When a public company loses a high-profile customer, two things happen: The stock drops, and the company begins an aggressive hunt for new customers.
(ADFC:Nasdaq), a newly public software and services company in Cupertino, Calif., has been through both stages. Its stock
decided in early June it would manage advertising services for newly acquired
, which had accounted for 20% of AdForce's sales. Now, if rumblings coming from AdForce are accurate, the young company has accomplished the follow-up feat by replacing the lost revenue from Geocities.
According to an outside corporate spokesman, AdForce has recruited 14 new customers since the GeoCities letdown, an amount of business that should completely replace the revenue that evaporated into the Yahoo! monolith. In a missive titled "40 Days and 40 nights since the GeoCities loss," the publicist noted that the recovery was "much faster than most analysts predicted." Asked, however, to provide additional information, AdForce clammed up.
For good reason: The company is set to announce its second-quarter financial results on Monday before the markets open. The spokesman later said AdForce's lawyers put a muzzle on CEO Charles Berger until then, when the company also plans to discuss its new client list. (Public companies are in so-called quiet periods, when they are not supposed to discuss material aspects of their business, roughly from a couple of weeks before the end of a quarter until they release results.)
Recovering the lost revenue wouldn't be the only cause for cheer among AdForce investors. The other is that the young company is looking increasingly like acquisition bait in a market being consolidated by
on the one hand and
on the other.
New York-based DoubleClick, which sells Net advertising for a network of clients and sells software to Web firms (including to
) to manage their Net operations, recently cut deals to buy competitor
, a research firm focused on retailing.
For its part, AdForce recently signed customer or partnership agreements with ad services firms
, both controlled by Web heavyweight CMGI.
"The Adsmart agreement signals a possible deepening relationship with CMGI," writes
Hambrecht & Quist
analyst Daniel Rimer, in a report to clients released earlier in the month. "This is the second agreement AdForce has signed with a CMGI portfolio company in the past two months."
Read between the lines here: CMGI-controlled
accounts for a huge chunk of DoubleClick's sales. AdForce is forging a closer relationship with Adsmart and Engage, the latter of which expects to go public shortly.
"If Adsmart is given a portion of AltaVista's inventory, we believe AdForce is positioned to be a direct beneficiary," writes Rimer, whose investment bank was an underwriter of AdForce's IPO and who rates the investment a buy. "We will closely monitor the relationship between AdForce, Adsmart, CMGI and AltaVista as events unfold."
There is still the nagging concern -- duly disclosed in AdForce's IPO filings with the
-- of online advertising representative
, which accounted for 23% of AdForce's first-quarter revenue. 24/7 has its own ad serving technology and it wouldn't be a shocker if it eventually dumped AdForce. David Moore, 24/7's CEO and the only person a spokeswoman says can discuss the 24/7-AdForce relationship, wasn't available for comment Thursday.
Plugging TheStreet.com on Fox News
I've counted at least six of my colleagues in columny at
who have used their bits and bytes (tech talk for what the dead-tree guys refer to as ink) to hype our new television show, which
debuts Saturday on the
Fox News Channel
on cable TV.
Please check out this show, which after numerous rehearsals, promises to be a broadcast version of the lively, opinionated, irreverent and even controversial fare you get here at the site. I'll be playing the voice of reason against
Gary B. Smith's
voodoo-like chart reading.
James J. Cramer
will be acting out as well.
See you this weekend on the small screen.
Adam Lashinsky's column appears Mondays, Wednesdays and Fridays. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a monthly column for Fortune called the Wired Investor, and is a frequent commentator on public radio's Marketplace program. He welcomes your feedback at