their site, the company's 8K posted on Yahoo! Finance via Edgar.

While this may have only been an "exceptionally symbolic change," I am confident that it's just a preview of the innovations in communications to come, both from Sun and other companies for which transparency and one-to-one connections with constituents is critical. Perhaps rather than fight evolution our friends at the news wires should start thinking about how they can help shape the future direction of financial disclosure. It's coming...with or without them.

Disclosure Note: Sun Microsystems is a client of MWW Group.

Posted by Michael Kempner at August 1, 2007 04:31 PM