| Although ValueClick may be able to avoid legal repercussions by settling on the FTC inquiry, I don't think the market has properly factored in this negative on the value. ValueClick most likely will have to eliminate some of these practices to avoid legal action. When that occurs, their revenue growth and means of competitiveness could be impacted, meaning the effective multiple going forward goes up. Hence, it may be at lower likelihood for takeover because a) FTC issue has to be closed, and that may take some time, b) impact on growth needs to be evaluated for a couple of quarters after the change, and c) the negative publicity or client feedback from the practices should fade into history. Thus, though ValueClick may remain a potential takeover target, it is not likely in the short term, and the valuation may already be overrich. I suspect over the next two quarters a gradual decline in the stock value as investors move out who purchased on takeover speculation. Time to get back in therefore could be in about 6 months. |
