Quarterly Revenues Slipping for DoubleClick

The Alley-based online ad giant saw revenues of $114.9 million, resulting in
a pro forma net loss of $10.5 million, or $0.08 per share. That’s a penny
better than Wall Street had expected, according to Thomson Financial/First
Call estimates.

But it’s also 15 percent less than the firm took in just a quarter
earlier, when it broke even on an earnings-per-share basis.

That figure doesn’t include a restructuring charge of $29 million, in
conjunction with its revamping of global media operations into more easily
managed units, the Brand Network and Audience Network.

Nevertheless, chief executive Kevin Ryan said he was pleased with the
quarter’s performance.

“We have leadership positions in each of the business segments in which
we operate, world class technology, a robust balance sheet, and a great
team,” Ryan said. “Ironically, the tough industry environment has resulted
in DoubleClick having a better competitive position than ever before. I am
excited about our prospects for the future.”

But in response to a market that chief financial officer Stephen Collins
called “pretty darn tough,” DoubleClick said it would post a second-quarter
loss of between $0.05 and $0.07 per share, on revenue of $100 million to
$105 million.

Analysts, and previous guidance, had forecasted a $0.02 per share loss.
Collins said that a portion of this is the result of no discernable seasonal
pickup in industry advertising revenues.

“Online marketing is soft right now, along with the whole economy,”
Collins said. “As the economy turns around, DoubleClick will benefit along
with its customers. For the time being though, we need to manage our
operations tightly, and not be overly aggressive in our revenue
projections.”

DoubleClick also revised guidance for the rest of 2001, expecting annual
revenue to be between $425 and $450 million, resulting in a full-year
pro-forma loss between $0.18 and $0.22 per share.

While DoubleClick is expecting TechSolutions revenue to grow between 5
and 10 percent in 2001, and Data to grow 20 percent during the year, a new
strain will be placed on the firm as it decreases its work for AltaVista, in
accordance with a previously announced agreement. DoubleClick said that its
media business would likely decline 45 to 55 percent in part for that
reason.

In better news, DoubleClick said during the most recent quarter that it
has continued to lessen its dependence on media revenues — somewhat. The
company saw about 40 percent of its income come from media, down about 5
percent from fourth quarter. The move had been in response to efforts to
concentrate on its higher-margin TechSolutions division — a unit that’s
also less exposed to the softness in ad pricing.

As expected — and because of that softness — DoubleClick’s media
business continued to feel pressure, producing $46.1 million in revenues for
first quarter, down sharply from the $60.4 million it saw in last quarter.

The company’s TechSolutions unit suffered as well.
While most of DoubleClick’s quarterly revenue again came from the
division — which produced $54.9 million in revenue — it took in less than
last quarter’s $61.5 million.

That’s in spite of adding 177 new clients, including publishers like
Getmusic.com, Major League Baseball, and EMAP, and agencies including FCB
Worldwide. Ryan said price pressure from troubled competitors’
“bargain-basement deals” was one of the factors in the unit’s current
weakness.

The company’s Data division pulled in $18.2 million in first quarter, up
from $17.8 million in last quarter. DoubleClick attributed the growth to
expansion of its Abacus Direct unit’s direct marketing list-sharing
business, Abacus Alliance.

DoubleClick also said the proportion of revenues from traditional
advertisers continued to grow to more than 59 percent, from about 55 percent
last quarter.

Despite the concern going forward, DoubleClick’s $831 million in cash —
minus the undetermined amount it will spend to acquire e-mail marketer
FloNetwork in April — should be enough to carry it through the current
downturn in online advertising.

“I think it will be clear that we are outperforming the industry in a
very tough environment. This was a tough quarter for the industry, and I
think the entire year’s going to be tough,” Ryan said.

Collins also said the company’s “drawing the line” on reducing operating
expenses — suggesting no further layoffs or office closings. It’s a gutsy
promise, but Collins added that the DoubleClick’s infrastructure could
easily support even a larger company.

“We have taken the steps necessary to stay lean and mean,” he said. “As
the economy recovers and advertising dollars are allocated more and more to
online media, DoubleClick will benefit enormously. We have the resources and
staying power to stay on top.”

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