Sluggish Earnings Drive Down DoubleClick Stock

NEW YORK DoubleClick’s stock dropped nearly 28 percent or $1.92 to close on the Nasdaq at $5.06 today, following yesterday’s news that the company failed to meet its second-quarter financial projections, due to weaknesses in its ad-management and Abacus divisions.

The online ad technology concern reported yesterday that its Q2 revenue was $69.2 million, up 9 percent over the $63.6 million in the year-earlier quarter, but below its April guidance of $70-74 million.

Second-quarter net income totaled $3.9 million, or 3 cents per share, off 33 percent from $5.8 million, or 4 cents per share, in the year-ago period, and 49 percent from $7.7 million, or 5 cents per share, in the first quarter.

The New York-based company attributed the declines to lower-than-anticipated mailings by Abacus customers in the U.S. retail, business-to-consumer realm, and continued softness in the online publisher portion of its ad-management business.

As a result, DoubleClick revised its full-year outlook, projecting earnings per share of 13-17 cents on revenue of $290-305 million. The New York-based company previously anticipated $294-314 million in revenue [IQ Daily Briefing, April 15]. For the third quarter, DoubleClick projected revenue of $76-82 million and earnings per share of 2-5 cents.

“While several of our newer businesses continued to show growth, we are not satisfied with our overall results,” DoubleClick chief executive officer Kevin Ryan said in a statement. “We are focused on enhancing the performance of our core businesses, even as we continue to invest in our newer products. These increased investments may dampen our results in the short term, but we believe that they are necessary to improve long-term growth.”

As of June 30, the company had $541.6 million in cash and marketable securities, and a net cash position of $403.2 million, or $3.06 per share. That accounts for Performics, a search and affiliate marketing specialist that DoubleClick bought in June in a deal worth up to $65 million. The purchase, which is expected to be immediately accretive to EBITDA, or earnings before interest, taxes, depreciation, and amortization, will reduce net income by 1 cent per share this year due to integration costs and amortization of intangibles.

It also reflects the $38 million used to repurchase about 4.7 million shares of its common stock in Q2. (DoubleClick has picked up more than $59 million in stock since the board authorized a $100 million buy-back program late last year.)