*Update* DoubleClick Beats Its Estimate - TheStreet

*Update* DoubleClick Beats Its Estimate

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SAN FRANCISCO -- DoubleClick's (DCLK) third-quarter results beat Street expectations, though the good news may have slipped out earlier than the Internet ad-placement concern expected.

The company was scheduled to release its earnings after the market closed Thursday. But DoubleClick's CFO spilled the beans during an interview with the

Dow Jones News Service

during market hours.

"The timing just screwed everybody up," DoubleClick spokesman David Sasso said of the story, which hit the wires at 11:58 a.m. EST. He added that the less time he was on the phone explaining, the faster the official press release would be available.

According to the earnings report, released just after the close of trading in New York, DoubleClick posted a loss of 28 cents a share for the quarter ended Sept. 30, beating the consensus estimate of a loss of 29 cents a share, according to

First Call

. A year ago, the company reported a loss of 19 cents a share.

The latest quarter showed revenue jumped to $20.8 million from $8.2 million a year ago.

DoubleClick's stock was up 1 3/8, or 8%, to 18 1/2 in late trading.

The following story was posted at 10:43 a.m. EDT:

DoubleClick Watchers Focused on Its Compaq Deal

SAN FRANCISCO -- Wall Street has not been kind to

DoubleClick

(DCLK)

. Its stock has been languishing in the mid-teens, down nearly 80% from its high of 76 in July. And few expect the company's third-quarter earnings, due this afternoon, to reverse that trend.

Analysts polled by

First Call

are looking for a loss of 29 cents a share, only a bit wider than the second-quarter loss of 28 cents a share.

DoubleClick is one of those gold-rush plays trading on the long-term potential of the Internet. Although investors have fled stocks that won't deliver profits soon, DoubleClick is trading at about 3.5 times revenue for the past 12 months on the hope that Internet ads will take off and carry the company's sales with it.

Ken Winston, an analyst at

Needham

, estimates online ad sales will grow to $9 billion in 2002 from $900 million last year. That would give DoubleClick plenty of room to benefit from the shift in concentration of Internet advertising to a broader range of revenues.

Largely for that reason, analysts who have started coverage on DoubleClick recently are mostly bullish. Both Needham's Winston and another analyst,

SG Cowen's

Scott Reamer, have buy ratings on the company. Keith Benjamin, a long-term Internet bull at

BancBoston Robertson Stephens

, initiated coverage on DoubleClick with a long-term attractive rating last month. (Of these firms, only Cowen has underwritten for DoubleClick.)

But this is a long-term commitment and with DoubleClick, the long view is unclear. "The challenge in analyzing the company is the change in business model as the company's mix of services and customers evolves," Benjamin said in a statement.

DoubleClick, founded in 1996 in an Atlanta basement and taken public in February 1998, has four primary businesses: the network of sites it places ads on, including

Edgar-Online

,

Dilbert Zone

and

Auto-by-Tel

; the network's backbone, called

Dart

, which lets advertisers check on their click-through rates; DoubleClick Direct, which recognizes what ads are being clicked on the most and filters those that aren't; and DoubleClick Local, targeting ads to local audiences.

For now, the company generates the bulk of its business from its network of sites. "The company has not derived significant revenues from its Dart service, DoubleClick Direct, DoubleClick Local or international operations," according to a filing with the

Securities and Exchange Commission

.

Even in its core business, there are possible pitfalls. About half of DoubleClick's revenue comes from a deal to serve ads on

Compaq's

(CPQ)

portal

AltaVista

, a site that attracts the kind of hard-core techies that Web advertisers love. DoubleClick renewed the contract in January through 1999 (although either side can back out with three months' notice), and in July Compaq said it was in talks to strengthen the ties between the two companies.

Now analysts are uneasy with the contract. It's a big one for DoubleClick, and tenuous. There has been little word from Compaq on the partnership since July, and that has weighed down the stock. (An Oct. 14 announcement that DoubleClick would launch the AltaVista Holiday Shopping Guide during the last week in October did not lessen analysts' concerns.) Winston said the uncertainty about the deal is what's keeping him from rating the stock a strong buy. He's not alone in feeling anxious. "The stock will be driven in the near term by the expected outcome of DoubleClick's negotiations with Compaq," Cowen's Reamer wrote in a recent report.

So even if DoubleClick surprises with a smaller-than-expected loss, Wall Street is unlikely to get too excited until the Compaq question is ironed out.

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

Thomson Company Reports.

Since published, this story has been corrected and clarified. Please see

Corrections and Clarifications.