Sell-Side Reaction to Greenfield Online's Pre-Announcement (SRVY)

Pacific Growth Equities analyst Derek Brown sent a note to clients reacting to Greenfield Online's pre-announcement of lower than expected Q3 revenues. Here are key points:

Sizable Q3:05 Shortfall Triggers Management Shakeup; Withdrawing Ests; Maintaining Over Weight On Long-Term Opportunity

INVESTMENT SUMMARY
• Yesterday after the close, Greenfield pre-announced Q3:05 revenue of $22–23M, compared with previous guidance of $26–27M and our estimate of $26.5M
• Perhaps more significant, the Company also announced a change in senior management, with Al Angrisani replacing Dean Wiltse as president and CEO
• We are withdrawing all ests, given the level of uncertainty and change; nonetheless, we maintain our Over Weight rating on the Company’s shares in light of longer-term opportunities

VALUATION AND RECOMMENDATION

We are extremely frustrated with, and disappointed by, weakening business dynamics and management’s poor execution record to date; moreover, we fully expect the Company to remain in the proverbial penalty box for an extended time, given the “credibility gap