New CEO Clicks Off Purchases, Boots Up Earnings

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Things definitely clicked for investors of ValueClick Inc. last week as an earnings report that beat street estimates sent shares soaring to a five-year high.

Under new Chief Executive John Giuliani, the Westlake Village digital marketing company is focusing on integrating recent acquisitions and improving margins. The initial results have proved encouraging. Adjusted fourth quarter earnings before income, taxes and depreciation were $77 million, up 26 percent from the same period the year before, and higher than the consensus estimate of $69 million. The adjusted margin was 39 percent, above analyst estimates of 35 percent.

“The new CEO’s plans of increasing productivity … are gaining traction,” said Sameet Sinha, analyst with B. Riley & Co. LLC in West Los Angeles.

The share price jumped 24 percent to $27.08 for the week ended Feb. 20, making it one of the biggest gainers on the LABJ Stock Index. (See page 64.)

ValueClick, which was founded during the dot-com boom in 1998, allows marketers and businesses to advertise and sell their products on Internet sites. In recent years, the company has made some major acquisitions, most notably Chicago-based Dotomi, which developed technology to find prime website placements for ads.

Giuliani, the new chief executive, came to ValueClick from Dotomi. ValueClick is now taking a break from acquisitions to focus on integrating the newly acquired properties and improving efficiency.

“We are pivoting from a history of lots of acquisitions, running our businesses somewhat independently, to really running them more holistically,” Giuliani told analysts and investors at a Goldman Sachs technology conference earlier this month. “It makes all the sense in the world to take the best of what we’re doing and put it together.”

Analysts say this is the right approach at this time.

“He is focusing on improving what the company already has and delivering the most value from existing assets,” said Scott Kessler, technology and Internet equity analyst with for S&P Capital IQ in New York. “If he’s able to execute this, it could mean higher revenue growth, better margins and a better company.”

Kessler pointed to ValueClick’s divesting a low-margin business, Search 123, to focus on segments with the promise of higher margins.

ValueClick’s biggest challenge is competition from Internet advertising giants such as Google Inc. of Mountain View. That company’s ad exchange service allows marketers to make deals directly with media outlets.

“Customers are looking for one-stop shops,” Sinha of B. Riley said. “These moves should help ValueClick get a larger share of advertiser budgets.”

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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