The financial analysis for Nielsen is still forthcoming, but I have looked a bit more on what the financial blogosphere is saying about it.  Most sites, such as Motley Fool and the Wall Street Journal, are calling the IPO a poor purchase.  What I find disappointing is the reasoning behind it.

Nielsen has a terrible business model.  They use a couple of thousand households to speculate on the viewership habits of millions.  The last view years has seen them branch out into some tracking of Internet and delayed viewing in their ratings.  The problem is that tracking Internet or DVR views is trivial.  Anytime you watch something on ABC, they know.  Every rewind on that TIVO is tracked.  Nielsen is no longer providing the useful product it once did.

But who cares?

Let’s say I start a LintMart.  We’re devoted to selling lint.  We have 6 customers.  Each of them pays us a million dollars for each gram of lint we provide them, with a bonus if the lint is  blue.  It’s a terrible business model, but I have customers and I’m making money.  With that kind of profit margin, why wouldn’t you invest?

Now, I’m not saying that Nielsen is selling fluff for a ridiculous amount, I’m just saying that you shouldn’t write it off as a bad investment simply because they have serious going concern problems.

So why should you write it off?  Michael Corkery on the WSJ says it better than I can: (Link)

“Still, anytime savvy investors – such as KKR, Blackstone and Carlyle Group – are selling out in a volatile stock market — potential investors should be asking themselves why.”