DoubleClick edges revised estimates
Still losing, but CEO says will be profitable next year
By William Spain, CBS.MarketWatch.com
Last Update: 5:48 PM ET Oct. 11, 2001
After the closing bell Thursday, DoubleClick announced a third-quarter net loss of $12.6 million, or 9 cents per share, on a 31 percent revenue decline to $52.8 million.
While that nudges past Wall Street expectations by a penny, the consensus estimate of analysts polled by Thomson Financial/First Call were revised after a recent warning from the company.
In the year-ago period, DoubleClick actually earned 3 cents per share.
CEO Kevin Ryan, however, sounded a strong note of confidence during the company's conference call. He said that fourth quarter per share losses will be in the range of 3 cents to 5 cents, far narrower than current Wall Street estimates and that "barring a terrible decline in the economy, we will be profitable in 2002."
Diversification and cost control will be key, he said, as there is no indication that the online advertising markets won't continue to deteriorate into the first and second quarters of next year.
Direct marketing businesses now make over 40 percent of DoubleClick's gross profit and as "marketers tend to shift dollars into direct response marketing in tough market environments ... DoubleClick will benefit from this trend."
Shares in the online ad and technology company closed up 59 cents, or 8.6 percent, to $7.49.
The company also touted its strong cash position in the earnings report, saying it still had $778 million in cash and marketable securities on hand at the end of the quarter.
It has been busily using that money to retire debt, buy back stock at low rates and acquire new assets.
The loss on the third quarter was no big surprise: A few weeks ago, DoubleClick (DCLK: news, chart, profile) warned -- for the second time in three months -- that it would fail to meet analysts' estimates.
At that time, CFO Bruce Dalziel blamed the Sept. 11 attacks for "softness in both online advertising and software sales. This has diminished the outlook for revenues in our media business, and to some extent in our technology business ..."
Nevertheless, the company has been taking advantage of the weakness of its competitors to cherrypick promising technologies at fire-sale prices.
Since May, the company has bought MessageMedia (MESG: news, chart, profile), a permission-based direct marketer/junk e-mailer; a media planning system from Adgile Intercactive; and 24/7's Sabela Media unit. It has also reportedly been sniffing around RealMedia. Just last week, it gobbled up the technology assets of L90 (LNTY: news, chart, profile).
Terms of the MessageMedia deal were adjusted Thursday when DoubleClick abruptly lowered the price it's paying to about $8.5 million, down from the June 1 purchase price of about $41 million. Under the new deal, DoubleClick will issue 1 million shares of common stock worth about $6.9 million based on Wednesday's closing price and also make available up to $1.5 million of bridge financing. The revised transaction is expected to close in the fourth quarter.
Shares in MessageMedia took a tumble on the news, losing 14 cents, almost 54 percent, to close at 12 cents.
William Spain is a reporter for CBS.MarketWatch.com in Chicago. |
