Since February, IRI's stock price has fallen by almost two-thirds, to about $14 per share. After announcing expected first-quarter earnings that were less than half of what analysts predicted, Chicago-based IRI last week told analysts it's considering adopting a more conservative accounting system; in the past, IRI has included clients it expected to win in revenue projections.
But these days, there are simply fewer potential clients. IRI and rival Nielsen Marketing Research have reached a sort of client equilibrium, each holding roughly half of the nearly $700 million U.S. market.
IRI Chairman Gian Fulgoni said the company will cease chasing clients who are shopping around for cheaper scanner data services.
An executive close to IRI said the company has focused too much energy and too many talented people on sales.
Mr. Fulgoni admitted IRI was six months late delivering Windows versions of its data analysis software, a delay that will cut into the approximately 25% average annual growth rate of the company's software business of the recent years.
To regain its technological toehold, a necessity if the company is to avoid drastic price cutting, IRI has shuffled executives.
Technology expert Magid Abraham, 35, elevated to chief operating officer only last July, stepped down from that post last month, stating that "health problems exacerbated by stress" were limiting his time in the office.
James Andress, president and co-ceo, has taken on chief operating officer duties.
According to Securities & Exchange Commission documents, Mr. Abraham was one of several IRI executives to sell a large number of shares last December before IRI's stock price fell. Mr. Abraham exercised and sold roughly 45,000 stock options at prices just under $38, making approximately $1 million.
Mr. Abraham, working part time out of his home, will accelerate development of IRI's Project Omega, a long-awaited program designed to make data processing more efficient.
"They may get their efficiencies, but I won't base my recommendations or growth estimates on it," said Dean Witter Reynolds analyst James Dougherty. "I think price cutting has definitely been an issue, but I also think Nielsen's services are better" than in the past, he added.
This is going on while scanner data competition is heating up overseas. IRI has convinced Canada's Bureau of Competition Policy to petition the Competition Tribunal, alleging Nielsen's contracts with Canadian retailers are anti-competitive.