D&B Unveils Free Search Tool

Dun & Bradstreet Corp. (DNB - Analyst Report), a provider of business information, launched a free search tool which allows individuals to identify companies that are located in the areas affected by the earthquake and tsunami in Japan on March 11, 2011.

The search tool is expected to help companies in the assessment of their financial and business continuity risk exposure resulting from the earthquake and tsunami as well as unfolding developments at the Fukushima Daiichi Power Station.

On March 11, 2011, Japan was hit by an enormous earthquake that triggered a deadly 23-foot tsunami in the northern part of the country. The earthquake struck about 230 miles northeast of Tokyo. Disaster hit again on March 12, when about 26 hours after the earthquake, an explosion in reactor #1 at the Fukushima Daiichi Nuclear Power Station caused one of the buildings to crumble to the ground.

Japan was on the brink of a nuclear catastrophe, when partial meltdowns occurred at reactors #1 and #3 and reactor #4 was also engulfed in a fire. According to Tokyo Electric Power, the plant's operator, 5 workers died and 22 more suffered various injuries since the quake.

Based on its huge and unique information database, D&B has identified approximately 150,000 businesses in the Fukushima, Miyagi and Iwate regions. The search for the affected entity can be started by entering company name or D-U-N-S number in the database.

The search tool will provide information on which companies are in the impact zone but cannot provide on-demand detailed reports due to conditions in the region.

The disaster has forced most of the companies to shut down their operations in the affected areas in Japan. Electronics companies, such as Sony Corp. (SNE - Snapshot Report), Panasonic Corp. (PC - Snapshot Report), Toshiba Corp., Fujitsu Ltd., Canon Inc. (CAJ - Analyst Report), Epson, Nikon Corp. and Sharp are still in the process of assessing the damage.

We believe this free tool will make it easier for the companies to identify and assess their current position in the affected areas. We also feel that D&B will continue to gain from the inclusion of this kind of value-added products (can be monetized going forward) in its mix, as customers express greater interest in buying such offerings to improve their own businesses.

According to Objective Analysis, global supplies of NAND and DRAM will be affected by the production shutdown in Japan, as it is a significant supplier of those memory chips. This is expected to impact computer and smartphone manufacturers such as Apple Inc. (AAPL - Analyst Report).

According to the World Bank, the massive quake and tsunami could cost Japan’s economy up to $235 billion, or 4.0% of the total output. The lower end of the World Bank's estimate of the twin disasters' impact was $122 billion, equivalent to 2.5% of gross domestic product.

Recently, D&B downgraded Japan’s Country Risk Rating to DB2c from DB3a with a negative outlook, due to the power shortages and nuclear safety concerns caused by the tsunami. D&B expects reconstruction to be delayed until the third quarter due to the severe disturbance to supply chains and infrastructure.

Recommendation

Our long-term view is positive, attributable to D&B’s high-margin business model, international growth potential, emerging market growth opportunities, strategic investments, incremental cost savings and new product pipeline.

However, a sluggish macro environment in North America and weakness in Europe remain concerns. Acquisitions have played a major role in international growth and we expect integration to remain a primary concern going forward. Moreover, a high net debt will hurt financial stability going forward.

We maintain a Neutral rating on a long-term basis (6-12 months). Currently, D&B has a Zacks #3 Rank, which implies a Hold rating over the short term (1-3 months).

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