Surfing For Annual Reports

Many companies offer financial data, but few use the Web in all its multimedia glory

In recent years, companies have discovered that the World Wide Web can be a good way to get information to customers. Now, in this season of annual reports, they are learning that it also can be an effective way to communicate with employees and--most particularly--shareholders and prospective investors.

To see how the Internet is changing the concept of the annual report, I toured the Web sites of the high-performance companies on the BUSINESS WEEK 50 list and took a peek at the online offerings of selected other corporations. I found that most provide some investor data online, but it's not always useful. I located Web sites for all but three of the BW 50. Of these, 39 offer at least some financial data, but just 28 provide a complete 1995 or 1996 annual report. Some also offer copies of dull but important Securities & Exchange Commission filings, such as 10K annual financial reports and proxy statements. Others offer links to the SEC's EDGAR database (, where all corporate filings are available.

DULL TO DRAMATIC. I found some dramatic differences in approach. Offerings range from bare-bones financials, some with barely readable text, to colorful and sometimes animated annual reports with multimedia glitz. The more basic ones can be boring. Granted, even if an online report is boring, it can still be useful to the investor. But some companies are using the Web to go beyond what they can do in print, making the sites more informative as well as more interesting. Many, for example, provide a current stock quote and history on stock prices and trading activity.

Not surprisingly, high-tech companies are generally the cleverest at taking advantage of the new medium. For example, Intel offers three versions of its online annual report. The simplest, designed for 14.4 kbps modem connections, is mostly text. The middle version, for 28.8 kbps, comes with richer graphics. And the rendition designed for fast connections offers sound, animations, and financial graphs that pop up as you click on highlighted text. You can watch slides of last year's annual meeting and hear speeches by CEO Andrew Grove and other key execs.

IBM's 1996 report has an interactive "historical charts" section that lets you plot up to five data series on a single grid (but not with a Microsoft Internet Explorer browser, for some reason). You can roll your own charts at the 3Com site by downloading tables into a spreadsheet.

Compaq Computer also uses its electronic annual report to offer something extra. A link takes you to the ProLytiX site, a subscription-only service aimed at professional analysts. It offers a wealth of financial information, including many ratios not published in financial statements. People coming from the Compaq site have free access to all Compaq information.

A key advantage of online communication is up-to-date information, which some companies have put to good use. Norfolk Southern, for example, has used its site to keep investors posted in its fight to acquire Conrail.

Because the Web is worldwide, some companies have crafted their sites to appeal to a global audience. Microsoft provides its financial tables in four languages and converts data into six different currencies. Northern Telecom offers its entire annual report in French, German, and Spanish as well as English.

DUMPY. High-tech companies use their Web sites as technology demos, but not every corporation shares those ambitions. Still, even a simple Web site can be an effective way to communicate with investors. The trick is to follow a few simple rules.

The worst online annual reports simply dump the text of the printed version onto the Web, with type that is too small and pages that are too long for easy browsing. Freddie Mac is an example. At the bottom of each page should be links to the next page, the previous page, and the table of contents. This sounds elementary, but a number of sites, including Microsoft's, fail to do it.

Finally, graphics have to be chosen with care. Too few, and the report is visually oppressive. Too many, and the pages take too long to download. And it takes some effort to make sure that graphs and charts are readable. Medtronic (, for example, has lots of useful-looking graphs in its online report, but I could barely read the captions.

Many of the annual reports now on the Web represent first efforts, and it shows. Come back next spring, and I think you'll find that online financials will be a feast for investors' eyes.

Before it's here, it's on the Bloomberg Terminal.