Online marketing maven ValueClick
The third-quarter earnings release proudly highlighted GAAP earnings of $0.44 per share and a non-GAAP take-home pay $0.05 higher than that. Analysts had expected just $0.16 per share, and the management guidance range topped out at $0.14 per share. So that's a tremendous win. Right?
Not so fast. The majority of the target beat-down came from a one-time tax adjustment in the company's favor. Back that out, and you get non-GAAP earnings of $0.21 per share. That's still comfortably ahead of expectations, but far from the enormous outperformance the unadjusted EPS would indicate. And $106.8 million in revenue fell way below the expected $120 million target. Both the top and bottom lines shrank compared to the year-ago period. Make of this what you will, but not drawing due attention to the tax-related windfall seems dishonest to me -- and happy tax adjustments just don't happen on a regular basis.
That said, ValueClick is doing a lot of things right. The least profitable of its four reportable segments is the slowest-growing, which tells me that the company is spending its blood, sweat, and tears to expand its higher-opportunity markets instead. ValueClick keeps a tight lid on operating expenses, despite working through the integration of newly acquired subsidiary Investopedia. Management is actively buying ValueClick stock, which tends to be a positive sign.
All things considered, ValueClick looks like a stalled sailboat searching for wind. Some analysts see a buyout target painted on ValueClick's back, which would be a sensible exit strategy from where the company stands today. Rival ad agencies are supposed to be aiming their darts at the bull's-eye, but only Interpublic Group
It would make more sense to me if an online operator with tons of spare cash stepped up to the plate instead, but Google
No, I think ValueClick will be left to soldier on alone. But where is the next catalyst? I just don't see it. If you have any ideas, please use the comments box below.
