Ticker: (Nasdaq: DCLK)
Phone: 212-271-2542
Web site: www.doubleclick.com
(2/9/2000): $102 15/16
By
Rick Aristotle Munarriz (TMF Edible)
How Did It Double?
Did DoubleClick get caught with its hand in the cookie jar? Some online users and privacy groups think so. Yet, while the company's use of "cookie" technology has ignited an ethics debate -- and now a series of class-action lawsuits -- the shares of the online advertising giant have overcome those concerns.
If DoubleClick were a cookie, it would be an Oreo Double Stuf. The company's stock is trading five times higher than it was just a year ago. That's right, shareholders are rolling in "cookie" dough.
Thanks to its dominance in the realm of Internet marketing, the company has amassed about 100 million different user profiles. Beyond selling and delivering banner ads to more than 1500 websites, the company can track your online usage through these cookies. Identifying your cybersurfing habits, the company can then target ads to feed your interests.
So, is DoubleClick a cookie monster or a company adding relevancy to the Internet experience? While the debate has heated up now that DoubleClick has acquired an offline database that helps connect online users to their physical addresses, DoubleClick stock has certainly lived up to its name.
Business Description
DoubleClick is the world's leader in Internet advertising solutions for advertisers and Web publishers. Through its cookie technology and media background, the company delivers measurable, targeted advertising.
DoubleClick's distinct Internet advertising solutions include the DoubleClick Network, DoubleClick's DART (Dynamic Advertising Reporting and Targeting) Service, and DoubleClick Direct.
Financial Facts
Income Statement
12-month sales: $258.3 million
12-month income: ($14.2 million)*
12-month EPS: ($0.13)*
Profit Margin: N/A
Market Cap: $11,302.5 million
(*Excludes charges)
Balance Sheet
Cash: $444.8 million
Current Assets: $573.0 million
Current Liabilities: $112.4 million
Long-term Debt: $255.3 million
Ratios
Price-to-earnings: N/A
Price-to-sales: 43.8
How Could You Have Found This Double?
DoubleClick has been a 12-bagger since going public two years ago. While some may have questioned the effectiveness of online banner ads in the past, it has long been considered the fuel of content sites and portals.
DoubleClick has been, and continues to be, the leader in banner ads. That would typically make the company an easier sell in lining up prospective advertising clients. The fact that click-through rates (the percentage of users actually clicking on a specific banner ad) have fallen from 2% to less than 1% through the years has made DoubleClick's targeted efforts even more valuable. But, DoubleClick has not been one to sit on the throne quietly.
Last year, in a pair of stock transactions that added 31.2 million new shares outstanding, the company bought NetGravity and Abacus Direct.
In NetGravity, the company acquired an online ad-serving competitor. NetGravity's client base included media heavies like CNN, USA Today, and Time. Abacus was a more intriguing puzzle piece. It represented a reach into traditional offline marketing. Abacus runs a cooperative alliance with more than a thousand direct marketers (which has since grown to top 1500 members). Abacus then combines customer purchasing data to provide a clearer picture of individual spending habits.
While a casual observer could see a tempest brewing -- after all, when you combine the anonymous online "cookies" with actual user information, the link was too lucrative not to make -- the combination only cemented DoubleClick's role as the premier online marketing specialist.
Where to From Here?
Revenues rose 86% for DoubleClick last year. While operating expenses soared 148%, the company was still able to trim its 1999 losses before charges. Analysts project a shift into profitability by next year.
In the meantime, the company is cashing in on its equity success. After a pair of stock splits over the last ten months, the company and some insiders are ready to cash in.
Last Friday, the company filed to offer a 7.5 million share stock offering. 1.6 million of those shares will come from existing shareholders. With another 1.1 million shares available to underwriters if the demand exists, the company might raise close to $700 million based on current prices.
DoubleClick doesn't have a dire need for the new money. The company is cash-rich, and its acquisitions have been more than willing to accept stock over money as legal tender.
The share dilution, and more importantly the insider selling, might be a cause for concern. However, if the company continues to invest new funds as it has in the past, it will only make DoubleClick stronger. Some cookies just don't crumble.
Related Links:
DoubleClick Snapshot
See Also