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Internet advertising agency DoubleClick (Nasdaq: DCLK) on Thursday reported that its revenue dropped by nearly a third and that it posted a loss for the third quarter ended September 30th, saying that corporate spending cutbacks have pinched the company's business.
The company had warned that last month's terrorist attacks on the United States had hurt sales of both online advertising and software, so the loss was expected. In a conference call with investors Thursday, chief executive officer Kevin Ryan said things are now looking up.
"We're now seeing business return to a pre-September 11th level," Ryan told
investors in a conference call. The fourth quarter and next year, he said,
should be better than previously thought "due to the success 
we're having
with cost cuts and new products."
Yet DoubleClick said it will continue to lose money in the fourth quarter. The company predicted a loss for the fourth quarter of 3 to 5 cents per share on revenue of US$84 million to $92 million.
As of mid-morning Friday, DoubleClick shares were trading at $7.88, up 39 cents.
Down 31 Percent
DoubleClick said revenue for the third quarter fell 31 percent from a year earlier to $92.7 million, while the loss before non-cash and other charges totaled $12.6 million or 9 cents per share. In the year-earlier quarter, the company earned $3.7 million or 3 cents per share.
DoubleClick's third quarter net loss was $103.5 million or 77 cents a share. A year ago, the company had a net loss of $10.7 million or 9 cents per share.
Direct Response
According to Ryan, the company's increased focus on direct marketing should help it in the future. Direct-response marketing , which advertisers tend to favor when they run short of cash, now accounts for more than 40 percent of DoubleClick's gross profit, up from "almost nothing" three years ago, he said.
"Marketers tend to shift dollars into direct response marketing in tough market environments, and DoubleClick will benefit from this trend," he said. "Direct marketing is now a significant business for DoubleClick," and it will "continue to be a larger and larger share of our business," Ryan told investors.
DoubleClick has been broadening its business as demand for online advertising remains in a slump. The company is buying rival MessageMedia (Nasdaq: MESG) in a move to broaden its client base and give it access to licensed software. On Thursday, DoubleClick said it lowered the price it will pay for MessageMedia due to a decline in stock prices.
Tight Ship
DoubleClick said that it had $778 million in cash and marketable securities on hand at quarter's end. During the quarter, the company retired $20.3 million of long-term debt and boosted net cash by $6.7 million. Some of the proceeds were used to buy back shares, a move chief financial officer Bruce Dalziel said will shield shareholders against dilution of earnings in future years.
DoubleClick said it has cut expenses and will continue to do so as it aims
for a profit next year. "We are running a very tight ship," Dalziel said.
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