Investors don't like bad news late at night

By Jeff Green
Bloomberg News Service

CHICAGO — Nicor Inc. sent investors a wake-up call July 18 by disclosing — at 11:22 p.m. — that one of the gas utility's joint ventures had overstated revenue.

Investors responded the next morning: Nicor shares plunged on the New York Stock Exchange, ending the day 40 percent down.

"It's not a good practice to put news out in the wee hours of the night, now more than ever," said Louis Thompson, head of the National Investor Relations Institute. "Companies need to think about (it) if we're serious about restoring investor confidence."

Nicor, Flowserve Corp., Alliant Energy Corp. and 40 other U.S. companies released negative financial news last month between 8 p.m. and 5 a.m. New York time. Shaken investors punished many of the stocks at the first opportunity.

Flowserve issued a news release July 22 at 11:19 p.m. The Irving, Texas, maker of industrial pumps cut its third-quarter profit forecast . Its stock tumbled 37 percent the next day.

Alliant Energy's news that second-quarter profit was below expectations came at 8:34 p.m. July 18. The Madison, Wis., utility's shares lost 23 percent of their value the next day.

Spokesmen at Flowserve and Alliant Energy said the companies issued the news releases as soon as they were finished writing them.

It is not illegal to divulge such news late at night, said Michael McAlevey, a former Securities and Exchange Commission official. However, it is better "to release news at a time when the market is capable of absorbing the info."