It’s scary out there. Companies everywhere are looking for ways to cut costs. All too often, though, they look first to marketing – or in the case of public companies, financial communications and investor relations. Selfish reasons notwithstanding I can say with certainty that this is the wrong strategy. Now more than ever public companies need to be building investor awareness of their stock – letting investors know precisely why they should care and encouraging them to follow the stock’s story through to more favorable investing times.

However, the default opinion is often, “Why should I invest in telling my story right now? It’s not going to move the needle.” While this opinion is not entirely accurate, it is certainly true that the market for emerging growth stocks has shrunk considerably of late. For example, total dollar trading volume on the Over-the-Counter Bulletin Board has shrunk by nearly 60% in the last year. (<a href="http://otcbb.com/dynamic/tradingdata/sharedollarvolume/dollar.htm">http://otcbb.com/dynamic/tradingdata/sharedollarvolume/dollar.htm</a>)

But there is still money to be found, if you are doing everything you can to set your story apart. Investors are consumers, and your stock is the product they consumer. You must treat your stock as you do your core product or service and redouble efforts to build demand for it NOW so that when investors return to the market they know precisely in which stock they want to invest. This means aggressively employing cost-effective financial marketing methods that can be precisely tracked and that result in an opt-in investor database to which you can then remarket at every opportunity.

To drive home this point, I want to share with you some excerpts from an outstanding recent article from Zealotry Marketing (<a href="http://www.zealotrymarketing.com">www.zealotrymarketing.com</a>) entitled “The Fear Factor: A Marketing Nightmare, or a Marketer’s Dream?”

In general, the article strongly advises companies to now “Be more visible.  Do more.  Be flexible.”

In the article marketing guru Alf Nucifora (<a href="http://www.nucifora.com">www.nucifora.com</a>) states that when speaking to his clients: “I tell them that now more than ever they need smart, experienced marketing service support in order to survive the current crisis and capture market share at a time when competitors [or comparable stocks] are vulnerable.”

The article concludes with the following emphatic statement:

“Suspending marketing programs is flat out the wrong thing to do.
If your brand proposition (positioning, targeting, messaging, value points) worked in good times, it should work in the bad times as well. Walking away from marketing tells your staff and customers [or investors]: you are lacking in confidence; do not have a viable business plan; are making it easier for competitors to take market [or investor mind] share from your company; and accurate measures or projection of ROI about marketing is missing.”

When determining what to do with your financial communications in these turbulent market conditions, consider the long-term ramifications of your decisions – the scant money saved will likely be meaningless next to the erosion of investor confidence you’ll trigger or the complete lack of investor awareness you’ll experience once a market improvement begins.

To read the entire article from Zealotry Marketing: <a href="http://zealotrymarketing.wordpress.com/2008/09/17/fear-the-economy/">http://zealotrymarketing.wordpress.com/2008/09/17/fear-the-economy/</a>

 

By guest technology blogger Shehan Jayatilaka

A little more than a year ago I owned a "smart phone". Unfortunately, what made this phone "smart" is up for debate. It moved slowly, was tricky to navigate and for having so many bells and whistles, was so difficult to operate that I used it mainly for texting and phone calls, and only in the event of an absolute emergency, did I use it for the Internet.

Fast forward a few months later and I took the plunge—I bought an iPhone, and although Steve Jobs would love for me to be an evangelist for his phone (buy an iPhone, buy an iPhone), all I will say to that point is that of all the phones I have purchased, which are numerous, the iPhone is the most elegant, simple and useful phone I have owned to date.

A few weeks ago, to much fanfare, the version two iPhone was released to the masses, but more significant, Apple allowed third party developers to build native software applications for the iPhone.  With big names like the New York Times, Bloomberg and Oracle throwing their hat into the mobile application ring, I was surprised to see that there was a conspicuous absence of financial services applications.  (To be fair, E*Trade has mobile applications for Blackberry devices and most companies have mobile web applications– which means you have to use your mobile browser, log on and into the site, and so forth as opposed to native software applications).

No public company wants to stay on the Bulletin Board for long, and especially not now – dollar trading volume on the OTC BB has been sliced in half in the last 12 months. But there has long been disagreement as to the appropriate next step for emerging growth companies: NASDAQ or Amex? In the last three years that disagreement has been emphatically settled. NASDAQ has so completely trounced Amex as to make the conversation moot. Consider the following:

• Since 2005, 110 companies have transferred from Amex to NASDAQ. Transfers from NASDAQ to Amex over the same period? Two. 110 – 2. That’s the biggest blowout since Georgia Tech beat Cumberland 222 – 0 in 1916.

   

• As a result, Amex is now a ghost town with fewer than 600 companies listed. NASDAQ, in stark contrast, is at 3,100 companies listed and growing

This latest blog entry comes to us from Timothy J. Keating, President of Keating Investments, LLC. Tim Keating was asked by David Feldman of The Reverse Merger & SPAC Blog to address the impact of certain aspects of the recent SEC changes to Rule 144. Here is his response in its entirety.

Timothy J. Keating
President, Keating Investments, LLC

Last month, I delivered a speech to the Reverse Merger Conference in Los Angeles titled: “Self-Filings: The New Preferred Private-to-Public Path.” My thesis was that certain of the rule changes to Rule 144 that went into effect on February 15, 2008 were clearly not understood by most of the participants in the PIPEs/reverse merger industry and disastrous for reverse merger sponsors. My good friend David Feldman argues that the changes to Rule 144 which shortened the waiting period from one year to six months were the best thing that has happened to the PIPEs industry in many years. Since I primarily look at the world through the lenses of a reverse merger sponsor, I wholeheartedly disagree. In fact, I see the Rule 144 change glass as half empty—at best.

For reverse merger sponsors, there are three major causes for concern in the Rule 144 changes.

First, the SEC explicitly created a doctrine of “separate, but not equal” by adding an extra six-month holding period to PIPE investments made at the time of a reverse merger. Based on excellent disclosure reforms codified in law in 2005, there is no conceivable justification or rationalization for this extra waiting period. One can only conjecture that certain senior SEC staffers still have a visceral allergic reaction to reverse mergers and felt compelled to “do something” to maintain an official taint on this activity.

When public companies issue new shares, most notably as part of a private placement (also known as a PIPE) to raise capital, they must first register these shares with the SEC in order for the receiving investor to sell them. This process can have significant impact on open market investors (you), so do your homework – when evaluating an investment, check first to see if a registration statement (Form S-1) has been filed with the SEC. If one has, has it been amended? That would show up as a subsequent filing labeled S-1/A. Finally, has the registration statement been declared effective and converted to a Prospectus (Form 424B3)?

This seems like just a lot of paperwork - why should you care? Quite simply, the value of your investment depends on it. Let’s break this down. When a company raises capital it often does so by issuing new shares – usually in the millions, if not tens of millions. As a pure exercise in supply and demand, if these shares get sold in small increments over time into an active market for the stock then there should be little negative impact on the stock price (and the value of your investment). But what if these shares all come to market at once, sold in huge blocks until the market simply cannot sop up any new shares? When supply so aggressively exceeds demand the stock price will get crushed. And it will get buried under these new shares until the company can stimulate enough new demand (through demonstrated performance) to eat through this overhang. Even for strong companies this can take months. For struggling companies this can take years, if it ever happens at all.

Spicy Pickle is a nationally recognized and award-winning franchise specializing in culinary inspired fast-casual dining. The $70 billion fast-casual industry is growing at 10% - 15% per year.

The term “tipping point” has been thrown around with such enthusiasm in recent years that it has lost much of its meaning. But Spicy Pickle is truly an example of a company quickly approaching a quantifiable tipping point.

The company believes that it will reach profitability with a store count of 75 – 100. With 41 restaurants currently open across 13 states and another 87 already pre-sold, Spicy Pickle’s could easily clear this hurdle with just its existing pipeline. But the company is not resting on its laurels – sales efforts are ongoing to grow beyond this 128 restaurant total.

That China is experiencing phenomenal growth is not exactly breaking news at this point. We’re so used to hearing about their annual 10% GDP growth that we almost forget what a staggering number that truly is. So it is likewise easy to assume that all interesting China growth plays have been tapped out. This could not be further from the truth.

Start by assessing your own definition of "growth" in the context of a country’s economic boom. Is it best evidenced by tangible features like road, infrastructure and high rise construction? By the Summer Olympic Games, Beijing will have added the equivalent of three Manhattans to its skyline – in just three years’ time. Maybe something you want to be a part of? If so, you could either invest in the companies performing the construction or in the materials actually making the construction possible. In my mind, companies and contracts come and go, but the need for core materials like steel remains constant. That monstrosity that is The Bird’s Nest (the main athletic stadium) would be nothing more than an artist’s rendering without steel.