DCLK ($13 down$11.67) Revs Fall 20 Perc.
By JIM KRANE, AP Technology Writer
NEW YORK (AP) - Plunging Internet advertising sales caused second-quarter revenues at DoubleClick Inc. (NasdaqNM:DCLK - news) to fall 20 percent, though the Web advertising agency still beat Wall Street's profit expectations.
In times of economic malaise, advertising spending is one of the first things a company cuts, said Patrick Keane, a senior analyst at Jupiter Media Metrix.
For a company like the New York-based DoubleClick, which has yet to turn a profit since its inception in 1995, the malaise is magnified by the drastic drop-off in Internet business.
For the three months ended June 30, DoubleClick lost $37.9 million, or 29 cents per share, compared with $22.1 million or 18 cents per share in the year-ago period.
Excluding one-time items, DoubleClick lost 7 cents per share in the second quarter, slightly better than the 8 cents loss per share expected by analysts surveyed by Thomson Financial/First Call.
Revenue fell to $101.9 million from $128.1 million in the year-ago period.
``We remain mired in an advertising slowdown that began manifesting itself a year ago,'' said DoubleClick chief financial officer Stephen Collins. ``Our best case scenario is that meaningful growth will return in the middle of 2002.''
In a conference call, Collins predicted a further drop in revenues in the third quarter, to between $96 million and $102 million.
DoubleClick and other companies whose earnings stem from Internet ads are being hammered by blows from three sides, said Keane.
Many of the Web sites that used DoubleClick's ad-serving technology have been shuttered since the dot-com crash, or have lost ads from those departed dot-coms.
And there's a general feeling among advertisers that online ads don't do much for business.
``Advertisers just don't feel that online advertising moves the needle, whether its selling the product or influencing a brand decision by a consumer,'' said Keane.
Online ads have gotten so cheap that they are being used by ``bottom feeders'' looking to market products directly to consumers, like the ubiquitous X-10 ``tiny wireless video camera,'' said Keane.
Advertisers need to be more creative in designing the one-dimensional banners or pop-up windows that are now often ignored, said Allen Weiner, analyst Nielsen NetRatings.
DoubleClick is larger than its chief competitors 24/7 Media Inc. and Engage Technologies Inc. (NasdaqNM:ENGA - news), which are experiencing the same pressure.
Analysts say that DoubleClick remains a bellwether company in a field that will grow more viable as the Internet rebounds and bandwidth, or connection speed, increases.
And online ads still hold a powerful trump card over other ad types by permitting impulse buying.
``It's the only medium that allows direct interaction between an advertiser and an end user,'' said Weiner. ``It's the only advertising channel that gets an immediate result.''
Shares of DoubleClick fell 74 cents to $12.02 in regular trading on the Nasdaq Stock Market, then fell another 35 cents to $11.67 in after-hours trading.
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