Calling in Sick at ValueClick

There is a whole world of online advertising outside of Google (Nasdaq: GOOG  ) . Unfortunately for companies like ValueClick (Nasdaq: VCLK  ) , that world moves much more slowly.

ValueClick posted uninspiring third-quarter results last night. Revenue fell by 3% to $152.9 million. Earnings, before accounting hits on a stock option tender offer and tax adjustments, fell to $0.15 a share, from $0.17 a share a year ago.

Adding insult to In-ternet-jury, the company is seriously hosing down its current quarter guidance. ValueClick now expects a sequential dip in revenue, with the fourth quarter's tally coming in between $140 million and $145 million. That is far less than the $167.7 million that Wall Street had been expecting and the $183.1 million it rang up a year ago.

Oh how times change. It was after the company's fourth-quarter report that the company initiated its guidance for 2008: earnings of $0.78 a share to $0.81 a share on $730 million to $745 million in revenue. Now the company is looking at $0.55 or $0.56 a share in net income on $633 million to $638 million on top.

So what's eating at the online marketer? ValueClick faults weakness in comparison shopping and search, partly offset by strength in its display advertising business. After seeing Microsoft (Nasdaq: MSFT  ) and Yahoo! (Nasdaq: YHOO  ) post healthier gains in search advertising than in display, you may think that ValueClick is living in a virtual Bizarro World.

However, ValueClick isn't some second-tier online lead generator like MIVA (Nasdaq: MIVA  ) , Local.com (Nasdaq: LOCM  ) , or LookSmart (Nasdaq: LOOK  ) . ValueClick owns the prestigious Commission Junction affiliate network and the Shopping.net comparison shopping site.

If Google's motto is "do no evil," then ValueClick's may have been "do know evil" after the company was dogged by an FTC inquiry over some of its online lead-generating practices.

ValueClick has risen above it. It's the company's financials that can't seem to rise above at the moment.

With a clean balance sheet and $119 million in cash and marketable securities, ValueClick may try to acquire its way back to growth, but its history is loaded with niche purchases like Fastclick and Commission Junction. The one given is that the company's cash-rich position in these uncertain times buys it time until sentiment -- and ideally growth -- return.

So, yes, there is a whole world out there beyond Google. You just don't necessarily want to live there.

Microsoft is a Motley Fool Inside Value pick. Google is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletters today, free for 30 days. We can help your portfolio get clicking.

Longtime Fool contributor Rick Munarriz does not own shares in any of the companies in this story. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy is ready for trick-or-treaters.


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