News notes
Flake-Wilkerson Market Insights, a Little Rock, Ark., research firm, has been named one of America’s entrepreneurial growth leaders by Inc magazine in its annual ranking of the Inc 500, the nation’s fastest-growing private companies. Flake-Wilkerson is ranked 123rd on the 2001 list, having achieved 2010 percent sales growth in the past five years. During that period, the number of full-time equivalent employees increased form 25 to 179.
St. Louis-based Maritz Research has attained ISO 9001 registration. The ISO 9001 designation applies to companies that provide design, production, and services. In addition, St. Louis-based data collection firm Delve has attained ISO 9002 registration. ISO 9002 applies to firms whose work is based on technical designs and specifications provided by their customers.
Wilton, Conn., research firm Greenfield Online announced that September was its first profitable month in company history. "We’ve experienced a dramatic turn-around," says Bob Bies, CFO of Greenfield Online. "Last year Greenfield Online experienced losses of $7.5 million in the fourth quarter of 2000, and exactly one year later will have an EBITDA profit of 20 percent." In response to an increase in demand for online research infrastructure services, the company has realigned its business and accelerated the development of its outsourcing division.
The respective stockholders of Harris Interactive and Total Research Corporation have voted in favor of Harris Interactive’s acquisition of Total Research Corporation. In separate meetings held on November 1, Harris Interactive stockholders voted in favor of the issuance of shares of Harris Interactive common stock to Total Research Corporation stockholders in accordance with the merger agreement and Total Research Corporation stockholders voted in favor of the adoption of the merger agreement and the approval of the merger. The combined company is expected to generate approximately $130 million in worldwide revenue this fiscal year - with approximately 20-25 percent of that revenue being generated from international research. Harris Interactive’s stock will continue to trade under the symbol HPOL. Total Research common stock has been deregistered under the Securities Exchange Act of 1934 and delisted from the Nasdaq National Market, formally ending trading of Total Research common shares.
Acquisitions
North Adams, Mass., research firm MindBranch, Inc., has expanded into Hong Kong. This follows an announcement earlier this year to expand into Korea through the acquisition of Outsource Korea, Inc., a business information firm. Within the Hong Kong market, MindBranch will focus on the telecom, computer/IT and financial industries.
Internet audience measurement firm NetRatings, Inc., Milpitas, Calif., has agreed to purchase New York Internet research firm Jupiter Media Metrix in a transaction valued at approximately $71.2 million. The transaction is expected to close during the first quarter of 2002. NetRatings also announced the immediate appointment of Bill Pulver, formerly president of ACNielsen eRatings.com, as president and COO of NetRatings. Dave Toth will continue as CEO of NetRatings, and Jack Lazar will continue as CFO. At the close of the transaction, Pulver will assume the role of CEO and president for the combined company. Toth will be pursuing other entrepreneurial interests.
NetRatings expects the acquisition of Jupiter Media Metrix to grow its number of customers by 94 percent. NetRatings reported revenue of $20.4 million for the year ended December 31. Jupiter Media Metrix reported pro forma revenue of $142.8 million for the year ended December 31.
In the transaction, which will be taxable to Jupiter Media Metrix stockholders, those stockholders may elect to receive 0.1490 NetRatings shares or $1.95 in cash in exchange for each Jupiter Media Metrix share. The exchange ratio of 0.1.490 is fixed, based on the NetRatings closing price of $13.09. The merger agreement provides that no more than 50 percent nor less than 30 percent of the aggregate transaction consideration will be paid in cash. Jupiter Media Metrix directors and certain key members of management, who hold a total of approximately 22 percent of the Jupiter Media Metrix stock, have agreed to exchange no less than 70 percent of their holdings for stock with the remaining portion to be received in cash. They have also agreed to vote their shares in favor of the transaction.
The price per Jupiter Media Metrix share is subject to possible reduction to reflect any drawdowns by Jupiter Media Metrix under the loan agreement outlined below, as well as certain expenditures by Jupiter Media Metrix in excess of $5 million to terminate various international joint ventures.
Jupiter Media Metrix’s board of directors is entitled to designate one member to join the NetRatings board of directors at the closing.
Pending the completion of their merger, NetRatings and Jupiter Media Metrix have agreed to take no further actions in respect to each other in the existing patent infringement allegation filed by Jupiter Media Metrix against NetRatings.
The closing of the transaction is subject to Jupiter Media Metrix stockholder approval, Hart-Scott-Rodino clearance and other customary
conditions.
In connection with the merger agreement, NetRatings has agreed to lend Jupiter Media Metrix up to $25 million, subject to specified conditions, under a secured credit facility that will replace the standby letter of credit arrangement between Jupiter Media Metrix and Tod Johnson, Jupiter Media Metrix’s chairman.
NetRatings also announced that it has agreed to purchase the 80.1 percent of ACNielsen eRatings.com that it does not currently own for approximately $16.4 million in a non-taxable transaction in which NetRatings will issue 1,256,000 shares. ACNielsen eRatings.com, an Internet audience measurement company with operations outside the United States, is a joint venture 80.1 percent owned by ACNielsen and 19.9 percent owned by NetRatings. This transaction will allow NetRatings to streamline its international operations and consolidate its services under a global brand.
The transaction has been reviewed and recommended to the full board of NetRatings by its non-management directors unaffiliated with ACNielsen and its parent company, VNU, deliberating separately. VNU will continue to own, through ACNielsen and Nielsen Media Research, a majority of the NetRatings shares outstanding immediately after the closing of both transactions and its designees will continue to comprise a majority of NetRatings’ directors. The transaction is subject to customary closing conditions as well as completion of the Jupiter Media Metrix transaction.
Alliances/strategic partnerships
West Chester, Pa., packaging consulting firm Packaging Strategies, through an alliance with consulting firm BRG Townsend, Inc., Mount Olive, N.J., has announced the addition of turnkey market research services to packaging firms.
Toronto software maker Cycore and Mill Valley, Calif., research firm MarketTools, Inc. have formed a partnership to co-develop, market, and sell their technology solutions. The two companies have agreed to integrate Cycore’s Cult3D software with the MarketTools’ zTelligence research platform to enable researchers to present realistic, 3-D images within online research studies.
Austin, Texas-based Clickin Research, Inc. has formed a partnership with the National Association of Convenience Store (NACS) to develop products designed to increase convenience store performance and customer and employee satisfaction levels. Clickin Research and NACS plan to release several products over the next several years. The first product, MyCstoresOnline, is a customer satisfaction survey that provides convenience stores with a method to collect and analyze store-level customer data and then compare that individual store to industry benchmarks.
ACNielsen, Kantar Media Research (KMR) and Indian Market Research Bureau (IMRB) have agreed to form a new joint venture to offer measurement of TV audiences and advertising expenditures in India. The transaction is expected to close by the end of this year. The new venture plans to combine local TV ratings data from TAM Media Research, a 50-50 joint venture between ACNielsen and KMR/IMRB, with data from research company ORG-MARG, in a single service across India. Coverage will be expanded to all major states in India (15 states versus the current coverage of nine) and virtually all major metropolitan areas, under a plan that will be presented to the industry. The new joint venture will cover more than 90 percent of the country’s TV and press advertising spending.
Chicago-based SPSS Inc., with its SPSS MR division, and America Online, Inc., through its Digital Marketing Services (DMS) subsidiary, have announced a strategic alliance under which SPSS Inc. has acquired the exclusive rights to distribute survey sample drawn from AOL members and users of America Online’s other interactive properties. America Online, DMS and SPSS MR, will work to expand online industry survey and sample services through OpinionPlace.com, an online portal for research respondents.
Awards
A new marketing research system developed by Hershey Foods Corporation and Northwood, Ohio research firm NFO WorldGroup has been recognized with a research industry award for innovation and methodology. The program, "From Tradition to Innovation: Bridging Historical Mail Panel Data to Online Research," is the first-place winner in the 2001 EXPLOR Awards for "Exemplary Performance and Leadership in Online Research," sponsored by the A.C. Nielsen Center for Marketing Research, the University of Wisconsin-Madison School of Business, and the American Marketing Association. The entry was judged to be the best for organizational relevance, technical execution, creativity, and innovation from among 20 submissions. The testing system, built on NFO InfoScore, NFO WorldGroup’s online reporting tool and database product, helped Hershey reduce the time between survey launch to data accessibility via a Web-based interface. Hershey representatives collaborated Closely with NFO InfoScore developers to build a research system that would integrate historical access panel data with ongoing data imports of online concept images, text, and data, classified into product hierarchies that the company would define and maintain. The resulting tool gave Hershey the means to preserve its investment in traditional offline research.
The Advertising Research Foundation has bestowed its annual ARF Naples Research Industry Leadership Award on British advertising researcher Simon Broadbent, in recognition of his leadership in demonstrating the effectiveness of advertising.
Jay Mattlin, vice president of media planning research at Menlo Park, Calif., research firm Knowledge Networks, and Bruce Goerlich, global director of accountability at Starcom MediaVest Group, were winners of the Chairman’s Award at the annual Worldwide Readership Research Symposium, held in Venice, Italy, in October. The award was given for a paper, "Measuring Magazine Reading via the Internet: Testing the Effect of Number of Titles and Other Questionnaire Design Issues," co-authored by Mattlin and Goerlich, which Mattlin presented at the symposium. The paper details the effects of different Web-based approaches to measuring magazine readership, and compares them to more traditional methodological approaches.
Company earnings reports
SPSS Inc., Chicago, announced results for the third quarter 2001. On a pro forma basis, excluding acquisition-related and other nonrecurring charges, but including the full implementation of recent accounting interpretations on revenue recognition, diluted earnings per share and revenues for the quarter ended September 30 were $0.25 and $48.0 million, respectively. These results compare to analyst expectations of earnings in the range of $0.30 to $0.37 and revenues between $47.0 and $50.0 million, as well as to pro forma earnings per share and revenue figures for the same period last year of $0.27 and $50.4 million, respectively. On a reported basis, diluted income per share and revenues for the quarter ended September 30 were $0.19 and $47.9 million, respectively. These reported results include acquisitionrelated and other non-recurring charges as well as the effects of the prescribed implementation of the recent accounting interpretations, which show the deferral of revenues related ro annual and other time-based licenses from only the fourth quarter of 2000 forward rather than the entirety of the previous year.
Rochester, N.Y.-based Harris Interactive reported results for the fiscal 2002 first quarter ended September 30. Revenue was $17.1 million, up from $12.1 million reported in the same period a year ago, or an increase of 41 percent. The revenue includes $14.3 million from U.S. operations, an increase of 18 percent from a year ago. Revenues also included $2.8 million derived from the purchase of M&A Create in Tokyo and MRSL in London during the quarter. For the first fiscal quarter, the company reported a net loss of ($0.09) per share, down from a net loss of ($0.22) a share a year ago, or a 59 percent improvement. The loss from U.S. operations was approximately ($0.08) a share, with the additional one cent due to the acquisition of the research firms in London and Tokyo.
Opinion Research Corporation, Princeton, N.J., reported third quarter and year-to-date results. For the periods ended September 30, revenues for the third quarter were $41.9 million and revenues for the nine months were $132.9 million. The company has now reported 10 consecutive quarters of year-over-year revenue growth. For the third quarter, EBITDA (earnings before interest, taxes, depreciation, and amortization) was $3.7 million as compared to $4.7 million in the third quarter of 2000. Cash earnings per share (net income plus goodwill amortization expense after-tax) were $0.12 as compared to $0.27 in the third quarter of 2000. Cash earnings per share are equivalent to what will be reported as earnings per share in 2002 under the new accounting pronouncements, which eliminate the amortization of goodwill. Diluted earnings per share in the current quarter were zero, compared to $0.16 in the third quarter of 2000.
Revenue gains in the third quarter were led by the company’s social research business. Social research generated a 19 percent increase in revenues over third quarter 2000 revenues due to contributions from an acquisition completed last year. The company’s social research backlog at the end of the quarter was $219 million.
For the first nine months of 2001, revenues were $132.9 million, an increase of $15.7 million or 13 percent compared to $117.2 million in the first nine months of 2000. EBITDA for the first nine months was $13.3 million, compared to $13.7 million for the first nine months of 2000. Operating income for the first nine months was $7.0 million and net income $1.4 million, compared to $8.4 million and $2.4 million, respectively, for the first nine months of 2000. Diluted earnings per share for the first nine months of 2001 were $0.24 and cash earnings per share $0.56, compared to $0.50 and $0.80, respectively, in the first nine months of 2000.
Irving, Texas, research and CRM firm Aegis Communications Group, Inc. reported results for the third quarter of 2001. Total revenues generated, during the quarter ended September 30 were $56.3 million as compared to $74.1 million in the year ago third quarter, a decrease of $17.8 million, or 24.0 percent. Net loss after preferred stock dividends for the third quarter of 2001 was $4.6 million, or ($0.09) per share, as compared to net income after preferred stock dividends, in the third quarter of 2000 of $0.1 million, or $0.00 per share. EBITDA declined to $1.9 million in the third quarter of 2001 as compared to EBITDA of $8.0 million in the comparable prior year quarter.
New York-based Arbitron Inc. announced results for the third quarter ended September 30, reporting revenue of $65.6 million, an increase of 12.4 percent over revenue of $58.4 million during the third quarter of 2000. Earnings before interest and taxes for the quarter were $26.2 million, representing a 3.0 percent increase compared with EBIT of $25.4 million reported during the same period last year. Net income for the quarter was $12.9 million, compared with $15.4 million for the third quarter of 2000, a 16.4 percent decrease.
Net income per share for the quarter was $0.44 (basic) and $0.43 (diluted), compared with $0.53 (basic) and $0.52 (diluted) net income per Share during the comparable period last year. The 2000 earnings per share amounts have been adjusted to reflect the one-for-five reverse split, which became effective following Arbitron’s reverse spin-off from Ceridian.
For the nine months ended September 30, revenue was $176.1 million, an increase of 10.3 percent over the same period last year. Revenue for the core business excluding RADAR grew by 9.2 percent. EBIT was $66.3 million, compared to $63.0 during the same period last year. Net income for the nine months was $33.9 million or $1.15 share (diluted), compared with $38.1 million or $1.30 on a per share (diluted) basis last year. The company reported EBITDA of $ 69.9 million compared with $66.1 million during the first nine months of 2000, a 5.6 percent increase.
Fairfield, Conn., research firm IMS Health announced diluted earnings per share of $0.27 for the quarter ended September 30, up 13 percent compared with the year-earlier period. Results exclude a tax benefit of $0.07 per share recorded in the quarter that, if included, would have resulted in year-over-year earnings per share growth of 42 percent. Constant dollar operating income grew 18 percent while constant dollar revenue was up 8 percent. Recurring results exclude divestitures and one-time gains and charges.
For the third quarter of 2001, IMS Health’s constant dollar revenue grew 8 percent over the year-earlier period, or 4 percent on a reported basis, to $328.1 million. Operating income totaled $125.8 million, up 18 percent constant dollar over 2000 third-quarter results. Net income gew 15 percent to $81.6 million, or $0.27 per share, compared with $71.1 million, or $0.24 per share, in the 2000 third quarter.
For the nine months ended September 30, revenue totaled $992.0 million, up 14 percent constant dollar and 9 percent on a reported basis from the first nine months of 2000. Operating income grew 29 percent constant dollar to $329.5 million, compared with $277.4 million in the year-earlier period. Net income for the first nine months of 2001 rose 16 percent to $203.8 million, or $0.68 per share. This compares with $175.6 million, or $0.59 per share, in the first nine months of 2000.