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Little Visibility for DoubleClick

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By Mike Trigg (TMF Tonto)
January 12, 2001

Internet ad company DoubleClick (Nasdaq: DCLK) reported better-than-expected results after the market's close yesterday, citing growth in its TechSolutions business. With Yahoo!'s (Nasdaq: YHOO) guidance Wednesday casting an even darker shadow on the online ad market, the DoubleClick news wasn't that bad. However, the ad shakeout end is nowhere in sight, which forced the company to lower expectations for the first quarter of 2001.

DoubleClick reported fourth-quarter pro forma net income of $216,000 -- breakeven on an earnings-per-share basis -- compared to a net loss of $1.8 million, or $0.02 per share, in the year-ago period. Those results beat the Street consensus of a loss of $0.02 per share and were at the high end of company guidance, given back in December when it warned. Revenue grew 41% year-over-year to $132.3 million. 

The company's TechSolutions ad sever business drove its top line, increasing 114% year-over-year to $61.5 million. DoubleClick served 185 billion ads during the quarter, up from 77 billion in the same period last year. DoubleClick's media sales were $60.4 million, growing 19% annually but down 6% sequentially. The fourth-quarter marked the first time the ad server business exceeded media sales. Data services made up the rest, climbing 5% over the year-ago period to $17.8 million.

For the first quarter, the company expects revenue between $110 million and $115 million, down from forecasts of $118.2 million. It's expecting a bottom-line loss of $0.07 to $0.09 per share. The Street consensus called for a loss of $0.06 per share. The company forecasts the following growth for its business segments: ad server up 35% to 40%, media down 30% to 35%, and data services up 14%.

For the full year, DoubleClick expects revenue to grow between 6% and 12% and, excluding one-time charges, a profit of $0.07 to $0.09 per share, including a $5 million charge related to its email business. While investors might react positively to yesterday's announcement, the company conceded that visibility into the whole year remains low. The Internet continues to grow in popularity, more so than traditional advertising channels. That bodes well for DoubleClick long-term, but in the meantime the ride for investors won't get much better.

After-Hours Coverage

Gateway, Hewlett-Packard Disappoint
The technology bellwethers both shared bad news about near-term profits and their forward-looking outlook after the market's close tonight. Gateway will cut jobs in the first quarter, while Hewlett-Packard is shying away from updating its full-year guidance amid economic uncertainty.

No Slowdown for Ariba
Ariba is the cr�me de la cr�me of the B2B sector, and investors were paying close attention today when the company announced better-than-expected earnings, citing strong top-line growth and profitability. Given today's strong results and forward-looking guidance, it appears that Ariba's pipeline remains strong and the company is well positioned to weather the IT slowdown.

Rambus Stalls
Rambus' first-quarter earnings fell a penny short of estimates and included cautionary words for the second quarter because of decreasing SDRAM prices. That will hurt in the near term. Rambus depends on the acceptance of DDR SDRAM and RDRAM for its long-term success, but it still isn't clear if they will come into common use for several years.

News to Go

Integrated circuit company Sipex Corp. (Nasdaq: SIPX) said that it expects to report fourth-quarter revenue of $23 million to $27 million. That's below the company's previous forecast. In the year-ago period, Sipex reported revenue of $22 million. The shortfall is due to an accounting change. According to a press release, Sipex previously recognized revenue on shipments made to distributors. However, it's now contemplating changing that policy and deferring revenue on shipments to distributors until the products are shipped out of distribution to the final customer.

Internet directory company LookSmart (Nasdaq: LOOK) warned that its fourth-quarter loss would be worse than expected and plans to cut 31%, or 172 employees, of its workforce, citing the troubled Internet advertising market.  The company now expects to report a loss of between $0.14 and $0.15 per share. The Street consensus expectation called for a loss of $0.12 per share. On the top line, revenue is expected to be between $30 million and $31 million, below the previous forecast of $33 million to $36 million. The company will report actual results on Jan. 25.

Hillsboro, Oregon-based TriQuint Semiconductor (Nasdaq: TQNT) announced that annual revenue would exceed expectations, coming in at $300.6 million. That's well above the year-ago figure of $163.6 million. Unfortunately for the company's senior management team, they will have to make good on a bet with the company's sales force and shave their heads. "We are experiencing some mixed emotion around here. While the entire TriQuint team is thrilled with our results, some of the senior execs were not too excited about losing their hair," said President and CEO Steven Sharp. "Frankly, I think it's a great badge of honor and I was proud to be the first to climb the stool."

Silicon carbide semiconductor device maker Cree (Nasdaq: CREE) reported fiscal second-quarter results after the market's close yesterday, citing its top- and bottom-line growth. The company posted earnings of $13.8 million, or $0.18 per share, compared to $5.6 million, or $0.08 per share, in the same period last year. That beat the Street consensus by a penny. Revenue grew 67% from $24.8 million to $41.5 million. Not long ago, The Motley Fool spoke with CFO Cynthia Merrell about Cree's R&D arrangements with other companies because some short sellers claimed those deals artificially added to Cree's bottom line.

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