Tag - Hpol

Billionaire investor Vincent Bollore’s continued interest in microcap play Harris Interactive Inc. (Nasdaq:HPOL) deserves a closer look.

Ranked as one of the world’s richest people by Forbes magazine, Bollore has focused his attention in recent years on making media-related investments. The French billionaire is a major shareholder and chairman of Havas SA, the world’s sixth-largest advertising agency holding company. Havas is the owner of the Euro RSCG Worldwide agency. Bollore is also a major shareholder in British media services holding company Aegis Group. Bollore has spent the past two years trying to gain control of Aegis.

Last year, published reports indicated that Bollore was interested in increasing his investments in the market research sector. In April of 2007, Bollore popped up as a 6% shareholder in Harris Interactive. The custom market research shop’s roots trace back to the founding of Louis Harris & Associates over 50 years ago. Rochester, N.Y.-based Harris is best known for The Harris Poll, one of the longest-running independent opinion polls in the United States. Over the past 52-weeks, Bollore has purchased over $2.6 million worth of Harris shares on the open market.

So far, Bollore’s investment in $78 million market capitalization Harris has been a loser. Since opening 2008 around the $4 level, Harris shares have steadily declined, as demonstrated by the recent stock price of $1.45. Harris shares have been punished the past two quarters particularly for company management falling short of meeting projections and poorly managing expectations. 

For the fiscal third quarter ended March 31, Harris reported revenue of $57.3 million, an 11% annual increase. However, this gain was largely acquisition-driven. Organic revenue actually declined 4% year over year. The loss for the quarter was $2.1 million, or $0.04 a diluted share, compared with net income of $1.2 million, or $0.02 a diluted share, for the year-ago period. Earnings before adjusted EBITDA for the quarter declined 58% to $1.6 million from $3.9 million. Harris blamed the decline primarily on revenue shortfalls in its U.S. health-care business, which has been . . .

Harris Interactive Inc. (Nasdaq: HPOL) shares are in a freefall after the professional services firm said in an announcement that it expects fiscal 2008 results near the lower end of its guidance but that the “volatile and rapidly changing macroeconomic outlook could continue to negatively impact our results.”

Before the opening, Rochester, N.Y.-based Harris posted second-quarter earnings of $2.1 million, or $0.04 per share, down 42% from $3.6 million, or $0.06 per share, a year earlier. Analysts predicted, on average, earnings of $0.06 per share.

Quarterly revenue totaled $62.7 million, up 13% from $55.7 million during the year-ago period. Wall Street analysts projected revenue of $68.2 million.

“Our global expansion and harmonization strategy is working. Newly armed with Harris capabilities, our German, French and Asian groups grew nicely in the quarter,” CEO Gregory Novak said in a statement. “Deteriorating economic conditions in North America continue to cause disruption — especially in our health-care and financial services groups, reinforcing the fact that in addition to the aforementioned benefits gained from global expansion, a larger footprint will help buffer the effects of industry and regional economic declines.”

In midday trading, HPOL shares are down 20.51%, or $0.65, at $2.52. Over the last 52 weeks, shares have ranged from $2.42 to $6.50.

I. Name a company unfairly hit by the August market rout.

Answer: Greenfield Online (Nasdaq: SRVY), the fast-growing Internet survey and comparison shopping firm.

II. Why are shares undervalued?

_____ A. Second quarter earnings beat expectations 

_____ B. Greenfield’s comparison shopping segment Ciao! is driving growth

_____ C. Internet demand for surveys and shopping information is strong

_____ D. It’s got cash

_____ E. All of the above

Answer: E. Greenfield Online collects, organizes and sells its survey responses to marketing research companies and end-users globally. Through its comparison shopping business Ciao!, which is focused in Europe, it gathers user-generated product and merchant reviews, garnering revenue from e-commerce, merchant referrals, click-throughs and advertising. The Wilton, Conn.-based Greenfield uses a network of panelists and Internet users for its survey needs, allowing it to quickly and effectively respond to client demands. It is penetrating markets in Europe through Ciao!’s survey and shopping offerings, showing it is one of the premier companies in the field (for the U.K. version, see http://www.ciao.co.uk/).

Businesses rely on feedback from consumers to make product marketing decisions. Market research is a critical tool businesses use to assess products, pricing and promotions. The Internet is fundamentally changing market research by enabling researchers to collect high-quality data more quickly and efficiently. Compared to traditional mail, telephone or mall-based surveys, online research offers these advantages:

• Speed. Using the Internet, researchers can collect and process large volumes of data from diverse groups across multiple markets. Survey response times are measured in hours instead of weeks since Internet technology allows thousands of surveys to be administered simultaneously.
• Cost effectiveness. Internet surveys dramatically lower the cost of market research by minimizing data collection costs.
• Improved results. The Internet allows a level of privacy and anonymity not possible in telephone or mall-based surveys. In addition, since there is no interaction with an interviewer; interview bias is eliminated. Internet surveys can also include images, sounds and video not possible with telephone or mail surveys.  

While still in an early growth stage, online research is expected to transform the worldwide market research industry. Overall market research spending is forecast at around $12 billion in 2007 and projected to grow 5-7% annually over the next several years. Online market research represents a multi-billion dollar opportunity that is largely untapped. Spending on online research is forecast to reach $1.9 billion in 2007 but is dwarfed by spending on mail, telephone and mall-based surveys estimated at $10 billion This disparity suggest an $8 billion opportunity as online surveys begin to replace traditional survey methods. 

Two small caps poised to benefit are Harris Interactive Inc. (Nasdaq: HPOL) and Greenfield Online, Inc. (Nasdaq: SRVY).