News notes
New York-based Arbitron Inc. announced in late January that the Media Rating Council has accredited the Portable People Meter radio ratings data in Houston.
Sydney-based research process outsourcing firm Pulse Group announced that it has received an undisclosed amount of venture capital funding from Japan Asia Investment Company Ltd.
Acquisitions/transactions
Synovate has acquired Interview - NSS, an Amsterdam-based full-service research company. Interview-NSS employs a staff of 110 and has experience in contact and channel management, media and branding research. The acquisition also includes the European Data Collection Centre, a multilingual CATI contact center located in the Dutch capital.
U.K.-based Research Now has acquired Samplenet e-Research Solutions. Samplenet, which trades as OpenVenue, is a Canada-based online fieldwork company. The initial consideration for the acquisition is CAN$22.5 million, split equally between cash and shares. Additional payments totaling up to CAN$25 million of cash or shares may be payable subject to the achievement of performance targets, giving a potential maximum total consideration of CAN$47.5 million.
The Nielsen Company announced in February that it has completed the sale of its VNU Business Media Europe unit to 3i, a private equity and venture capital firm. Terms were not disclosed. Separately, The Nielsen Company and NetRatings Inc. announced that they have entered into a merger agreement by which Nielsen, which already owns approximately 60 percent of NetRatings, would acquire the NetRatings shares it does not currently own at a price of $21 per share in cash, for a total purchase price of approximately $327 million. The NetRatings board of directors approved the merger agreement following the unanimous recommendation and approval of an independent special committee of the NetRatings board of directors. The transaction price represents a 44.1 percent premium over NetRatings’ closing price on October 6, 2006.The merger is expected to be completed in the second quarter of calendar year 2007, subject to customary conditions and approvals.
Paris-based Ipsos has acquired a majority stake in the Peruvian market research and public opinion company Apoyo Opinión y Mercado S.A. The company, which also operates in Bolivia and Ecuador, has revenues of over $10 million, and approximately 200 employees in the three countries where it operates.
New York communications services company WPP has acquired All Global, a U.K.-based marketing research company that specializes in health care information services. All Global will be integrated into WebSurvey Research, a New York based firm which is part of WPP.
Alliances/strategic partnerships
New York firms Arbitron Inc. and The Nielsen Company have signed an agreement that will govern completion of development and testing of the Project Apollo marketing research service and the expansion of the pilot panel to a full national service if the test results meet expectations and generate marketplace support. The parties have formed a jointly-owned limited liability company to continue pursuit of the project. The proposed Project Apollo service would use the Arbitron Portable People Meter system, ACNielsen Homescan technology and other technologies to provide advertisers with an understanding of the connection between consumer exposure to advertising on multiple media and their shopping/purchase behavior.
Association/organization news
The Council for Marketing and Opinion Research has appointed Howard Fienberg as its new director of government affairs. Fienberg brings more than eight years of public policy experience including work on legislative issues affecting the research profession.
Awards/rankings
New York research firm Frost & Sullivan gave marketing executive Chris X. Moloney a 2007 Lifetime Achievement Award for Marketing Research and Competitive Intelligence. Over the past 15 years, Moloney, who is chief marketing officer at Scottrade, an online investment firm, has “emerged as a recognized pioneer and forward thinker in the field of marketing research, specifically in the areas of customer loyalty, customer advocacy marketing and drivers of consumer behavior” according to a Frost press release. The Lifetime Achievement Awards are nominated, selected by and voted on by a panel of industry experts assembled by Frost & Sullivan.
Ipsos announced that its researchers have won two awards from the journal Managing Service Quality (MSQ) for co-authored papers: Outstanding Paper and Highly Commended Paper. The articles were deemed to have made significant contributions to theory and best practices in the services industry.
The article receiving Outstanding Paper (Best Paper) was “A Longitudinal Examination of the Asymmetric Impact of Employee and Customer Satisfaction on Retail Sales.” Its authors were Timothy Keiningham and Ken Peterson (Ipsos Loyalty), Lerzan Aksoy (Koç University), Bruce Cooil (Vanderbilt University), and Terry Vavra (Terry Vavra Associates). One of the key findings of this research was that for companies to benefit financially from improved employee satisfaction, managers must not only achieve consistent levels of satisfaction, they must also achieve performance thresholds that correspond to increased sales.
MSQ awarded “Call Center Satisfaction and Customer Retention in a Co-branded Service Context” a Highly Commended Paper distinction, meaning that it was a finalist for the Outstanding Paper award. This article was written by Keiningham and Barry Wahren (Ipsos Loyalty), Aksoy, Cooil, and Tor Wallin Andreassen (Norwegian School of Management).This paper showed that there is a potential downside to cobranding in that customers may leave the primary brand if they are dissatisfied with the co-brand partner. Copies of the articles can be found at www.ipsos-ideas.com.
Anne Bailey Berman, president of Boston research firm Chadwick Martin Bailey, was awarded the 2007 Pinnacle Award for Achievement in Entrepreneurship by the Women’s Network of the Greater Boston Chamber of Commerce, in a ceremony honoring the accomplishments of women in greater Boston who have achieved excellence in business and management.
New accounts/projects
The Travel Industry Association has selected Vancouver-based Vision Critical to provide an online “Voices of the Industry” panel to help keep the association’s finger on the pulse of the travel industry community.
Sonneborn Inc., a Mahwah,N.J., maker of high-purity specialty hydrocarbons, has licensed the Confirmit EFM platform from Norway-based research software company Confirmit for its newly expanded customer satisfaction initiative.
Germany-based GfK announced several TV measurement contract wins for its associated companies. GfK Romania will measure official TV ratings in Romania for four years initially, starting in January 2008.The TV research contract of Intomart GfK in the Netherlands has been extended by a further three years and the contract of GfK Ukraine until 2012. Beyond this, the GfK Group has equipped viewer panels in India, Pakistan and Cyprus with additional and also new metering instruments.
Seattle-based Global Market Insite Inc. (GMI) announced that MacGroup, a Cincinnati agency that designs custom modeling solutions, has selected GMI’s Net-MR market research software suite for data collection.
Redlands, Calif.-based GIS software firm ESRI has signed an agreement with geoVue, a provider of location optimization tools. ESRI will provide its ArcGIS Server enterprise GIS platform, data and support to geoVue to develop integrated solutions that capitalize on geographic analysis for multilocation businesses.
New companies/new divisions/new locations/expansions
Synovate Healthcare has launched a new office in Hamburg, Germany.
Chicago consulting firm Frank Lynn & Associates has formed a new research division called Insight Research.
Company earnings reports
Greenfield Online Inc.,Wilton, Conn., reported financial results for the fourth quarter and full year ended December 31, 2006.Total net revenue was $29.5 million for the fourth quarter of 2006 as compared with $24.5 million for the same period in the prior year for an increase of $5 million or 20.3 percent of which approximately $1.1 million or 4.4 percent was due to favorable currency effects. For the Internet survey solutions segment, total net revenue was $22.4 million for the fourth quarter of 2006, including favorable currency effects, as compared with $20.9 million for the same period in the prior year for an increase of 7.2 percent.
Total gross profit was $22.5 million or 76.2 percent of revenues for the fourth quarter of 2006, as compared with $18.5 million or 75.4 percent of revenues for the same period in the prior year.
Operating income was $5.2 million for the fourth quarter of 2006 or 17.5 percent of revenue, as compared to an operating loss of $89 million for the same period in the prior year, which includes impairment and restructuring charges of $91.8 million.
Net income for the fourth quarter of 2006 was $3.5 million as compared with a net loss of $89.1 million, including the charges mentioned above, for the same period in the prior year.
Net cash flow provided by operating activities was $7.6 million for the fourth quarter of 2006 as compared to $7.5 million for the same period in the prior year.
For the fourth quarter of 2006, adjusted EBITDA, excluding restructuring charges and one-time charges, a non-GAAP financial measure, was $8.7 million or 29.4 percent of revenue, as compared to $5.7 million or 23.3 percent of revenue for the same period in the prior year.
Operating free cash flow, a non- GAAP financial measure, was $5.9 million for the fourth quarter of 2006, as compared to $5.7 million for the same period in the prior year.
For the fourth quarter 2006 ended December 31, Arbitron Inc., New York, reported revenue of $79.3 million, an increase of 5.2 percent over revenue of $75.3 million during the fourth quarter of 2005. Costs and expenses for the fourth quarter increased by 17.9 percent, from $63.8 million in 2005 to $75.2 million in 2006, due in part to planned expenditures for the 2007 rollout of the Portable People Meter ratings service in Philadelphia and New York. Noncash equity compensation for the quarter amounted to $1.4 million. Earnings before interest and income tax expense (EBIT) for the quarter were $10.9 million, a decrease of 35.7 percent compared with EBIT of $17 million for the fourth quarter of 2005. Interest expense for the quarter increased to $3.2 million from $0.9 million in 2005 due primarily to a one-time “make whole” charge of $2.9 million stemming from the early repayment of a $50 million outstanding senior note in October 2006. Net income for the quarter was $4.9 million, compared with $11.2 million for the fourth quarter of 2005. Net income per share for the fourth quarter of 2006 decreased to $0.17 per share (diluted), compared with $0.36 per share (diluted) during the comparable period last year. For the year ended December 31, 2006, revenue was $329.3 million, an increase of 6.2 percent over revenue of $310 million for 2005. A planned increase in expenses for the 2007 rollout of the Portable People Meter radio ratings system in Philadelphia and New York and for the Project Apollo pilot contributed to an increase in costs and expenses for the year of 16.9 percent, from $216.3 million in 2005 to $253 million in 2006. Non-cash equity compensation in 2006 totaled $6.5 million. EBIT decreased 17.2 percent from $101.4 million in 2005 to $84 million in 2006. Net income for 2006 decreased 24.7 percent to $50.7 million compared with $67.3 million in 2005. Earnings per share (diluted) in 2006 was $1.68, compared with $2.14 per share (diluted) last year, which included a tax benefit from the reversal of certain tax contingencies relating to prior years of $0.15 per share (diluted).
Mobile and Internet measurement firm Keynote Systems, San Mateo, Calif., announced financial results for its fiscal first quarter ended December 31, 2006. Revenue for the first quarter of fiscal year 2007 was $15.8 million, an increase of 4 percent compared to the preceding quarter and a 15 percent increase compared to the first quarter of fiscal year 2006. Net income for the first quarter of fiscal year 2007, which included a $1 million income tax benefit, $920,000 in stock-based compensation expenses, and a $759,000 charge for amortization of intangible assets required under generally accepted accounting principles (GAAP), was $264,000, or $0.01 per diluted share. This compared to net loss of $6 million, or $0.35 per share, for the preceding quarter, and net income of $587,000, or $0.03 per diluted share, for the first quarter a year ago.
The non-GAAP net income for the quarter was $551,000, or $0.03 per diluted share, compared to non- GAAP net loss of $797,000, or $0.05 per share, for the preceding quarter, and non-GAAP net income of $2.4 million, or $0.12 per diluted share, for the first quarter a year ago.
Paris-based Ipsos generated consolidated revenue of EUR 857.1 million ($1.1 billion) in full-year 2006, up 19.4 percent compared to 2005.This is the firm’s strongest annual growth rate since 2001.The currency effect was almost negligible, with a positive effect of 0.6 percent. There were major changes in the scope of consolidation, which account for 12.3 percent. Nonetheless, this figure is lower than at the beginning of the year due to the integration of MORI in the U.K. in October 2005 and Understanding UnLtd. in the U.S. in November 2005. Organic growth was 6.5 percent. In comparison, market growth is estimated at 5 percent, which is a little less than expected at the beginning of the year due to the ongoing development of online data collection systems and the transfer of European budgets to the developing countries. Both of these two trends had a deflationary effect on the market, which remained nonetheless dynamic.
Harris Interactive, Rochester, N.Y., announced results for the second quarter of fiscal 2007 ended December 31, 2006. Revenue for the second quarter was $56.6 million, up 3 percent when compared with $54.8 million of revenue reported for the same period a year ago. U.S. revenue was $43.2 million, down 1 percent from the $43.7 million of revenue reported a year ago. European revenue, including $1.3 million of favorable foreign exchange rate differences, was $13.4 million, up 20 percent from the $11.2 million of revenue reported for the second fiscal quarter of 2006.
Global Internet revenue for the second quarter was $32.4 million, equal to the $32.4 million of Internet revenue reported for the same period a year ago. U.S. second quarter Internet revenue was $28.4 million, down 3 percent when compared to $29.2 million of Internet revenue in the second fiscal quarter of 2006. European Internet revenue for the second quarter was $4 million, up 27 percent from the $3.2 million of Internet revenue reported for the same quarter last year.
Operating income for the second quarter, which included a $0.4 million gain on the sale of real estate in the U.K., was $5.8 million, or 10.2 percent of revenue, up 46 percent when compared to operating income of $4 million, or 7.2 percent of revenue, for the same period a year ago.
Net income for the second quarter was $3.6 million, or $0.06 per diluted share, up 54 percent when compared with net income of $2.4 million, or $0.04 per diluted share, for the same period a year ago.
Revenue for the first half of fiscal 2007, which ended on December 31, 2006, was $104.6 million, up 1 percent when compared with $103.8 million of revenue reported for the same period a year ago. U.S. revenue for the first half was $79.8 million, down 1 percent from the $80.8 million of revenue reported for the first half a year ago. European revenue, including $1.8 million of favorable foreign exchange rate differences, was $24.8 million, up 8 percent when compared to $23 million of revenue reported for the same period a year ago.
Global Internet revenue for the first half was $61.3 million, up 2 percent from Internet revenue of $60.4 million reported for the same period a year ago.
U.S. first-half fiscal 2007 Internet revenue was $52.8 million, down 2 percent when compared to the $54 million reported for the first half of fiscal 2006.
European Internet revenue for the first half of fiscal 2007 was $8.5 million, up 34 percent from the $6.4 million of Internet revenue reported for the same period a year ago.
Operating income for the first half was $6.8 million, or 6.5 percent of revenue, up 13 percent when compared to operating income of $6 million, or 5.8 percent of revenue for the same period a year ago.
Net income for the first half was $4.6 million, or $0.08 per diluted share, up 27 percent when compared with net income of $3.6 million, or $0.06 per diluted share, reported for the first half of fiscal 2006.
Norway-based research software company Confirmit reported an increase in revenue in 2006 of 26 percent to $21.8 million. Confirmit achieved revenue of $7.6 million (22 percent growth) in the fourth quarter of 2006 with an EBIT margin of 21 percent.
SPSS Inc., Chicago, announced revenues and earnings for its fourth quarter and fiscal year ended December 31, 2006.The company reported 2006 fourth quarter revenues of $71.1 million, an increase of 14 percent from the same quarter of 2005, driven by increased sales across all product lines and major geographical regions. New license revenues for the 2006 fourth quarter were $35.8 million, up 20 percent over the fourth quarter of 2005.
Revenues in the 2006 fiscal year were $261.5 million, an 11 percent increase from $236.1 million in the 2005 fiscal year. New license revenues for the 2006 fiscal year were $125 million, up 16 percent from $107.6 million in the 2005 fiscal year.
Operating income in the 2006 fourth quarter increased 36 percent to $11.7 million, or 16 percent of total revenues, from $8.6 million, or 14 percent of total revenues, in the same quarter of 2005. Operating income for the 2006 fiscal year increased 22 percent to $34.3 million, or 13 percent of total revenues, from $28 million, or 12 percent of total revenues, for the 2005 fiscal year. 2006 operating income includes the effect of expenses for share-based compensation of $1.7 million and $6.7 million in the fourth quarter and full-year periods, respectively. Excluding share based compensation expenses, 2006 operating income would have been $13.4 million for the fourth quarter, or 19 percent of total revenues, and $41 million for the fiscal year, or 16 percent of total revenues.
In connection with its ongoing worldwide income tax audits, the company recently became aware of information relating to open tax years and has estimated that certain deferred tax assets on its balance sheet may no longer be realizable. Due to the possible loss of these tax attributes, the company recorded a non-cash charge of $6.9 million to income tax expense in the 2006 fourth quarter to establish a valuation allowance with a corresponding reduction in deferred income taxes on the company’s balance sheet. he effect of this income tax charge was to reduce 2006 diluted earnings per share (EPS) by $0.33 for the fourth quarter and by $0.34 for the fiscal year.
As a result of this income tax reserve, reported EPS for the 2006 fourth quarter were $0.10 compared to $0.30 for the same period of 2005. EPS for the 2006 fiscal year were $0.73, compared to $0.85 for the 2005 fiscal year. The effective income tax rates for the 2006 fourth quarter and fiscal year were 85 percent and 56 percent, respectively, compared to effective income tax rates of 40 percent and 41 percent in the same periods of 2005.
National Research Corporation, Lincoln, Neb., announced results for the fourth quarter and year ended December 31, 2006. 2006 revenues increased by 35 percent. 2006 net new contracts reached $11.9 million, up 81 percent over 2005. 2006 earnings per share were up 15 percent; up 23 percent without the impact of share based expenses. The quarterly dividend was increased by 20 percent to $0.12 per share.
Revenues for the quarter ended December 31, 2006 were $10.3 million, compared with revenues of $8.6 million for the same period in 2005, an increase of 21 percent. Net income for the quarter ended December 31, 2006 was $1 million, or $0.15 per basic and $0.14 per diluted share, compared with net income of $1.5 million, or $0.22 per basic and diluted share, in the prior year period. Earnings per share for the quarter ended December 31, 2006 were negatively impacted by $0.02 per share as a result of the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123R in the first quarter 2006.
Revenues for the year ending December 31, 2006 were $43.8 million, compared with revenues of $32.4 million for the year ended 2005. Net income for 2006 was $5.9 million, or $0.86 per basic and $0.85 per diluted share, compared with $5.2 million, or $0.74 per basic and diluted share, in the prior year 2005. Earnings per share for the 12 months ended December 31, 2006 were negatively impacted by $0.08 per share as a result of the company’s adoption of SFAS No. 123R. Had it been adopted in 2005, the earnings per share would have been $0.70 per basic and $0.69 per diluted share for the year 2005, compared to $0.86 per basic and $0.85 per diluted share in 2006. Excluding the impact of SFAS 123R results in an increase in diluted earnings per share on a comparable basis of 23 percent for 2006 over 2005. The company believes that this non- GAAP measure provides a better comparison for the current year on earnings per share.
IMS Health, Fairfield, Conn., announced fourth-quarter 2006 revenue of $543.5 million, up 14 percent (10 percent constant dollar), compared with revenue of $477.7 million for the fourth quarter of 2005.
Fourth-quarter 2006 diluted earnings per share on a GAAP basis were $0.32, compared with $0.38 in the prior-year quarter. On an adjusted (non-GAAP) basis and excluding the expensing of equity-based compensation, earnings per share were $0.43, compared with $0.40 per share in the same period last year. Including the expensing of equity-based compensation, adjusted (non-GAAP) earnings per share for the fourth quarter were $0.40.
Operating income in the fourth quarter of 2006 was $125.7 million on a GAAP basis, up 6 percent, compared with $118.4 million in the year-earlier period. On an adjusted (non-GAAP) basis and excluding the expensing of equity-based compensation, fourth-quarter operating income was $135.3 million, up 12 percent on a reported basis and 11 percent constant dollar, compared with $120.5 million in the year-earlier period. Including the expensing of equity-based compensation, adjusted (non-GAAP) operating income in the 2006 fourth quarter was $125.7 million, up 4 percent on a reported basis and 3 percent constant dollar, over the prior year.
Net income on a GAAP basis was $65.5 million, compared with $89.4 million in the year-earlier quarter, a 27 percent decline. On an adjusted (non-GAAP) basis and excluding the expensing of equity-based compensation, net income for the 2006 fourth quarter was $87.8 million, compared with net income of $94.1 million in the prior year, down 7 percent. This decline is primarily due to higher interest expense on debt used to fund 2006 share repurchases, and a weaker dollar reducing foreign exchange hedge gains year over year. Including the expensing of equity-based compensation, adjusted (non-GAAP) net income for the fourth quarter of 2006 declined 14 percent to $81.2 million.
For the 2006 full year, revenues were $1,958.6 million, up 12 percent (11 percent constant dollar), compared with revenue of $1,754.8 million in 2005. Diluted earnings per share on a GAAP basis in 2006 were $1.53, compared with $1.22 in the prior year, up 25 percent. On an adjusted (non- GAAP) basis and excluding the expensing of equity-based compensation, earnings per share in 2006 were $1.54, a 12 percent increase, compared with $1.38 per share in 2005. Including the expensing of equity based compensation, adjusted (non- GAAP) earnings per share in 2006 were $1.41, up 2 percent, exceeding analysts’ consensus. Net income on a GAAP basis in 2006 was $315.5 million, compared with $284.1 million a year earlier. On an adjusted (non- GAAP) basis and excluding the expensing of equity-based compensation, net income in 2006 declined 1 percent to $318.6 million, compared with net income of $320.6 million in 2005. Including the expensing of equity-based compensation, adjusted (non-GAAP) net income in 2006 was $290.8 million, down 9 percent.
For the 2006 full year, operating income was $444.2 million on a GAAP basis, a 6 percent increase, compared with $420.8 million a year earlier. On an adjusted (non-GAAP) basis and excluding the expensing of equity-based compensation, operating income in 2006 was $490 million, a 12 percent increase (11 percent constant dollar), compared with $438.7 million in 2005. Including the expensing of equity-based compensation, adjusted (non-GAAP) operating income in 2006 was $450.2 million, up 3 percent on a reported basis and 2 percent constant dollar.