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Technology Stocks : DoubleClick Inc (DCLK) -- Ignore unavailable to you. Want to Upgrade?

To: sammie-m who wrote (2607)	9/21/1999 12:51:00 AM
From: jay silberman	Read Replies (1) \| Respond to of 2902

investors.com DOUBLECLICK INC. New York, New York Web Ad Agency Bulks Up In Booming Market Date: 9/21/99 Author: Nellie Andreeva Double-click your mouse, and you can go any place on the Web. A New York company sharing that name wants to make it that easy for advertisers to find space on the Internet. DoubleClick Inc. is an Internet ad agency. It's the largest player of any publicly held e-marketing company, says Thomas Weisel Partners analyst H. Perry Boyle, Jr. And the company is bulking up. DoubleClick announced plans in July to buy its top rival, NetGravity Inc., for $555 million. With very little customer overlap between the two companies, DoubleClick stands to nearly double the number of the top 50 Web publishers it serves to 27. That purchase follows on the heels of the company's planned merger with Abacus Direct Corp. The deal, announced in June, gives the company Abacus' database of consumer spending behavior to better target its ads. 'It was a marriage made in heaven,' DoubleClick CFO Stephen Collins said. Not bad for a company that started with two people in a garage at the end of 1995. DoubleClick now has more than 700 employees. Revenue jumped from $6 million in 1996 to $80 million last year. Mutual fund management firm Janus Capital Corp. revealed last week that it bought a 12% stake in DoubleClick. 'We're very strong believers in the growth of the Internet, and we think that DoubleClick is a key beneficiary of this trend,' said Janus analyst Minyoung Sohn. The key to DoubleClick's meteoric rise? 'We've always had in mind that we were going to be a great company, and we've tried to be very aggressive,' Collins said. The company has been so aggressive about dominating its market, it has earned DoubleClick a nickname -'Darth Vader of the Internet.' DoubleClick got a new weapon this month when it won a patent for ad delivery. Boyle believes that DoubleClick will use the patent 'to try to make a few competitors squirm, especially the weaker ones that lack the necessary cash to spend on litigation.' The company is vying for a piece of a market that's still in its infancy. Although Web advertising makes up less than 1% of total ad spending, the sector is clearly on a roll. Advertisers spent $2.1 billion online in 1998, says Marissa Gluck, an analyst with the research firm Jupiter Communications. That should balloon to $11.5 billion by 2003. DoubleClick looks to capture business by working as an aggregator of ad space. Many Web sites can't afford or don't want to have an in-house sales force. So they join an ad network managed by firms like DoubleClick. For advertisers, it's more convenient to buy ad space in bulk than to contact each Web site. For Web publishers, which split the ad revenue with the vendors, this is a low-risk, cheap source of income. But finding an ad network isn't always easy. Some ad aggregators sell to obscure Web sites as well as popular ones. Not DoubleClick. It has high brand requirements similar to those that an upper-class club might have for new members. The company reaches some of the Web's most recognized sites, including EDGAR Online, PBS Online, Billboard Online and the Dilbert Zone. But the jewel in DoubleClick's crown is the portal Alta Vista. That relationship also poses a risk. Alta Vista made up 20% of DoubleClick's revenue in the second quarter. That's down from nearly 50% last year, and DoubleClick still could get burned if Alta Vista opts to sell its ad space on its own. For now, nothing indicates that Alta Vista is leaving. And DoubleClick could always ink deals with other portals. Rumors surfaced last month about ongoing talks between DoubleClick and Lycos Inc. DoubleClick declined comment. One of its main rivals, Engage Technologies Inc., handles Lycos' ads. Apart from selling space to advertisers on its network, DoubleClick offers them its DART technology to help target users better with data files called 'cookies.' These data files are placed on consumers' hard drives when they first visit a site. The files keep records of which sites users visit and how many times they see a particular ad. Acquisitions have helped the company bolster sales, but it has yet to see a profit. DoubleClick lost 13 cents a share in the second quarter, compared to a 14-cent loss last year. Still, revenue jumped 155% to $44 million. DoubleClick could lose 49 cents a share in 1999 and 5 cents in 2000, First Call says. Analyst Boyle expects the company to stop its losses by the third quarter of 2000. The company trades as DCLK near 117. What might fuel growth? More personalized advertising, with content based on a consumer's likes and dislikes, Collins says. People like to get advertising, he adds, especially when it's relevant to them. Look for consolidation of online advertising to continue, analysts say. And DoubleClick should continue to be a major force. In fact, the next consolidation wave could involve traditional ad agencies, which have lagged in embracing the Internet. Few analysts would be surprised if DoubleClick buys one of these traditional advertisers one day. -------------------------------------------------------------------------------- (C) Copyright 1999 Investors Business Daily, Inc. Metadata: DCLK NETG ABDR LCOS ENGA E/IBD E/SN1 E/NAM E/NAM1