December 11, 2000 2:20 PM PST

DoubleClick issues profit warning

Online advertising giant DoubleClick said Monday that it will fall well short of Wall Street's earnings and revenue targets for the fourth quarter.

The company also will report a larger-than-expected first-quarter loss on sluggish revenue growth.

During a conference call with analysts, DoubleClick executives said per-share earnings will fall within a range of breaking even to a loss of 3 cents. The company was expected to post a profit of 2 cents per share for the December quarter, according to First Call/Thomson Financial.

Those estimates, however, have been cut in recent weeks as Wall Street analysts sounded the alarm bells about online advertising growth.

DoubleClick said it sees fourth-quarter sales in the range of $126 million to $129 million, about 8 percent to 10 percent below what analysts expected. The company previously lowered expectations for the fourth quarter during its third-quarter conference call in October.

Also Monday, the company detailed a host of charges for the fourth quarter related to head-count reductions, goodwill write-downs and an advance to a customer.

In addition, DoubleClick said the first quarter also will be weak. Chief financial officer Stephen Collins said the company now expects to report a first-quarter loss of 5 cents a share to 7 cents a share with sales up 5 percent to about $115 million compared with last year. First Call consensus projected a loss of 2 cents a share for the first quarter.

DoubleClick said it plans to be profitable in the second quarter and in fiscal 2001.

There were a few positives from an otherwise gloomy conference call. Collins said DoubleClick was "holding the line" on its ad rates.

"If you drop prices in a cyclical downturn, you don't get them back," he said.

DoubleClick also said its ad mix was 52 percent "not-com," with the remainder coming from dot-coms.

One analyst during the conference call said he thought DoubleClick's news would be worse. Wall Street analysts have lowered estimates on DoubleClick, Yahoo and others in recent days on concerns about an online advertising slowdown.

Reiterating an outlook from last week, DoubleClick indicated that it has a strong cash position and could weather the downturn.

"We know it's a tough market, but we're resolute on managing a profitable company," Collins said.

 

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