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UPDATE 2-ValueClick Q4 profit beats Street; settles FTC probe
February 13, 2008 / 11:46 PM / 10 years ago

UPDATE 2-ValueClick Q4 profit beats Street; settles FTC probe

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By Pratish Narayanan

BANGALORE, Feb 13 (Reuters) - Online advertising company ValueClick Inc VCLK.O posted a quarterly profit that beat analysts’ average estimate, and said it settled a regulatory probe into its marketing practices, sending its shares up more than 7 percent in after-hours trade.

The company said it settled the U.S. Federal Trade Commission investigation for $2.9 million, without admitting any liability or conceding that it violated the law. The settlement is subject to court approval.

In May, 2007, ValueClick said the FTC had started an investigation into the marketing practices related to its lead generation business. Lead generation is a process by which companies collect personal information by luring consumers with free gifts and then sell it to online advertisers.

Shares of ValueClick have sunk 28 percent since late May as the probe cast a shadow over the company’s books, hurting results as some online advertisers stayed away.

The drop in ValueClick’s shares due to the probe has been partially offset by takeover talk that spawned after its bigger rivals aQuantive and DoubleClick were acquired by Microsoft Corp (MSFT.O) and Google Inc (GOOG.O), respectively.

News of Microsoft’s proposed takeover of Yahoo Inc YHOO.O has further stoked speculation that ValueClick could be snapped up by bigger companies operating in the Internet advertising market as they scramble to gain a firmer foothold in the lucrative business.

ValueClick’s stock trades at about 26 times forward earnings, trailing the Internet Software & Services sector which is at a multiple of about 50.

OUTLOOK STILL BLEAK

ValueClick on Wednesday forecast weak first-quarter and 2008 results as it remains wary about broader macroeconomic conditions and sees a muted outlook for the troubled lead generation business.

ValueClick forecast first-quarter earnings of 15 cents to 16 cents a share, on revenue of $166 million to $170 million, and 2008 earnings of 78 cents to 81 cents a share on revenue of $730 million to $745 million.

Analysts were expecting first-quarter earnings of 18 cents a share on revenue of $174.9 million, and 2008 earnings of 83 cents a share on revenue of $739.9 million.

ValueClick earned $18.1 million, or 18 cents a share, for the latest fourth quarter. Revenue rose 14 percent to $183.1 million. The earnings include a charge of 3 cents a share related to the FTC probe.

Analysts on average had expected earnings of 18 cents a share, before items, on revenue of $175.9 million, according to Reuters Estimates.

The company said on Wednesday the lead generation segment has been moved to its WebClients division.

Shares of the company rose to $23.27 in trading after the bell, after closing up more than 4 percent at $21.68 Wednesday on the Nasdaq. (Editing by Saumyadeb Chakrabarty)

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