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DoubleClick outlook disappoints, shares slide

DoubleClick Inc. (Nasdaq: DCLK) plunged Friday as the company's third-quarter earnings news sunk in. Although the company announced its first profitable quarter, growth is expected to slow and visibility is dim for the next few quarters.

Shares were down 36 percent, or 6.56 to 11.56 after the company's Thursday announcement that it had hit third quarter forecasts. Though earnings were on target, even amid the slow-down in online ad spending, revenue in the company's media and data revenues disappointed some analysts.

"There have always been down cycles in advertising, and we're in one now," said CFO Stephen Collins in a conference call. Though Collins said he was confident growth will pick up in the long term, he admitted visibility is dim into 2001, due to the current dot-com shakeout.

Collins said visibility was particularly limited in the media business, and the company expects a pro forma loss in the first quarter of 2001.

DoubleClick was downgraded to "buy" from "strong buy" by analyst Scott Reamer at SG Cowen Friday.

"Investors were prepared for weak Media biz, but Technology and Data (62 percent of revenue) also weak, a surprise," Reamer wrote in a research note.

Credit Suisse First Boston said on Friday it initiated coverage of DoubleClick with a "buy'' rating and a 12-month stock price target of $25. Analyst Jamie Kiggen set earnings estimates at 3 cents for the DoubleClick's December quarter and 25 cents for 2001, down from previous consensus estimates of 5 and 36 cents.

"While there is tremendous potential value in DoubleClick longer-term, earnings visibility is low, especially over the next two quarters,'' Kiggen said in a research note.

"Near-term catalysts are unclear, but could include a stock buyback, accretive acquisitions, and/or more definitive customer and market data. However, the stock could essentially be dead money for a couple of quarters,'' he said.

Reuters contributed to this report.