In its 2011 earnings report D&B announced several strategic transactions: 

Japan:  D&B signed an exclusive reciprocal distribution agreement with TSR Japan.  It sold its domestic Japanese business to TSR.   D&B has a joint venture with TSR which provides value added and cross border information to Japanese customers.

China:  In November 2011, D&B acquired substantially all the assets of MicoMarketing, a provider of direct marketing services to B2B customers in China for approximately $14 million. This transaction adds more than 2.5 million business records to D&B’s China data base and scales its operations in this market. Prior to the acquisition, MicroMarketing generated approximately $11 million of revenue for full-year 2011.

In December 2011, D&B divested its market research business in China, consisting of two joint venture companies, selling its equity shares in such companies to its partner for a total purchase price of $5 million. The business provides highly specialized and customized market information and has little connection to its core data assets.

Divested Non-Core Businesses in North America: Consistent with our MaxCV program, we divested two North American product lines that were sunset earlier in 2011, Purisma and a small supply management consulting business for an aggregate $3 million. These businesses were dependent on a high level of customization making them expensive to maintain and grow.  Combined, these two businesses generated approximately $5 million of revenue during the full-year 2011.

Core revenue for the full year 2011 was $1,758.5 million. This result is up 5% from the prior year similar period, before the effect of foreign exchange, (up 7% after the effect of foreign exchange). Operating income before non-core gains and charges for the full year 2011 was $500.1 million, up 4% from the prior year similar period. On a GAAP basis, operating income for the full year 2011 was $424.8 million, up 4% from the prior year similar period.

Total year revenues for Risk Management Solutions grew by 6% to US$ 1,114.4 million; Sales & Marketing Solutions grew by 5% to US$ 520.8 million and Internet Solutions grew by 7% to US$ 123.4 million. Revenue growth of its North American operations was 1%. Asia-Pacific operations grew 43% and European and other markets grew by 24% (all percentage figures before effect of foreign exchange).

Following the earnings release D&B’s stock declined 4.8 percent to $80.22. On February 7th 2012. D&B shares had risen to an almost one-year high of $84.97 on Feb. 3.  –  According to Bloomberg news D&B’s fourth quarter results missed analyst estimates amid delays to its technology-upgrade program.

In February 2010 D&B had announced a technology program, which it calls ‘MaxCV’, with an estimated cost of $130 million. MaxCV was expected to be completed this year. The cost of the project has been revised upward to $160 million and is now expected to be completed by the second half of next year.

Outlook: The delay in its technology program is affecting negatively the real-time data supply chain project and product innovation. As a consequence D&B’s full year outlook for 2012 projects modest growth:   Core revenue growth of 3 to 5%.  Operating income growth of 4% to 7%.

Source: D&B Press Release

BIIA Observations:  It is interesting to note that D&B is divesting consultative services while other industry players are adding such capabilities to their product portfolios.  Last year BIIA had observed a number of transactions of companies adding consultative services to assist clients with workflow and industry specific know-how.
D&B’s Sales & Marketing Solutions business recovered well compared to the flat performance of its North American Risk Management Solutions business.  While management conceded that the delay in its technology program had stalled development of DNBi we believe that there were other mitigating factors impacting growth.  For instance, NACM’s Credit Management Index (CMI) indicated poor credit conditions throughout the year of 2011. 
NACM’s economist Dr. Christ Kuehl commented in the December CMI report:  “… the problem is that most of the CMI index readings are still in the 40s. Rejection of credit applications is still in the contraction zone at 49.5. The index for accounts placed for collection moved into expansion territory, but just barely, rising from 49.5 to an even 50. Only the bankruptcy filing factor is solidly in expansion territory with a reading of 56, but that is down from the previous month’s reading of 56.7.  In general it can be said that many companies remain in distress, and this doesn’t bode well for the coming months when there will be no boost from holiday spending,”    In other words, the credit climate in the US has not recovered which impacts demand for commercial credit information.