2004 Publishers Open Forum

Disclaimer

January 12, 2004
San Diego, California


Product Development for Industry Information

Standard & Poor's NetAdvantage


Jay Reingold
Vice President, Library Services
Standard & Poor's



Questions

1) Please briefly describe the main features currently under development for your industry products and why these are important for the library market.
2) Please briefly describe the research teams involved in the industry analyses, and those involved in product development. Also describe the relationship between these different contributors to the product's development and how they receive input or feedback from customers.
3) Please outline the basic approach used for the industry analyses and, in general, the range of credible resources used or specialist analysis tools employed.
4) Please describe your interactions, if any, with industry leaders, industry organizations or private research organizations.
5) What is particularly noteworthy about your product, especially for the public library or academic library audiences?


1) Please briefly describe the main features currently under development for your industry products and why these are important for the library market.

We are in the process of developing two line extensions to complement our popular Standard & Poor’s Industry Surveys product:

Standard & Poor’s Industry Surveys "Global Supplements" consisting of extensive commentary on eleven (11) industries from a European, Asian and/or Latin American perspective. The "Global Supplements" will follow the familiar Industry Surveys format. The initial release will likely include a total of twenty-two (22) separate surveys on the following industries:

Banking
Computer Hardware
Pharmaceuticals
Investment Services
Basic Chemicals
Oil & Gas
Food & Beverage
Automobiles
Airlines
Wireless Telecommunications
Capital Goods


We are developing the Global Supplements in response to market demand for reasonably priced, broad-based, comprehensive, introductory-level industry analysis with a global perspective. We are hoping to release this product in the spring / summer of 2004.

Standard & Poor’s Industry Risk Reports. Designed primarily for the consulting and accounting market, these reports will focus primarily on the different types of operational risks that companies that compete in a particular industry must manage. We will also assess the extent to which particular companies are exposed to industry specific risks and the degree to which specific risks are increasing or decreasing in severity.

We are developing the Risk Reports in response to the increased focus on risk management and risk assessment among auditors, consultants, bankers and corporations in the wake of recent accounting scandals, global terrorism, market crashes, energy crises, blackouts etc.

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2) Please briefly describe the research teams involved in the industry analyses, and those involved in product development. Also describe the relationship between these different contributors to the product's development and how they receive input or feedback from customers.

Standard & Poor’s maintains a "church" and "state" structure in relation to its industry research products.

The "church" is comprised of our equity research analysts whose principal responsibility is to conduct industry and company research and author the Standard & Poor's Stock Reports and Standard & Poor's Industry Surveys. By design, our analysts have minimal contact with clients of Standard & Poor's in an effort to safeguard their independence.

The "state" is comprised of our product management team, which is responsible for product development, competitive analysis, sales, marketing and delivery of our content to our customers. Product managers provide focus and direction to the research activities conducted by our analytical group in response to the needs of our customers. Client contact is maintained via trade shows, research surveys, sales meetings, teleconferences, correspondence etc.

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3) Please outline the basic approach used for the industry analyses and, in general, the range of credible resources used or specialist analysis tools employed.

Industry analysis at Standard & Poor’s is largely an outgrowth of our regular, ongoing, equity research effort. Our research analysts maintain buy / hold / sell recommendations on a universe of almost 1,200 companies (soon to increase to 1,400). Each analyst focuses on companies operating within a specific industry and authors an Industry Survey two times a year. Industry expertise is absolutely essential as the analyst is measured and compensated on his or her ability to identify the leaders and laggards – in terms of stock market performance – within a competitive set. Analysts gain their industry expertise through years of close study of individual companies, reading trade publications, dialogue with industry experts, attendance at industry investment conferences etc. On average, Standard & Poor’s industry analysts have been with our company for over seven (7) years.

Standard & Poor's equity research analysts employ both "bottom-up" and "top-down" research techniques when analyzing companies and industries.

The fundamental or "bottom-up" approach consists of three parts: (1) Intrinsic Value Analysis in which the analyst determines a security’s "fair value" based principally on a proprietary discounted "free" cash flow (DCF) model. (2) Relative Valuation in which the analyst assesses a security’s relative value by comparing appropriate financial ratios across peer groups. (3) Sum-of-Parts in which "fair value" is obtained by determining the private market values for a company’s separate, identifiable business units.

The top-down approach consists of analysis conducted by the Standard & Poor’s Investment Policy Committee and Standard & Poor’s sector strategists who estimate future values for key macroeconomic variables and offer earnings projections at the sector level.

Over the last sixteen (16) years Standard & Poor's equity research team has built a strong track record of success. On average, our 5-STAR "Buy" and 4-STAR "Accumulate" stock recommendations have increased by 16.4% and 12.1% per year respectively vs. an average annual increase of 9.1% for the S&P 500 over the period ranging from 12-31-86 to 11-30-03.

In the 2002 Wall Street Journal "Best of the Street" analyst survey, Standard & Poor's was ranked second (2nd) among 77 participating research firms, including such heavyweight names as Merrill Lynch, Smith Barney, Goldman Sachs, CSFB, Bear Stearns and Lehman Brothers.

Since 1999, Standard & Poor's research was rated # 1 on a one, two, and three-year basis among research providers with coverage exceeding 500 companies by Investars ( www.investars.com), an independent, third party firm that monitors the performance of equity research providers.

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4) Please describe your interactions, if any, with industry leaders, industry organizations or private research organizations.

Standard & Poor's equity and industry research methodology is proprietary. In general, our analysts do not have much interaction with industry organizations or private research organizations. The analysts may make use of published materials from such organizations in the course of their research and they do attend industry investment conferences.

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5) What is particularly noteworthy about your product, especially for the public library or academic library audiences?

Standard & Poor’s Industry Surveys have been published continuously, in one form or another, since the 1920’s. The format is time tested and proven and our market research indicates a high degree of satisfaction with the form and content of our Industry Surveys among our reference market customers.

Among public and academic library audiences, Standard & Poor's Industry Surveys have traditionally served as an excellent industry research starter kit. By reading our Industry Surveys, students and researchers can quickly gain a familiarity with the key participants, current business environment, modes of competition, jargon, source materials and comparative company performance statistics pertaining to a particular industry. Our industry coverage – surveys of 51 industries – is extremely broad and the authors of our surveys - Standard & Poor's equity research analysts – are acknowledged experts in their field.

Finally, industry expertise is the foundation of Standard & Poor's equity research activity. It is the cornerstone of our success and we are committed to strengthening and enhancing our industry research offerings into the future.

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BRASS Business Reference Sources Committee

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ALA Midwinter Conference, January 12, 2004



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