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DoubleClick's Double Talk

SAN FRANCISCO -- Roughly four weeks after a press release drove shares of DoubleClick (DCLK) up more than 40%, the company concedes the release was "misleading."

On June 30, the Internet advertising-placement company put out a statement saying it had the "third largest audience reach on the Internet behind America Online (AOL) AOL and Yahoo! (YHOO) YHOO , according to Media Metrix," which measures Web site use. (Reach is the percentage of Net users logged onto a given site.) New York-based DoubleClick also said it would be included in Media Metrix' monthly Web report beginning in July.

Never mind that Media Metrix disavowed the release. After all, throwing seemingly good news on fiery Net stocks makes them erupt. Wall Street pushed shares of DoubleClick as high as 77 1/8 from 49 11/16 in just four days.

Now, with the stock back at 44 5/8, DoubleClick is backpedaling. "We compared apples to oranges just to prove a point," says Amy Shapiro, a company spokeswoman. "It was misleading. We didn't explain it clearly enough ... and we realize that we should have explained more clearly what we were trying to say."

So what was the company trying to say?

CEO Kevin O'Connor maintains that the press release was "very clear" -- it just wasn't targeted at Wall Street. The release, he says, was aimed at advertisers. Wall Street, it seems, was somehow supposed to ignore it.

When Media Metrix, which tracks 30,000 individuals' online patterns, put out its rankings July 20, DoubleClick was nowhere to be found. Media Metrix has two sets of rankings: single sites (such as Yahoo.com) and properties (such as the Excite Network, which encompasses City.net, Excite.com, McKinley.com and WebCrawler.com). DoubleClick is neither. It places ads on unrelated sites. One part of DoubleClick's network, AltaVista, ranked No. 12 for sites visited at home, with an 11.4% reach. At work, AltaVista ranked No. 11, with a 17.1% reach.

DoubleClick calculated its No. 3 ranking by adding up all 170 different Web sites that feature DoubleClick-placed ads, a fact that it disclosed only in a footnote. DoubleClick based its ranking on April figures.

Using the June figures and DoubleClick's methodology, however, the company would have ranked No. 4 for home usage, with a 30.8% reach, and No. 3 for sites accessed at work, with a 41% reach.

O'Connor maintains that Media Metrix' numbers don't accurately reflect DoubleClick's massive worldwide presence. The research company in an interview said that the DoubleClick network attracted 12.4 million unique visitors across its network for the month of June. O'Connor, however, says that the worldwide network of sites -- including those beyond Media Metrix' U.S.-only rankings -- reached nearly three times the Media Metrix number. O'Connor says DoubleClick gets 35 million unique individuals per month worldwide.

" Our methodology is a different way of skinning the cat," says O'Connor. "A network is important because they reach a large number of users. What do advertisers care about?" he asks. "They want to reach as many people as possible."

Of course, this is an Internet stock, meaning that facts often don't matter. For instance, Virginia Stuart, a portfolio manager at Scudder Kemper Investments, agrees that it was "pretty misleading," but she also points out that the company -- with or without a press release -- does manage the ad placements on some heavily trafficked sites like Dilbert and AltaVista.

For more info on institutional holders of this stock, as well as financial statements and earnings estimates, please see the Thomson Company Reports.

As originally published, this story contained an error. Please see Corrections and Clarifications.

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