ValueClick: Value for Shareholders?

A common complaint is that online advertising is not effective. In fact,
this seems to be the complaint about any type of advertising.

However, there are new models emerging to improve online advertising. One
approach is cost-per-click (CPC), which is known as performance-based
advertising.

A leader in CPC is ValueClick
. Actually, the company went public in late March 2000. The
stock went as high as $24. Unfortunately, the stock is now at $7. Then
again, it was inevitable that the company would be affected by the problems
in the online advertising industry.

Basically, ValueClick has developed a sophisticated technology engine that
provides CPC services using a network of Web sites. The network aggregates
underutilized inventory in a cost-effective way.

For the most part, ValueClick focuses on small-to-medium sized Web sites. In
all, the network has about 14,300 Web sites. This has about a 30% reach of
the U.S. Internet population.

Last quarter, the company had $11.3 million in revenues, which was a 290%
increase from the same period a year ago. Unlike many of its brethren, the
company was even profitable, with net income of $1.9 million. The company
also has a hefty cash position of $138.4 million.

Further, in May 31, 2000, ValueClick raised $28 million in an IPO for its
ValueClick Japan division (listed on the Tokyo Stock Exchange). ValueClick
has a 53.7% stake in the company.

Unfortunately, ValueClick is not immune from the problems affecting the
online advertising space. Recently, the company announced that its third
quarter will slow down. Revenues are expected to be $9.5-$10 million.
However, the company expects a much better fourth quarter. Also, ValueClick
announced a $10 million stock buyback, which is rare event in the Internet
world.

Essentially, ValueClick has a solid balance sheet, effective technology and
a profitable business model. When the online advertising industry has its
turnaround, expect a strong performance from ValueClick.