In a development that bodes ill for the online advertising and media industry, sector leader DoubleClick late Thursday revised downward its earnings estimates for the third quarter, attributing the change to effects of the tragic events of Sept. 11.
DoubleClick now expects a third-quarter pro forma loss per share to come in between $0.09 and $0.11, where it had previously expected a $0.05 to $0.07 loss. Revenues are now expected to be between $87 million and $90 million, rather than between $96 million and $102 million. Wall Street had expected a loss of $0.06 per share, according to consensus estimates published by Thomson/First Call.
“The tragic events of Sept. 11 have led to softness in both online advertising and software sales,” said Bruce Dalziel, the company’s chief financial officer. “This has diminished the outlook for revenues in our media business, and to some extent in our technology business as well.”
Dalziel said the company’s data business remains strong, adding that “we continue to manage our cost structure proactively” — a statement that could point to further layoffs. Back in March, DoubleClick announced that it was laying off 10 percent of its workforce, primarily from its media business. That followed an earlier round of layoffs — involving 8 percent of its staff, or around 170 people — in December, 2000.
The news is a bad sign for the online advertising industry, which had already been struggling well before the attacks on Sept. 11. It’s been widely reported that traditional media has been feeling the pinch, but much of those effects could be attributed to advertisers pulling or changing ads to show sensitivity after the attacks, and to lost revenue due to non-stop news coverage that aired without commercial breaks. Until DoubleClick’s announcement, there was little indication of how the online media business would be affected, but, now, the picture looks grim.
Additionally, and understandably, DoubleClick said software sales hadn’t been what they’d originally expected in the wake of the Sept. 11 attacks. This may mean that other companies selling similar software products — Avenue A, Mediaplex,
24/7 Media,
Real Media, and Bluestreak — are also suffering.
DoubleClick declined to provide guidance for the fourth quarter, saying that information would be provided at the company’s quarterly earnings call, which is scheduled to take place on Oct. 11.