Slimmed-Down DoubleClick Turns Profit

A day after Yahoo! posted its first profitable performance in six quarters, DoubleClick followed suit, again returning to net profitability and beating Wall Street estimates.

New York-based DoubleClick said revenue for its second quarter came in at $75.7 million, leading to net earnings of $4.1 million, or $0.03 per share. Analysts surveyed by Thomson Financial/First Call expected the company to post a breakeven quarter. Pro forma earnings came in at $2.5 million, or $0.02 per share.

Last quarter, the firm posted a net loss of $6.04 million; a year earlier, that loss was $37.9 million.

Second quarter’s net income represents the largest in DoubleClick’s operating history — a performance due in part to declining operating expenses, which dropped 9 percent from last quarter to $48.1 million, its lowest levels since 1999. Those declining expenses, meanwhile, were due to the sell-off of several units, including @plan — for which it recorded a one-time net gain.

While offloading its units cut into expenses, it also reduced DoubleClick’s revenue, which fell 10 percent from last quarter, and is down 26 percent from a year earlier.

The company ended the quarter with $767 million in cash and marketable securities, with an increased cash position due to $11.2 million in cash from operations.

“With several key divestitures behind us we have successfully transitioned this business into a higher-margin technology and data marketing infrastructure company,” said Chief Executive Kevin Ryan. “DoubleClick is now on the right foundation to grow profitably and with our significant capital we are in the position to continue developing new opportunities through both internal product development and external acquisitions.”

Once more, the bulk of revenue came from DoubleClick’s TechSolutions division, which houses its DART and DARTmail units. The division reported sales of $48 million in the second quarter, a decrease of 7.3 percent from a year ago.

The company’s Data division, comprised of its Abacus Direct database, reported quarterly revenue of $17.9 million. While revenue dipped, the company said overall margins grew due to the divestiture of @plan, which had been weighing on overall unit performance — though contributing about $7 million in revenue.

In what will be its last quarter under DoubleClick, the company’s Media network generated $10.8 million in sales, $1.2 million below guidance. On Wednesday, DoubleClick closed on the sale of the division to L90, now known as MaxWorldwide.

Now, DoubleClick will recognize only media revenues from its Japanese subsidiary, which is publicly held, and which is expected to generate about $3 million in quarterly revenue.

Despite the record-breaking quarter, DoubleClick executives said they’re again bearish on the rest of the year.

Citing economic, political and international concerns, Ryan said earlier expectations for a turnaround in the second-half of 2002 are now on hold, with clients instead expected to hold off on increasing their technology spending until next year.

“I think that surge in spending is absolutely going away,” Ryan said. “We’re assuming conservative spending for the remainder of this year … We don’t think it will [improve] until next year.”

As a result, DoubleClick said it expects third-quarter revenues to be between $67 million and $73 million, with a pro forma per-share results coming in at between a penny loss to a penny in earnings. Analysts had expected $0.03 in per-share earnings for the quarter.

Executives still reiterated the company’s earlier promises to post a full-year profit.

“I think [market improvement] will take another year,” Ryan added. “But we feel that overall, from an execution point of view, things are going well.”

Added Chief Financial Officer Bruce Dalziel, “With our cash balance of $767 million we also have the resources to weather a weak industry environment while continuing to invest in new products and services.”

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