Darspal S Mann
Long/short equity, growth at reasonable price, special situations, deep value

On Road To Prosperity, Small Mishaps Do Happen But It Is Time To Buy

ValueClick Inc. (VCLK) pre-announced second quarter results and guided for a weak third quarter. In the second quarter, total revenues were up 4% Y/Y but 5-10% below the consensus numbers. Since the pre-announcement, the stock has declined almost 30%. Revenue miss was due to the weakness in its legacy Display business of Media division. In the first quarter, results came out ahead of the consensus.

This price drop gives investors an opportunity to invest in a good business that is moving well along a successful restructuring plan. This realigned business generates 25% cash flow margins, 33% EBITDA margins and increasing gross margins. Cash flows from declining businesses are being deployed to acquire fast growing and strategically important businesses.

Revenues can...

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