Doubleclick (DCLK), an internet ad marketing and management company, recently plummetted due to disappointing 2nd quarter results and after lowering full year expectations. However, the drop in price brings the stock that much closer to its cash value, making it a promising long term buy. The company recently traded at $4.86 (low of 4.80), with a market cap of $640 million. The company has net cash of $3.02. And to top it all off, the company has been profitable for several quarters, with net income of $3.9 million and generating 15 million in cash this past quarter.
Investigating the balance sheet
market cap Market Cap: 640.39M
Cash and cash equivalents $77,522
Investments in marketable securities (non-current asset) 264,822
Total current liabilities 78,528
Below are excerpts from the most recent quarter, with a few added editorials.
Total Company revenue came in below DoubleClick's previously issued
Second Quarter Results
2nd quarter revenue of $69.2 million versus $63.6 million in the year-ago
Gross margins of 68.4% during the quarter compared to 64.7% in the
GAAP earnings and EBITDA for the second quarter of 2003 benefited from a net restructuring credit of $6.9 million associated with the Company's facilities. This credit was partially offset by a $4.4 million loss in connection with the redemption of the Company's 4.75% convertible subordinated notes.
Company floating in cash...and generating it too!
DoubleClick generated $15.0 million in cash flow from operations during
"We have repurchased over $59 million in stock since our board authorized a $100 million buy-back program late last year," added Ryan. "We are currently generating positive cash flow from operations and have plenty of cash on hand to invest in the business."
However, a caveat. Motley Fool recently pointed out that the company was buying shares at upwards of nearly $10 a share...and was issuing shares as it was buying them back.
DoubleClick is adjusting its full-year 2004 outlook due to lower-than
Third Quarter 2004 Outlook
DoubleClick expects third quarter revenue to be between $76 million
The Company expects total Company gross margins to be in the high 60s to low 70s percentage range. GAAP operating expenses are expected to be between $50 million and $53 million. Items in interest and other, net and taxes are expected to be neutral to earnings, based on an assumed tax rate of approximately 15%.
DoubleClick expects 2004 revenue to be between $290 million and $305
The Company expects total Company gross margins to be in the high 60s to low 70s percentage range. GAAP operating expenses should be between $185 million and $195 million. Items in interest and other, net and taxes are expected to be approximately $3.5 million, based on an assumed tax rate of approximately 15%.
Doubleclick is a
true survivor of the internet bubble burst. It has survived by shifting
its business focus and become profitable. Disappointing earnings and
revenues in the face of an uncertain economy is to be expected. However,
should the economy finally rebound, internet
Buy? I would. I call it a low risk internet stock in a relative sense. The downside risk to the stock is $3. The upside? The stock has traded as high as 13 in the past year. That's a little risk for a big potential reward down the road.