Nielsen Reports Higher Second-Quarter Earnings

Strategic review to conclude after third quarter
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Nielsen reported higher second-quarter earnings and said it expects its strategic review to be completed by the time it releases its third-quarter financial results.

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The strategic review, begun under pressure from shareholders, could lead to the sale of the company or some of its divisions .

“We will discuss the outcome and go-forward plan at the conclusion of the process,” said Nielsen CEO David Kenny. “In addition, we remain focused on executing on our growth strategies and positioning the company to maximize value for all of our shareholders."

Net income rose 71% to $123 million, or 34 cents per share, from $72 million, or 20 cents per share a year ago.

Revenue fell 1.2% to $1.628 billion. The company said that on a constant-currency basis, revenues were up 1.2%.

Audience measurement revenue increased 3.5% due to client adoption of the company’s Total Audience Measurement System. The gains were offset by what the company called “pressure in local television measurement,” where Nielsen is being challenged by Comscore.

Revenues for the company’s Plan/Optimize revenue fell 4.9%. 

Nielsen Global Connect revenue fell 3.5% to $772 million.

The company raised its guidance for full-year earnings per share to $1.70 to $1.80 from $1.63 to $1.77. The company reaffirmed its expectations for revenue, adjusted earnings and free cash flow.

“Nielsen has evolved significantly over the past year. Our second quarter results were once again slightly ahead of our expectations,” Kenny said.

“We continue to make progress on our transformation into a product driven technology company, making faster, bolder decisions that enhance value for our clients. We were pleased with revenue trends in both Media and Connect and have also demonstrated progress in moving towards a modern architecture, highlighted by the successful transition of our National TV measurement processing to the cloud,” he said. “We have aligned our organization around two industry-leading businesses serving the media and fast moving consumer goods industries that are capable of greater profitability, higher cash flow conversion, and delivering strong shareholder value.” 

Analyst Todd Juenger of Sanford C. Bernstein noted that “One year ago we supposedly hit rock bottom: massive earnings miss, guidance downgrade, mgmt. departure, strategic review announced for Buy. The stock roughed at $22. A year later, the strategic review process is still ongoing, the stock is at $23. At least we finally now have a deadline, with the outcome of the strategic review promised before Q3 release.”

Juenger added “what has changed is the confidence and predictability around quarterly results and guidance. Revenue (total, and for each segment) was spot-on consensus. Adj EPS of $0.53 was well ahead of consensus $0.42, on margin and tax rate. We also, finally, have organic and constant currency growth laid out clearly. How refreshing.”

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