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DoubleClick lowers expectations for 4Q, 1Q

Online advertising giant DoubleClick (Nasdaq: DCLK) said Monday that it will fall well short of Wall Street's earnings and revenue targets for the fourth quarter. DoubleClick also said it will report a larger-than-expected first quarter loss on sluggish revenue growth.

On a conference call with analysts, the company said it will report earnings ranging between a loss of 3 cents a share and break even. According to earnings tracking firm First Call Corp., DoubleClick was expected to post a profit of 2 cents a share for the December quarter.

Analyst estimates have been cut in recent weeks as industry observers sounded alarm bells about online advertising growth. DoubleClick said it sees fourth quarter sales in the $126 million to $129 million range, down 8 percent to 10 percent from what analysts were expecting. The company also lowered expectations for the December quarter during its third quarter conference call.

The company also detailed a host of charges for the fourth quarter related to headcount reductions, goodwill writedowns and an advance to a customer.

DoubleClick said the first quarter will also be weak. CFO Stephen Collins said the company now expects to report a first quarter loss of 5 cents a share to 7 cents a share with sales up 5 percent, or about $115 million, from a year ago. First Call consensus projected a loss of 2 cents a share for the first quarter.

The company said it plans on being profitable in the second quarter and for fiscal 2001.

"There's an absolute lack of visibility," said Collins. Collins said the "spot market" --last minute advertising buys -- has unraveled and customers online and offline are "keeping their powder dry."

There were a few positives from an otherwise gloomy conference call. Collins said DoubleClick was "holding the line" on its ad rates. "If you drop prices in a cyclical downturn, you don't get them back," said Collins.

DoubleClick also said its ad mix was 52 percent "not com," with the remainder being dot-coms.

Indeed, one analyst noted on the conference call that he thought DoubleClick's news would be worse. Wall Street analysts have lowered estimates on DoubleClick, Yahoo! (Nasdaq: YHOO) and others in recent days on concerns about an online advertising slowdown.

Reiterating an outlook from last week, the company indicated that it had a strong cash position and could weather the downturn. "We know it's a tough market, but we're resolute on managing a profitable company," said Collins.


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