How a Dutch Parent May Boost NetRatings

NetRatings (NTRT ) is to the Internet what Nielsen Media Research is to TV. NetRatings monitors the popularity of Web sites and PC users' Net habits. Its measurement data help customers, mainly advertisers, improve their e-commerce strategies. The info is important because Web populations are so fragmented, says Jonathan Cohen, who runs JHC Capital Management, which has bought shares.

The stock leaped from 5.50 in mid-March to 8.29 by May 14. One reason: The company, says Cohen, may break even early next year, since it posted a narrower-than-expected loss in the first quarter, on revenues of $9 million, up 109% from last year. Another reason for the spurt: 64% of the stock is held by VNU, the Dutch outfit that owns Nielsen Media Research and ACNielsen. Some say VNU may buy the rest of NetRatings, notes Cohen. He figures the stock is worth 12 in a buyout.

Though bearish on the stock, Kevin Sullivan of Lehman Brothers notes NetRatings' cash hoard provides a "solid valuation support." At first quarter's end, NetRatings had cash of $237 million, or $7 a share.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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