Dire consequences of company results on Twitter

EVERY morning I wander down to the gate to pick up my delivered copies of Business Day and Financial Times. If the weather is good it is papers and tea at the pool, if not, it’s papers and tea back in bed.

That’s what gets me going in the morning, that’s my entertainment, my fix of what’s happening, my start to the business day. It may be yesterday’s news but its today’s thoughts on it — I hope it’ll always be like that.

The Securities and Exchange Commission (SEC) has given approval for companies to announce “key pieces of information” on Twitter and Facebook.

Nobody really knows what that means, what the boundaries and permissions and rules are. So far the only requirement seems to be that investors (investors mind you, not the general public) be made aware of the channels that the corporate communicator intends to use — the detailed story has to be filed somewhere, but who cares?

In time, there will be rules upon rules and mistakes upon mistakes. Oh yes, and lawsuits. Insider trading cases, class actions of “my battery was flat”, or “I had no signal” from the guys on the wrong side of the trade. Court cases and precedents, you know, the American way.

I’m not sure when our very own JSE will follow, but it will. It will have to. Already rules on publishing results are moving from being required in the paper to being available in the ether, already the rules of acceptably abbreviated reporting are being written — but the leap from a full-page advertisement in the newspaper to 140 characters on Twitter is a big one.

The SEC move is irreversible. Instead of a whole bunch of compliance reporting, with a format to fit it into, CEOs will need to get to the crux of their message in 140 characters. Not everyone will get that right. Only a few have the ability to comprehend and distil essence. The real issue, however, is distance and time compression. From source to final recipient is now measured in seconds. The “cheque is in the mail” is now the EFT, the “wish you were here” post card is now the SMS.

The inevitable march of tech- nology will come at a price. Twitter and other social media platforms propagate information in a geometric progression. You tweet your 256 followers who in turn each tweet their 256 followers who in turn each tweet their 256 followers and, after only three iterations, 16,777,216 people have got the message (and that’s only if one of them isn’t Justin Bieber or Lady Gaga — otherwise we have a global population information explosion).

Then the fun starts. That first message may trigger 1-million trades with 1-million counterparties, each with recommendations or warnings to their followers — before you know it you’ve got nanosecond algorithmic trading.

Once you press “send” the message is gone — we’ve all been there — you can’t take it back. So, what if you (or your predictive text function) make a mistake? Fast multiple retractions commence, recalled instructions, trades are challenged,

Already rules on publishing results are moving from being required in the paper to being available in the ether

reversed, court cases, consequences. Our relationship with our cellphone is umbilical. I’m afraid that bond is going to get stronger and stronger.

Dispersed integration, is there such a concept? It is all getting up close and personal. PCs are giving way to mobiles and websites are morphing into mobi-sites. Is this power to the people or control from the centre? One of the techno-faux pas of the Arab spring was the belief by the government that if they surrounded the broadcasting centre with tanks they’d contain the communication — duh?

So, the instant world has arrived, legally. Can we cope? Will we make the same decision based on 140 characters as we used to after reading an annual report? When the Bank of Japan announces a 2% inflation target after 20 years of deflation, the yen depreciates against the dollar by 3% instantly, but should it? Should the tons of goods already on the water from Japan to the US really be re-priced? Will it all reverse on another utterance tomorrow, or a tweet?

We live in a world of increasingly instant influence, instant consequence. A verbal contract may still only be as good as the paper it’s written on, but a tweet, well that’s good enough for the SEC. It may be wise to step away from your device to reflect a while, to consider the fundamentals.

Perhaps it would be good to have a reality check? Hang on, this is the new reality? Excuse me, my phone just beeped …