Earnings: ValueClick Q3 Net Income Plummets 88.1 Percent; Revs Slip 2.5 Percent

This story was written by David Kaplan.
Online ad firm ValueClick had previously warned investors that Q3 would be rough and its earnings report on Wednesday clearly bore that out: the company's GAAP net income was $2 million ($0.02 per diluted common share) down 88.1 from $16.8 million ($0.17 per diluted common share) fin Q307. Net income in the impacted by the completion of an offer to purchase up to 4.9 million stock options with exercise prices ranging from $25.66 to $29.73 per share. It was also impacted by certain tax adjustments. Excluding those two items, Q3 net income per diluted common share would have been $0.15, ValueClick said.

-- Revenue was down 2.5 percent to $152.9 million compared to $156.9 million for the third quarter of 2007.

-- A rough year so far: The Westlake Village, CA-based company has clearly been having a rough time this year. It began with a $2.9 million settlement with the FTC over deceptive online ad charges brought by the FTC then was hit by the decline in display advertising. Last week, ValueClick COO David Yovanno departed to take charge at widget distributor Gigya.

-- More weakness sooner, opportunity later: In a research note, UBS analyst Ben Schachter identified some of ValueClick's weakness ahead. The wider economic meltdown will continue to put pressure on ValueClick's display business, Schachter wrote. The display market may recover somewhat by the end next year. On the way to that point, a number of ad networks will likely fold amid the continued downturn, allowing ValueClick the chance to consolidate some of that market share. But longer-term, Schachter says that expansion of larger internet players and their goals of building display platforms may pose a new threats to ValueClick (NSDQ: VCLK).

-- What a difference a year makes: Additionally, Motley Fool points out that ValueClick is expecting revenue to slide sequentially from Q3 to Q4, with revenues ranging between $140 million and $145 millionfar less than the $167.7 million that industry analysts had been expecting and the $183.1 million generated just last year.

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By David Kaplan