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Sarah Novotny is the Sr. Editor in Charge of Adotas. Sarah grew up in San Jose, California. Her educational and professional career have taken her to both Los Angeles and New York City where she received a B.F.A. from NYU. As a writer, Sarah has free-lanced for various publications focusing primarily on traditional advertising and media reviews. When not writing and editing for Adotas, Sarah is continuing her acting career in various theatrical and film/television productions.

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ValueClick Remains Ripe For The Picking

Written on
May 21st 2007
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ValueClick (VCLK) stock has climbed nearly 20% over the last two days of trading. Stock prices are reflective of the heavy speculation most in the industry have about thelast independentonline ad network. ValueClick remains the last major online ad company outside the control of the Microsoft, Yahoo, and Google.

Rumors have also circulated that AOL’s parent company Time Warner may also wager a bid during the acquisition frenzy. Todays specualtions about ValueClick Inc. come on the heels of Google Inc.’s purchase of DoubleClick for $3.1 Billion and WPP Group Inc.’s $649 million buyout of 24/7 Real Media.

Observers say Microsoft, after having lost out to archrival Google in the bidding for online advertising company DoubleClick, is on the acquisition warpath for real.

“We believe that Microsoft’s M&A appetite may not have been satisfied with its acquisition of aQuantive,” ThinkEquity analyst Stewart Barry wrote in a research note on Monday. “We believe that an acquisition of VCLK would be highly complementary to the acquisition of aQuantive.”

Barry wrote that Microsoft continues to lag behind Google and Yahoo! in its capacity for letting advertisers place ads on the Web. That’s a shortcoming the software giant could shore up through a ValueClick deal.

The flurry of speculation that ValueClick will be next hasn’t been discouraged by the company, but an inquiry last week from the Federal Trade Commission could throw a monkey wrench into the works. The agency is investigating marketing tactics at WebClients, a subsidiary of ValueClick that generates sales leads through incentives. (It’s one of the players behind the “Win a free iPod!” style pitches that clog email inboxes world-wide.)

Jordan Rohan, an analyst at RBC Capital Markets, warned in an April 26 note that “incentivized practices may run afoul of the [Direct Marketing Association/Internet Architecture Board] best practices and could be deemed improper, despite complying with current regulations. The company asserts that it is not currently facing investigation by any legislative groups, but we believe that the entire industry could be under scrutiny in the second half of 2007.”

Rohan cut his 2008 earnings estimates by 8%, and his prediction proved prescient as the FTC launches it’s investigation. ValueClick didn’t return phone calls seeking comment.

The FTC question probe prompted several stock downgrades, even though the company is now seen as the leading takeover target among Internet advertisers and is the only publicly listed one with a market cap above $1 billion. More information can be found on the ValueClick/FTC investigation here on adotas.com.

Obviously, the skeptics remain fiercely divided.



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