Greenfield Online discusses the downside of acquisitions (SRVY 2Q05 conf call quotes)

Online marketing survey provider Greenfield Online (ticker: SRVY) has completed a series of acquisitions which are strategically compelling. Its customers want access to a panel of survey participants that spans Europe as well as the US, and there are clear benefits from pooling technology and know-how across a larger base. But the company lowered its revenue guidance for the remainder of the year due to two problems stemming from its acquisitions: (1) customers and competitors reacting detrimentally to Greenfield's increased market share, and (2) declining customer satisfaction as Greenfield struggles to integrate the acquisitions. Extracts from CEO Dean Wiltse's prepared remarks during SRVY's August 9 conference call:

…we are revising our full year 2005 revenue guidance… our bid volume in the second quarter was essentially flat in the U.S. and globally does not support the level of revenue represented by our prior revenue guidance for the remainder of the year...

We currently believe this to be a temporary situation and …believe the potential causes …include the following: Client satisfaction was impacted by greater than anticipated operational inefficiencies in the area of sampling, targeting and project timing, resulting from operating with three separate panels in the second quarter. We are addressing this issue by pushing forward with our unified panel system… The significant expansion of our market share due to recent acquisitions is causing some clients to diversify their online sample data sources. This has been a greater factor than we had anticipated…

While we're not seeing significant new entrants to the market, select competitors for which Internet market research… was a… minority revenue source, have increased their efforts to secure additional revenue from this popular product line.

Pricing pressure in the North America sample-only business has played a factor… as it is the path of least resistance for competitors to gain market share...

(Quotes are from the CCBN StreetEvents transcript.)

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