WHAT ARE THE FACTS?Technology News
Fri, 25 Jun 1999, 7:48pm EDT
DoubleClick Shares Fall on Concern CMGI May Buy Top Customer
AltaVista
By Greg Chang
DoubleClick Falls as CMGI May Buy Customer AltaVista (Update2)
(Updates with closing share price, adds analyst comment in
8th paragraph, details in 9th paragraph.)
New York, June 25 (Bloomberg) -- DoubleClick Inc. shares
fell 7 percent on concern the Internet advertising company will
lose its largest customer if CMGI Inc. buys Compaq Computer
Corp.'s AltaVista online directory.
DoubleClick, which makes technology for delivering targeted
online ads, fell 5 3/4 to 75 15/16 in trading of 5.38 million
shares. DoubleClick's shares have fallen 20 percent since
Tuesday, when the AltaVista talks were first reported, cutting
$724.6 million in market value.
AltaVista accounts for 43 percent of DoubleClick's sales.
CMGI's talks to buy the Internet directory concern some investors
since the company could supplant DoubleClick on AltaVista with
rivals ADSmart Corp. and Engage Technologies Inc., both of which
CMGI controls.
''If CMGI buys AltaVista and wants to bring everything in-
house, that could be bad for DoubleClick,'' said Alexander
Cheung, a portfolio manager with the Monument Internet Fund,
which owns DoubleClick shares.
DoubleClick's technology is superior to its competition,
which means that CMGI could also want to continue working with
the New York-based company, Cheung said. DoubleClick also has a
three-year contract with AltaVista which started in January.
DoubleClick agreed last week to swap about $800 million in
stock for Abacus Direct Corp., which tracks consumer buying
patterns.
If DoubleClick had obtained Abacus Direct's business in the
first quarter, the hypothetical percentage of its revenue from
AltaVista would have been 13 percent, according to a report by
Tara Long, an analyst with C.E. Unterberg, Towbin, who rates the
shares ''strong buy.''
''You have a lot of jittery investors in DoubleClick,'' Long
said. ''It seems a little early to react since this is all based
on a lot of speculation.''
AdForce Inc., a DoubleClick rival, saw its shares decrease
earlier this month when it lost its fourth-largest customer,
GeoCities, after the company was acquired by Internet directory
Yahoo! Inc.
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