Technology > Tech Investor
Do investor-relations Web sites work?
A new study examines problems with information found on corporate Web sites.
February 25, 2003: 10:40 AM EST
By Eric Hellweg, CNN/Money Contributing Columnist

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SAN FRANCISCO (CNN/Money) - Everyone knows that the Internet is awash in information about corporate financials. But as an investor, can you find online all the data you need to make smart investment decisions or track your portfolio's performance?

If you answered no, or qualified your response, you're not alone. A study released last week by the Nielsen Norman Group, a user-experience research firm based in Fremont, Calif., found most corporate investor-relations Web sites lacking, with the technology sector suffering from particularly acute shortcomings.

Nielsen Norman's report, "Designing Web sites to Maximize Investor Relations," looked at the sites of 20 companies, including InFocus (INFS: Research, Estimates), Interpublic Group (IPG: Research, Estimates), Palm (PALM: Research, Estimates), Symantec (SYMC: Research, Estimates), UPS (UPS: Research, Estimates), and Vodafone (VOD: Research, Estimates). Forty-two users -- professionals ranging from financial journalists (I was not one of them) to individual investors -- were told to execute several investment-oriented tasks on the corporate sites.

Individual investors -- the group we'll focus on here -- were able to complete 67 percent of the tasks, putting them on the high side of the 55 to 65 percent success rate that's typical in user tests, according to Jakob Nielsen, a principal of the research firm.

But, Nielsen notes, there's a lot of room for improvement. For example, 35 percent of the group couldn't find the companies' most recent quarterly reports, and 77 percent were unable to find the high and low stock prices from the previous quarter.

According to Nielsen, there are four main problems with corporate sites, regardless of what the company sells or the industry in which it does business.

First, most rely too much on unnecessarily complex charts. With professional investors using their own high-end charting software, "there's no reason for companies to have overly fancy tools on their own investor-relations sections," Nielsen argues. "Complicated charts scare novice investors."

The second problem is that these sites often don't provide a unified and simple overview of critical investor information on a single page.

Third, many corporate web pages offer quarterly and annual reports only in PDF format, making them hard to browse online.

Fourth, many sites use financial jargon that's likely to confuse novice investors. In the technology sector, the jargon barrier can be particularly problematic.

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"Investors want to understand what a company does," Nielsen says. "Tech companies seem incapable of explaining their products in layman's terms, preferring to keep it a deep secret what they do."

When asked to name some of the best investor sections on technology company sites, Nielsen says he hasn't seen any site that does it perfectly. But he grudgingly praises Microsoft (MSFT: Research, Estimates). "I am pretty critical of the usability of their software," he says, "but the IR section of has good information in a format that is easy to access."

Nielsen also offers a bouquet to IBM (IBM: Research, Estimates) for its clear main investor page and for making its annual reports available in formats other than just PDF. But he criticizes the clunky navigation needed to find previous reports. He also chastises IBM for running banner ads on its investor pages. "That's too cheap," Nielsen says.

So what can individual investors do to ensure that they find accurate and informative data on the Web? Thankfully, scores of reliable investor sites have sprung up online, including the one you're reading now. Third-party sites are great for comparing different companies, and they usually feature the best charts ( is a standout here).

But for in-depth information about a particular company, the company's own site is still your best option. Naturally, then, Nielsen urges investors to mix things up, combining free, third-party information with data drawn from corporate investor-relations sections.

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