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Technology Stocks : ESVS vs DCLK -- Ignore unavailable to you. Want to Upgrade?

To: Joe Copia who wrote (28)	2/25/1998 6:54:00 PM
From: Rande Is	Read Replies (1) \| Respond to of 717

DOUBLECLICK IPO A HIT [posted from lurker Sherrin] *DoubleClick went public amid a huge amount of hype and publicity. Now the company must live up to expectations as competition waits in the wings.* By Peter D. Henig February 20, 1998 DoubleClick's stock (DCLK) went on a tear right out of the gate. Originally priced at 12 to 14 for 2.5 million shares, the company bumped it up to 17 per share for 3.5 million after the underwriters, led by Goldman Sachs, realized what a hot commodity the IPO had become. Trading opened at 29.13 and reached as high as 31.75 before settling up 9.75 (57.35 percent) on a huge volume of 6.15 million shares. With volume over 6 million on its first day of trading, clearly a lot of the institutions were flipping their shares and taking profits. But to the company's credit, investor are buying this stock because DoubleClick has an established brand image and was the first in the market to carve out the web advertising services niche. With $30 million in sales for 1997, $10.9 million of which came in the December quarter, DoubleClick has clearly hit a home run with its IPO after only its second year of operations. The obvious question now is not how high the stock can go, but how long the hype can last. According to some, when the hype dies down, it may reveal some lurking competition. Francis Gaskins of Gaskins & Co. understands the rationale behind opening-day exuberance because he sees it all the time with hot Internet IPOs: "Right now DoubleClick has the advantage and therefore deserves the premium." However, Mr. Gaskins suggests that "the people in the market don't realize the competition that exists." He notes that other web advertising companies, like 24/7 and Softbank Interactive Marketing, will really fire up after this IPO and that each has a fairly impressive list of clients and sites. Unlike DoubleClick, which considers its space the first-tier sites, these two competitors offer networks of upper-end second- and third-tier sites, including AT&T WorldNet, Rolling Stone, and Reuters News for 24/7 and some top advertisers including Disney, Microsoft, Sprint, and Toshiba for Softbank Interactive. Mr. Gaskins further claims that while DoubleClick is firmly in the top position right now, "the distance between Number One and Number Two will be a lot smaller than most people think." Value added After today's trading, DoubleClick now has a rough valuation of $450 million based on the 15 million shares it has outstanding; that's some big coin for a $30 million revenues company which, according to its prospectus, foresees losses into 1999 as it reinvests in international expansion. However, Mr. Gaskins notes that "such a valuation is at the top end for primarily a service company that has little proprietary software which could offer high gross margins." By most accounts, market analysts remain bullish on DoubleClick. Its established brand image, its technical knowhow, and savvy management skills in an exploding industry counter the inherent riskiness of any Internet IPO. But will DoubleClick continue to dominate the market for Internet advertising? That's a question investors may have to ask further down the road; for now, DoubleClick will bask in the limelight as competition waits in the shadows. DoubleClick may have a rosy future, but investors may need a double take before climbing on board. Will DoubleClick live up to the hype, or is competition going to crowd it out of the spotlight? Give us a shine. Reference: herring.com