A large-cap technology company was increasingly viewed by investors as mature. Additionally, the Street had become concerned that the Company’s growth targets were too aggressive and thus questioned its ability to achieve financial commitments. Internally, management was considering changes to its capital and organizational structure and was keen on learning how the Street would react to different scenarios without tipping its hand. It had also recently hosted an Investor Day and was interested in receiving feedback on its new format. 


Opportunity

Corbin Advisors was retained to assist the Company in:

  • Understanding how key messages and financial targets resonated with investors
  • Testing management’s hypothesis with regard to investor perceptions of the Company, including potential uses of excess free cash
  • Assessing investor sentiment on potential structural change scenarios
  • Determining the effectiveness of its new Investor Day format

Key Discoveries

  • Disbelief about Company’s ability to hit long-term financial targets
  • Acute focus on total return and margins, not just growth
  • Market share loss of utmost concern
  • Story too complex with unnecessary noise
  • Disclosure not consistent quarter-over-quarter, making it challenging to model
  • Unease over lack of succession planning

Impact

  • Management gained a clear sense of investor perceptions and insight into what was weighing on valuation
  • Leveraged perception study research and findings and subsequently:
    • Announced a restructuring plan; streamlined operations, addressed valuation detractors
    • Provided more realistic growth targets, fine-tuned guidance communication
    • Appointed a COO
    • Initiated a dividend
  • Overwhelming positive reaction, including favorable sell-side reports

“Easing away from long-term growth targets is a positive.”

“…the company has underwent [sic] a dramatic overhaul, simplification, and realignment. Layers of bureaucracy have been ripped out…”

“We believe payment of a dividend has been one of the primary requests of several of its major investors and we believe the announcement is being regarded positively by investors.”