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DoubleClick beats 2Q estimates, sees 3Q challenge

DoubleClick (Nasdaq: DCLK) lost less than analysts expected in the second quarter, but sounded a note of caution about the current period.

After market close Tuesday, the online advertising network reported a second quarter net loss of $3.8 million, or 3 cents per share, not counting special charges. First Call's survey of 21 analysts predicted a loss of 5 cents per share for the quarter ended June 30.

The company recorded a loss of $22.1 million, or 18 cents per share, when all expenses are factored in. That includes $10.1 million in goodwill writedowns, $5.2 million in charges related to stock compensation and more than $3 million related to losses from affiliates that recorded large amortization charges.

Second quarter revenue increased to $128.1 million, up 157 percent year-over-year and up 16 percent from the first quarter.

However, increasing revenue in the third quarter will be challenging because of "short-term adjustments to online ad spending," CFO Stephen Collins said, during a conference call with analysts. "Caution should be applied," Collins added.

Shares of DoubleClick traded at 35 1/8 in afterhours activity on the Island electronics communications network, following the release of quarterly results. DoubleClick closed Tuesday's regular session at 35 1/2, down 2 for the session.

Advertisers' cost per thousand impressions (CPM) fell 7 percent to $3.68 from $3.96 in the first quarter, as DoubleClick rolled out its SONAR advertising network for smaller websites. CPM remained "basically flat" if SONAR's effects are discounted, Collins said.

Despite the near-term caution, DoubleClick remains comfortable with current consensus estimates for the second half of 2000, executives said. First Call currently predicts profits of 4 cents and 6 cents per share for DoubleClick's third and fourth quarters, respectively. The last three months of 2000 should be strong, the company believes.

"Although it's too early to tell, we're confident current growth targets are reasonable," Collins said. "People are just gearing up for the fourth quarter."

Company executives believe DoubleClick is on track to be profitable by the end of the year. Online ad spending is tightening and growth in the third quarter will slow, but online advertising is healthy, said Kevin O'Connor, chairman and CEO. "We don't see companies switching from Internet advertising to TV and radio," O'Connor told analysts.

During the second quarter, DoubleClick's TechSolutions unit posted revenue of $48.7 million, up 22 percent sequentially and up 234 percent year-over-year.

International business in the second quarter helped drive DoubleClick's systems revenue improved to $40.4 million, a 45 percent percent gain from the first quarter.

Data services rose 20 percent year-over-year to $15.8 million. Global media revenue increased 15 percent sequentially to $69 million.>