aQuantive Hurt by Razorfish Weakness

The stock slides after a fourth-quarter forecast falls short of expectations.
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aQuantive

(AQNT)

sank 11% Thursday morning after the digital marketing services company trimmed fourth-quarter guidance.

For the third quarter ended Sept. 30, the Seattle-based company earned $24 million, or 34 cents a share. That's up from the year-ago $3.4 million, or 5 cents a share. Excluding a tax valuation gain, latest-period earnings were $3.5 million, or a nickel a share, which is a penny ahead of the Wall Street analyst consensus estimate.

Revenue was $46.7 million, down from a year ago but triple the third-quarter 2003 level on a comparable basis, giving effect to media costs paid to publishers in the year-ago period.

"During the third quarter, each of our operating segments made good progress, as evidenced by significant, but early stages, of integration between Avenue A/Razorfish, continued strong revenue growth by Atlas DMT, and our newest operating unit DRIVEpm's first profitable quarter," said CEO Brian McAndrews. "The digital marketing industry's growth continues to accelerate, and we believe our recent strategic moves position us for continued long-term growth and profitability."

The tax gain comes on a decision the company made on net operating loss tax carry-forwards generated before aQuantive achieved profitability. During the third quarter, aQuantive concluded that it will likely be able to realize the benefit of these deferred tax assets in the future. Consequently, a credit to income taxes of $20.6 million was recorded to net income.

For the fourth quarter, aQuantive guided toward a profit of 4 cents a share on revenue of $54.5 million. Those numbers are shy of the Wall Street consenus estimates, which called for earnings of 6 cents on sales of $57 million. The company said the shortfall was "largely related to the Razorfish operations."

On Thursday, aQuantive fell 92 cents to $7.55.