Investor Relations at United Technologies (a)

12 Pages Posted: 21 Oct 2008

See all articles by Ted Forbes

Ted Forbes

affiliation not provided to SSRN

James Rubin

University of Virginia – Darden Graduate School of Business Administration

Abstract

In 1993, the top management of United Technologies believed that the company's stock was underperforming. The director of Investor Relations, the CEO, and the CFO launched a concerted effort to reposition the company in the minds of investment analysts. The A case discusses how well their campaign worked. See also the B case, BC-0121.

Excerpt

UVA-BC-0120

INVESTOR RELATIONS AT UNITED TECHNOLOGIES (A)

When you are a consistently well-performing company like Emerson, you can point to your history and say, “we've had 38 years of increasing earnings.” In that situation you can sell the future based on the past. In the case of United Technologies Corporation in 1993, we couldn't do that. We couldn't sell UTC on the past because the past didn't look all that good. In past years, UTC had taken large restructuring charges, made poor acquisitions, and most importantly, consistently disappointed investors. So we had to sell on the future. In 1993, we told Wall Street all the things we were doing to take costs out and make the business better; but Wall Street didn't believe us. They said, “We've heard it all before.” What do you do?

—Angelo Messina, Director of Investor Relations, UTC

The top management of United Technologies Corporation (UTC) knew they had a compelling story to tell. But as they looked out at the gold dome of the State House in Hartford, the managers in charge of Investor Relations (IR) had to decide who exactly to tell it to and how to do so convincingly. By 1993, the stock market was clearly pulling out of the doldrums. Encouraged by optimism about the future and data suggesting an end to the recession, Wall Street was about to begin a rise unimaginable in the black October of 1987. Profits were up, and the increasing popularity of mutual funds fueled unprecedented market growth. But UTC, one of the 30 stocks in the Dow Jones Industrials Index (UTX on the New York Stock Exchange), was not sharing in the recovery enjoyed by conglomerates of comparable size and history.

For IR, the news was not all bad. In 1993, some analysts recommended UTX as a speculative buy. Martin Sankey of First Boston Corporation, for example, wrote after the annual analysts' meeting in February that “UTC management expects 1993 to be only slightly better than 1992, with a very soft first half, then an improving second half as cost reductions take effect.” The good news, said Sankey, was that management finally appears . . . . serious about cost reduction. There were also a lot of new faces on the speaker's platform.

. . .

Keywords: communication strategy, stockholder relations

Suggested Citation

Forbes, Ted and Rubin, James, Investor Relations at United Technologies (a). Darden Case No. UVA-BC-0120, Available at SSRN: https://ssrn.com/abstract=907732 or http://dx.doi.org/10.2139/ssrn.907732

Ted Forbes (Contact Author)

affiliation not provided to SSRN

No Address Available

James Rubin

University of Virginia – Darden Graduate School of Business Administration ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4830 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/rubin.htm

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