] HipMojo.com » Market to aQuantive: Close but no Cigar

Market to aQuantive: Close but no Cigar

The poor sap never had a chance.

Seattle-based aQuantive is my favorite services play on the rise of online advertising.  While market darling and all-around powerhouse Google is a one-trick search machine and better positioned to capitalize on search; aQuantive is one of those companies that has its fingers in every segment of the industry.  It’s Yahoo!’s answer in services and the agency world.

2006 third quarter results were:

  • Revenue of $111.0 million, an increase of 41 percent over the third quarter of 2005.
  • Net income of $13.6 million, or $0.16 per diluted share. Net income before stock-based compensation(1) was $16.3 million, an increase of 73 percent over the third quarter of 2005.
  • Adjusted EBITDA(2) of $30.8 million, an increase of 51 percent over the third quarter of 2005.

Brian McAndrews, president and CEO of aQuantive commented, “The market for interactive marketing service and technology is robust. aQuantive achieved strong year-over-year growth domestically and internationally. With the investments we continue to make in technology, recruiting and training, sales and international expansion, we anticipate continued strong growth in the fourth quarter and 2007.”

“Yeah, really?  Well shove it” is essentially what the stock market told McAndrews when it sent its stock down over $3 in after hours trading, or over 11%.

Mind you, the stock had no chance: it has risen nice and steadily from $20 in August to nearly $29 over the past quarter.  I unloaded my shares at $26 not because I did not like the stock, but because from my experience in online advertising and with trading in these stocks, I know that Q3 is the weakest quarter and in aQuantive’s case, it would be hard to surpass fickle investors’ appetite after the stock run up.

What exasperated matters for AQNT is that Valueclick - a related company (VCLK is less of an agency play, more of a network play) - beat expectations and pushed up its guidance, sending the stock up quite a bit today.  Naturally greedy investors thought aQuantive would pull the same feat, but it didn’t.

Nonetheless, a great company to invest in if the price slides further, and it might because the company failed to up guidance:

Accordingly, the Company reiterates its anticipation of full-year 2006 results as follows:

  • Revenue of $420 - $430 million
  • Net income of $0.54 - $0.58 per diluted share
  • Net income before stock-based compensation of $0.67 - $0.71 per diluted share
  • Adjusted EBITDA of $1.28 - $1.33 per diluted share

At the time of the writing, I do not own shares in aQuantive.

Tags: , , , |
Posted By: Ashkan Karbasfrooshan | Nov 2nd

2 Responses to “Market to aQuantive: Close but no Cigar”

  1. HipMojo.com - IT, Video, Web, Technology, Gadgets » First Stock I Bought Since August Is… Says:
    November 3rd, 2006 at 11:02 am

    […] It also turns out that the day before they announced their results, Valueclick came out, beat their numbers and upped guidance (my comments on Valueclick here).  Of course, Valueclick is not only growing quickly but this quarter saw results being consolidated from their Fastclick acquisition.  All to say: I rarely short stocks I like (I did with Sandisk and made money but almost lost my shirt, for that click here) but I was tempted before the market close yesterday to short aQuantive cause it had no prayer given everything. […]

  2. HipMojo.com - IT, Video, Web, Technology, Gadgets » Asian Online Advertising Figures in 2010: $110 Billion Marketplace Says:
    November 3rd, 2006 at 4:28 pm

    […] Because of those rises, this week the companies disappointed shareholders; here are our thoughts on market’s reaction to the former and the latter. […]

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