Analyst skeptical of DoubleClick's upside

 |  About: DoubleClick, Inc. (DCLK)
by: David Jackson

DoubleClick announced that it expects to exceed its previous guidance for the December quarter. It now expects revenue of $81-82 million, versus previous guidance of $72 million to $77 million, and EPS of $0.06 to $0.07 versus $0.01 to $0.04.

DoubleClick's upside came from its "TechSolutions" segment, which accounts for about 64% of DoubleClick's total revenues and includes its core Internet advertising business and a recently acquired business called Performics.

As a result of the announcement, DoubleClick's stock rose over 8% on Friday. But at least one analyst is skeptical. American Technology Research analyst Mark Mahaney wrote in a note to clients:

Does this positive pre-announcement change our Hold thinking on DCLK? For now, no. Our biggest concern from the September quarter results was that organic TechSolutions growth (excluding the Performics acquisition) actually turned negative (2%). You take the new TechSolutions guidance and subtract $7MM in Performics contribution and you've only got 1% organic Y/Y growth. Still seems extremely weak. And EBITDA margins are still on track to decline 400 bps Y/Y. So we'll maintain the Hold rating.

One year DCLK chart below.