Friday 4 January 2013

Educating and Informing Investors

A posting back in June 2010 regarding a detailed disclaimer in a press release prompted one commentator to note that “the depressing thing is that companies need to keep issuing statements like this, which are there (it seems to me) more to reduce the risk of legal action for negligent misstatement than to educate and inform the investor”.

Those looking to educate and inform investors could do worse than to refer to the recent IPO prospectus from SolarCity, a US company in the field of solar panels.  The company is chaired by Elon Musk, who also chairs Telsa Motors, previously discussed here and here.

The headline statement  - ‘Our business may be harmed if we fail to properly protect our intellectual property’ - reads like standard IP-wash.  What follows, however, is a welcome dose of realism:

‘We believe that the success of our business depends in part on our proprietary technology’: an acknowledgement that IP is far from being the sole determinant of success.

‘We cannot be certain that we have adequately protected or will be able to adequately protect our proprietary technology’ and, candidly,

‘We cannot be certain that our patents provide us with a competitive advantage’.

Rather than highlighting weaknesses, SolarCity’s statements indicate realism and, thus, strength.

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