Communicating the Truth About Emerson
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Communicating the Truth About Emerson

Before the conference, 110-year-old Emerson was seen as a tired example from the old economy, and it had a stock price to match – in April Emerson’s stock hit a 52-week low. After the conference, Emerson was hailed a leader of the new economy.

Paul Holmes

St. Louis-based Emerson, a Fortune 121 company with revenues of $15.5 billion in 2000, operates more than 60 companies and 300 manufacturing facilities in approximately 150 countries around the world.  Long known as a manufacturer of mostly industrial goods, analysts and investors at the beginning of 2000 seriously questioned Emerson’s growth pace in light of the surging new, dot.com economy.  

PROGRAM DESCRIPTION

Of all the analyst conferences held in New York City during 2000, the one on May 24 at the Digital Sandbox dramatically succeeded in changing the course and corporate reputation of a company.  Before the conference, 110-year-old Emerson was seen as a tired example from the old economy, and it had a stock price to match – in April Emerson’s stock hit a 52-week low.  After the conference, Emerson was hailed a leader of the new economy, and its valuation rose steadily. The conference, along with related and highly targeted Internet and media relations activities, achieved both the business and communications objectives established beforehand.  

THE CHALLENGE/OPPORTUNITY

Frank Lloyd Wright once said:  “The truth is more important than the facts.”  Emerson’s dilemma was that financial and industry analysts and the business press largely knew all the “facts” about how the company had moved into the fast growing telecom and data markets through a series of acquisitions from Nortel, Ericsson and others.  The greater “truth,” which was not understood, was that the acquisitions were not just a series of random transactions.  Rather, they were part of a carefully planned repositioning that had revitalized Emerson.  The company was now poised to perform ahead of expectations but few in the analyst community or press had connected the dots to see the big picture.  They didn’t understand that Emerson had developed the scale and critical mass to meet telecom and data customers’ needs, and that this part of the business mix was the largest and fastest growing unit in the company.  With Emerson’s reputation clearly threatened, the record had to be set straight … fast.

PLANNING & OBJECTIVES

Fleishman-Hillard recommended that Emerson communicate its repositioning in a new way.  Strategies were developed to explain not only why the acquisitions are valuable, but also how they work together and why that matters to customers.  Then, based on the synergies Emerson created, the marketplace and magnitude of the opportunity was defined.  The storyline was enhanced with third-party credibility from outside experts and customers.  And, finally, the story was given a focal point by uniting Emerson’s broad range of data and telecom products and services under the new label: Emerson Network Power Group.

Clear objectives were established: 1) Develop and execute a single event to reach significant numbers of financial and industry analysts.  Focus on: i.) Attracting analysts representing 15% of outstanding institutionally held shares.  ii.) Attracting more total attendees than the previous New York conference held in January.  iii.) Using the Internet to extend the reach of the conference.  2) Communicate the story so analysts fully understand the impact of Emerson’s dramatic repositioning. 3) Generate media coverage of Emerson’s repositioning that portrays the company as a growing leader within the new economy.

STRATEGIC EXECUTION

With the basic messaging in place, tactics were developed to communicate key points to target audiences.  For the meeting, special graphics, logos and PowerPoint presentation templates were created along with banners, binders and custom letterhead.  Plus a seven-minute video was produced emphasizing Emerson’s strengths through the voices of industry experts and customers.

Key analysts were invited to the meeting and a webcast was arranged for those who could not attend in person.  In addition, the entire presentation with 137 PowerPoint slides and audio was archived on Emerson’s web site.  Site content was further enhanced with a new Emerson Network Power Group portal that included 21 pages of information featuring animation and video.  (http://www.emersonnetworkpower.com/)

Messages were tailored for the media and pitched during ongoing media relations and in a short media tour with Bloomberg and Reuters Financial Media in New York following the analyst event.

RESULTS BY OBJECTIVE

1) Develop and execute a single event to reach significant numbers of financial and industry analysts.  

i.) Attract analysts representing 15% of outstanding institutionally held shares.

Conference attendees represented 24.6% of outstanding institutionally held shares.

ii.) Attract more total attendees than the previous New York conference held in January.

 118 institutional investors attended the conference vs. the January conference that drew only 65.

iii.) Use the Internet to extend the reach of the conference.

Of the 118 attendees, 33 investors attended the conference via the live webcast, and following the meeting and the addition of the Network Power portal, downloads from the Emerson web site soared 235%.

2) Communicate the story so analysts fully understand the impact of Emerson’s dramatic repositioning.

Within days of the meeting, influential analysts from Credit Suisse First Boston, Lehman Brothers, Banc of America Securities and Brown Brothers Harriman filed reports with buy or long-term buy recommendations.  For example, from Credit Suisse First Boston: “Emerson’s meeting to highlight its electronics and telecom businesses was very successful in our opinion, because it provided much needed perspective into the breadth and depth of its offerings in these fast growing markets.”

4 additional high profile analysts issued reports that were strongly favorable.

Within a week the stock rose 5%, and by year’s end it had increased 36% over its May 23rd value.

With its 36% increase from May 23rd through year’s end, Emerson’s stock vastly outperformed the market.  In that time period the Dow gained just 3.5% while the NASDAQ lost 22% and the S&P 500 fell 4%.

3) Generate media coverage of Emerson’s repositioning that portrays the company as a growing leader within the new economy.

Ø

New York Media Tour


 

Media

Example of Emerson message reported


 

Reuters Financial Media

“Emerson is now changing its image to embrace new technologies.”


 

Bloomberg

“Emerson, which makes electronics and telecom equipment, said it plans to bid on a Lucent unit …”

Ø

Media Relations


 

Media

Example of Emerson message reported


 

BusinessWeek

“Emerson Electric Jump-Starts Itself” (headline)


 

The Wall Street Journal

“Emerson built its position through a rapid succession of acquisitions in the past two years.”


 

St. Louis Business Journal

“The Remaking of Emerson” (headline)


 

USA Today

“Emerson Electric started picking up on the change about three years ago … and expects to garner $4.1 billion, or 26% of revenue in the fields in 2000.”


 

Dow Jones

“It is this division that lifts earnings all around for the group, and is expected to comprise an increasing chunk of earnings in the years ahead.”

Additional Coverage – Based on the buzz created among analysts, MSN’s MoneyCentral Investor and CNN/fn’s “News and Markets” covered Emerson favorably, and CNET and Dow Jones called Emerson a “Hot Pick.”   Also, on CNBC’s “Half Time Report” on May 25th, Senior Writer Bob O’Brien commented: “So this is a company [Emerson] with a long track record of execution, but people are not interested in their kind of old economy. They punish their stock. They’ve ignored the fact that they’ve actually transitioned into a lot of new economy operations.”

Plus, Smart Money included Emerson in its “Six Stocks Ready to Rally” cover story in August.  That article concluded saying, “Russ Leavitt, Wall Street Journal All-Star electrical equipment analyst at Banc of America Securities, recently upgraded Emerson to a buy after the company’s May analyst presentation on Network Power Group.  ‘It became clear to me that they were serious,’ he says.”

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