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Nielsen is a very interesting story as it is one of the few companies that I feel has a true competitive advantage. Not only are they the dominant player when it comes to determining who is watching what on television, they also have a significant market data service that once entrenched into a corporation's marketing program, is very hard either switch from or eliminate. The business here is compelling.However, Nielsen has recently been IPO'd from the world of private equity. The company's historic financials, that we can see, are a mess as the private equity folk levered it up and did a pile of transcations, both acquisitions and diverstitures. The true earnings power of Nielsen is therefore very difficult to foresee, making a deterimination of value a difficult, if not an impossible task. Also, though the company has the ability to produce free cash flow, shareholders are unlikely to benefit directly as debt reduction is going to be management's focus in the coming years. In addition, private equity still owns a sizeable chunk as they held back a portion from the market. The sell side have all come out with positive rankings on Nielsen and it's awfully difficult for me to get overly excited under this type of scenario. The sell side knows there are significant underwriting fees to be had if they keep the private equity folk happy and do all they can to boost the value of the stock so that further sales can occur. Long term, I think this is a good one to keep in mind, but until a better feel can be had for the company's true worth, and the whole private equity/sell side thing gets cleared up, my bet is on staying away.
Great management and lots of potential upside, coupled with sound financials
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