Valueclick (VCLK)

By: ispeculatornew
Date posted: 01.21.2009 (4:00 am) | Write a Comment  (2 Comments)

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Valueclick is a stock that I have been looking at for a long time and trying to get an opinion on and still today as I write this after another extensive look at their products, I have a difficult time being convinced either way. Valueclick has been involved in internet advertising for a long time and through acquisitions mostly it was able to cover most of the different segments of internet advertising purchasing Commision Junction to offer cost per sale advertising and thus merging with its more conventional “banner advertising” that came from both Fastclick and Valueclick. It also survived the dot come bust earlier in the decade thanks to a very strong cash position and very safe management.

A lot of companies have been hurt by Google in past years but few as clearly as Valueclick. Google has basically outpaced VCLK in every possible measure such as the number of advertisers, number and quality of properties, technology, etc. I have been looking at thgeir offerings for years now trying to see how they were improving and have yet to see anything. Just look at how its main competitor Google has rolled out ads on mobile content, on non-used domains, etc, etc. In the meantime, Valueclick has been unable to generate anything new. Just look at their recent press releases and you will see that Valueclick has not announced anything since July of 2008. In an area as dynamic as internet advertising, it is very difficult to believe.

Its balance sheet is still very strong as the company has basically no debt and a very strong cash position, which in any era is a good sign, but especially right now. Their problem of course is that competitors such as Google and Microsoft are also in very strong cash positions. Recently, Valueclick has been using a lot of its cash in a stock buyback program. Of course, seeing how much value the stock has lost, it probably would have been better to wait a little longer.

The major problem lies in Valueclick’s income statements as income has been going downward for one year now in an industry that is expected to be even more challenging in 2009. I cannot imagine Valueclick being able to raise their revenue for now, especially with their different products falling behind competitors as time goes by. Valueclick is profitable and will likely remain so for some time, but as numbers continue to decrease something must change.

With a strong cash position, it would have been possible to think about possibly looking for an acquisition target but given how they’ve had problems integrating past companies perhaps the better idea would be to get bought. But with consolidation in the industry and companies such as Yahoo and Microsoft unsure of their plans in the near future, it is not easy to see who would be interesting in purchasing Valueclick… for now I’ll be a little patient with VCLK given that with such a strong balance sheet it does not have much downside

Disclaimer: I do have a position in Valueclick

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2 Comments

  1. […] The Intelligent Speculator analyzes Valueclick. […]

  2. […] certain but some companies are better targets. Of course, I had said a while ago I would not short VCLK because it could potentially be purchased by another […]

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