Are You REALLY Reading Your Customers’ Annual Reports?

It’s that time of year again. Spring, when a young man’s fancy turns to thoughts of financial disclosure—specifically your customers’ annual reports. This is the time of year when most of the 2015 reports come out, and I like to remind my readers that now is the time to download a copy, read it, and use the information gained to keep up with your customers and if possible develop fresh insights based on their changed environments. Even if you’re already doing a good job of keeping up with developments, it’s useful to peruse for clues about where they are going in the year ahead.

But I fear it’s a losing battle, and I doubt my feeble attempts to remind you do much good. I say that because of an article in last Saturday’s Wall Street Journal: “It’s Time to Re-Learn the Lost Art of Reading.” In the article Jason Zweig urges investors to read annual reports, and laments the fact that it seems to be a dying practice. He cites research by a Notre Dame finance professor who found that only 29 people a day download the average annual report when it comes out. (I wonder how many of those are salespeople?) “Even General Electric’s annual report was downloaded from GE’s website only 800 times in 2013”!

You can glean a lot from reading an annual report, but even if you don’t get any specific actionable information, it’s extremely helpful to earn the right to speak to higher level decision makers and show that you are interested in impacting their business results, not just pushing products into their pipeline. And if nobody is reading them nowadays, what a terrific opportunity to stand out as someone who has.

So, as soon as you finish this paragraph, do yourself a favor. Go straight to the Investor Relations section of your top customer’s website, download their 2015 annual report, and then read it. You don’t have to read the whole thing cover to cover, but you should definitely read the Chairman’s Letter, peruse the numbers, and check out Management’s Discussion of Financial results. To glean specific tidbits, use these questions I furnished in a previous reminder.