NetRatings: There's Upside in Current Takeover Negotiations -- Barron's

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THE TRADER: NetRatings by Michael Santoli

Highlighted companies: NetRatings Inc. (NTRT)
Summary: NetRatings Inc. (NTRT) tracks website traffic and measures ad effectiveness. It is the leader of the field, and recently turned profitable. Dutch publisher VNU owns 62%, and last week offered to buy the remaining 32% for $16/share, a 10% premium. NTRT investors, including hedge funds, appear ready to fight for more; Pirate Capital, an activist hedge fund that owns more than 500,000 shares, filed suit Thursday to protest the offered terms. Shares traded Friday at $16.76. Advocates of a higher price cite $2/share in tax-loss assets, and that the company has recently begun enforcing its patents with success. NetRatings IPOed at $17, when it had $20M in sales and 38% gross margin; today it has $80M in sales, 72% gross margin, and 1,750 clients. One money manager who has owned the stock for years says share acquisition is accretive to VNU up to $25. "Expect pressure from shareholders and negotiations to make up some of the gap between $16 and $25 before this story concludes."
Quick comment: NTRT provides the opportunity for a "non-partisan" play on the internet advertising scene • NetRatings Gets the Low Bid [Motley Fool] • NetRatings closest publicly-traded competitor is Websidestory Inc. (WSSI)