Value-Clicked; After A Warning Is There Any More Value? (VCLK, GOOG, MSFT, WPPGY)

July 30, 2007 by Douglas A. McIntyre

ValueClick Inc. (NASDAQ:VCLK) is probably hoping that Main Street can find more value in the stock with its shares down 20% pre-market.  On Friday evening, the company expedited its earnings release date to this morning on a short notice that gave very little or no time to most holders to decide what if they wanted to hold shares into earnings.  That acts as a trap for holders who were probably already worried after the major market slide, and this eliminated the ability for shareholders to get out ahead of the news.

The current quarter was put at a new $0.19 to $0.20 pro forma EPS on revenues of $155 to $165 million.  Its new 2007 fiscal guidance is now $0.74 to $0.76 EPS on revenues of $645 to $660 million, lower than prior guidance of $0.79 to $0.81 EPS on revenues of $655 to $665 million.  All in all this isn’t exactly a horrible earnings warning, but it shows a possible crack and could magnify fears that DoubleClicks’s buyout by Google (NASDAQ:GOOG), the 24/7 Real Media buyout by WPP Group (NASDAQ:WPPGY), and the buyout of aQuantive by Microsoft (NASDAQ:AQNT) could all be too much competition for the last of the large independent banner, click, and image online advertiser.

With shares down just over 20% pre-market to $20.50, shares are now closer to the low-end of the $13.65 to $36.70 trading range over the last 52-weeks.  This will adjust its market cap down closer to $2.1 Billion if shares open trading here at the 20% haircut levels.  ValueClick is going to have some upset shareholders on its hands this morning.  It increased its share buyback program from $66 million remaining up to $100 million, but unless it rolls back the clock to Friday’s closing price this is going to fall on deaf ears.

Based on how far shares are off now from highs, it would sure seem that the larger acquisitions that were seen in the online ad sector have now all been completed.  Even if that isn’t the case, there are still a lot of holders that are ‘long and wrong’ that were hoping this one would be acquired too.  Until those holders get flushed out and a new shareholder base is established with a lower entry price, the chances of even a ‘hoped for’ or hypothetical deal coming close to current prices would likely face far more shareholder resistance than support.

Jon C. Ogg
July 30, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

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