Avenue A warns of dot-com damage

Avenue A (Nasdaq: AVEA), a digital marketing company, warned Wednesday that revenue for the third quarter may be up to about $14 million below expectations due to a slow summer, and increasingly frugal dot-com clients.

Shares closed down 0.06 to 7.81 Tuesday, well below its 52-week high of 89.

The company said is has a "considerably stronger outlook for the fourth quarter 2000." But based on results of the quarter to date, revenue will likely be in the low to mid- $40 million's, whereas estimates put third quarter revenue at $54 million. According to First Call, analysts are expecting the company to lose about 13 cents a share in its third quarter, and 10 cents a share in its fourth quarter. Avenue A made no comment on how the lowered revenue will affect its bottom line.

The outlook bears a striking resemblance to that which Doubleclick (Nasdaq: DCLK) announced with its second quarter results; the online advertising company also warned that its third quarter would be slow, but said things would remain on target in the fourth quarter. Merrill Lynch analyst Henry Blodget had predicted that competition in the online ad market should be fierce in the third quarter.

The company said it has seen a summer slowdown in online advertising expenditures, which is consistent with traditional media spending trends. Additionally, some of its dot-com clients have become more conservative with their marketing budgets.

The company said it has added a number of new and substantial clients, including both financially solid dot-coms and traditional companies, which it expects will contribute to revenue beginning next quarter. It expects fourth quarter revenue to be in the mid- to high $50 million's.

Avenue A will report third quarter results on October 24.
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