Sell-side reaction to Greenfield Online's - SRVY - acquisition of CIAO

Pacific Growth Equities analyst Derek Brown commented to clients on Greenfield Online's (ticker: SRVY) acquisition of CIAO AG. Extracts:

INVESTMENT HIGHLIGHTS

Greenfield Online announced the acquisition of CIAO AG for $154M in cash ($74M) and stock ($80M). Based in Munich, Germany, CIAO AG is the largest independent survey research provider in Europe and a leading shopping and community resource for consumers across the Continent.  As such, CIAO meaningfully accelerates Greenfield’s overseas expansion efforts, adds a very seasoned layer of regional/product management, and enhances the Company’s  infrastructure/technology platform.  Furthermore, CIAO’s fast-growing, highly profitable model should be substantively  accretive to Greenfield’s business in 2005 and beyond.   

Mixed Q1:05 results, with disappointing revenue, in line EBITDA, and, likely, improved margins. In conjunction  with today’s announcement, management indicated that Q1:05 results would be mixed, with revenue now expected to fall modestly below previous guidance of $15.7–16.0M and EBITDA to fall within existing guidance of $3.8–4.0M.  Our unadjusted Q1:05 estimates currently call for revenue, adjusted EBITDA, and EPS of $15.8M, $4.0M, $0.09, respectively. The Company attributed the revenue shortfall to delays in the completion of six larger projects, which have apparently  been “pushed