MicroStrategy Bans Media From Annual Meeting
MicroStrategy Inc., the software company whose recent stock collapse after restating its earnings made tabloid headlines nationwide, will try to limit further public scrutiny when shareholders gather Monday for its annual meeting.
In a move called unusual by investor-relations experts and corporate-law specialists, MicroStrategy has banned reporters from the meeting. Only shareholders may attend the meeting in Herndon, Va.
“It’s not going to be open to the press,” said Michael Quint, spokesman for the Vienna, Va.-based company. “That’s just the decision that we’ve made.” He would not elaborate.
Although many companies don’t open their annual meetings to the general public, MicroStrategy’s media ban is an uncommon move, said Louis Thompson Jr., chief executive of the National Investor Relations Institute.
Others said the move creates the perception of trouble.
“You can’t have a thriving, healthy company and be cutting off the press,” said Frank Goldstein, a partner with the Washington law firm Brown & Wood who has represented shareholders, companies, dissident shareholders and independent directors.
“It simply signals your company is in difficulty. In the end of the day, it generally does you more harm than good,” he said.
MicroStrategy was warm to the media when it was a hot property-- a tech highflier, a darling of Nasdaq with a stock price that topped out at $333 in March, up nearly 2,700% from a June 1999 initial public offering price of $12.
Chief Executive Michael Saylor courted the public and the media, appearing on “60 Minutes” and in a Newsweek profile.
And in March, amid aggressive publicity, he unveiled plans to donate $100 million to launch a free online university to reach millions of people worldwide.
Then on March 20 the roof fell in.
That day, the company said it would restate its earnings for the last two years--cutting its 1998 profit by more than half and restating 1999 from a profit to a loss--to rectify past revenue recognition practices.
In one day, the stock lost more than 60%. Saylor was dubbed by one tabloid as “the $6 Billion Man” --his personal loss for one day.
Shareholders filed lawsuits, and the Securities and Exchange Commission began an investigation into the matter.
MicroStrategy shares closed Wednesday at $42.25, down 56 cents, on Nasdaq. The stock has rallied somewhat since bottoming out around 17 in May--down 95% from its March high.
At the meeting, the company will ask stockholders to approve PricewaterhouseCoopers--the same accounting firm that audited its previous earnings statement--as its independent auditors for the current fiscal year.
Representatives from the accounting firm are scheduled to answer stockholder questions at the meeting, according to the company’s proxy statement.
Annual meetings generally are forums for managers to discuss their companies’ performance and for investors to ask questions. Many attract little attention and most come off without a hitch.
But on occasion they can be scenes of protest and shareholder disharmony. Sometimes companies circle the wagons, but still let reporters in, even if they don’t welcome them.
Last month, AT&T; Corp. executives wouldn’t meet with reporters, a reversal from the previous year when its stock was 28% higher and Chairman C. Michael Armstrong presided at a press breakfast, extolling Ma Bell’s rosy future.
In April, at tobacco king Philip Morris Cos.’ shareholder meeting, reporters were barred from talking to shareholders and movements were restricted.
Federal securities rules do not require companies to open their meetings to the public. Virginia, MicroStrategy’s home state, also has no rule governing access beyond shareholders.
Still, many companies broadcast annual meetings over the Web to reach faraway investors, NIRI’s Thompson said.
Quint, MicroStrategy’s spokesman, said that only shareholders attended last year’s meeting. The company, whose stock had not yet begun its meteoric rise, had not caught the media’s eye, and no reporters asked to attend.
