DoubleClick Warns it Won't Repeat Q3 Profit
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Online advertising giant DoubleClick slashed its earnings predictions for fourth quarter 2000 during a conference call with analysts Monday.
The announcement wasn't unexpected; for the past week, Wall Street analysts have been backtracking on their earlier predictions for the company. At the start of the quarter, analysts had predicted the New York-based company would make break-even to $0.02 per share profit for the quarter.
Instead, the company said it would likely repeat its year-ago per-share loss of $0.03. Chief financial officer Stephen Collins estimated revenues for fourth quarter at $126 million to $129 million -- eight to 10 percent lower than beginning-of-quarter analyst estimates.
That's after DoubleClick posted a $0.03 per-share profit last quarter, although company executives at the time warned of continued shakiness in online ad spending, attributable to a shortcoming of dot-com revenue and traditional advertisers slow to move to the Web.
The company widened those reasons for flagging ad spending with to include the economy at large. Execs said that poor ad spending was an indicator of a widespread economic slowdown, rather than the fault of anything fundamental in or limited to the online advertising. Likewise, company executives said that traditional advertisers weren't moving to the Internet in droves simply because they were holding back for the moment, in what they said were tough economic times.
Collins added that DoubleClick now anticipates a first-quarter 2001 loss of $0.05 to $0.07 per share. Analysts previously pegged the company's losses for the period at $0.02, based on lowered guidance given in its third quarter report.
The company also pushed back its projected dates for concluding the acquisitions of e-mail marketer NetCreations and online media planning firm @plan to first quarter, without explanation.
While the company did trend down its estimates and provided a gloomy outlook on the near-term future, executives did take the opportunity to get in a few digs at competitors, especially fellow Alley denizen 24/7 Media.
"These competitors, or potential competitors like 24/7 Media ... don't have enough cash to compete," DoubleClick vice president of global media Glenn Robertson said, pointing to his firm's $900 million in cash and marketable securities.
"Yes, the current environment is tough, but so are we, and that's why we're the leader in what we do," Collins added.
Collins did have some good news for investors, saying that it expects full-year profitability for 2001, likely moving back into the black in mid-year.
"Visibility does remain low, but we will take steps necessarily to manage business the properly," Collins said.
Also, Collins said that CPM rates stayed "pretty much" unchanged.
"If you drop price indiscriminately, just because you're going through a cyclical downturn, it's really hard to get them back up later," Robertson said. "Our sense right now is that all advertisers are keeping their powder dry for all forms of media now. It's just very difficult to get business booked and closed right now that wasn't already in the pipeline."
"The traditional guys aren't doing much of anything differently than they did this quarter. But our traditional advertising business is becoming larger and more stable," he added.
During the day's trading, shares of DCLK closed down 0.52 percent, to $11.94. But investors reacted favorably to DoubleClick's announcement, made after the close of trading on Monday. The stock opened up on Tueday at $12.31, and, at press time, was trading up almost 16 percent, at $13.81.
"We know it's a tough market and as you've seen by some of the actions that we've taken ... we're resolute on managing a profitable company," Collins said to analysts and investors during Monday evening's call. "With all the cash we have, we're very secure, and we look forward to a better marke