And so, with the announcement of second-quarter financials last week on the part of two Internet advertising bellwethers, Yahoo! and DoubleClick, it became readily apparent that even if the online industry has reached bottom, it's destined to bump along the ocean floor for at least several more quarters.
The financial reports also illustrated another point: It's all relative. True, DoubleClick slightly exceeded expectations, losing 7 cents per share for the quarter rather than the 8 cents consensus estimate, but the "good" news obscured the fact that revenues fell 20% to $101.9 from $128 million last year, and that the company, though it maintains a strong cash balance, saw its net loss widen from $3.8 million to $9.5 million.
Examine the numbers even more closely-by looking at the company's online ad revenue (its Media division)-and it's crystal clear that for the time being at least, what was once DoubleClick's bread and butter is not as important to its bottom line. The company saw a 51% decrease, to $33.8 million, in its Media division revenue compared to a year ago. By comparison, the TechSolutions unit brought in $51.8 million, and Data, $19.3 million.
Total revenue was also off from the first quarter, when the company reported $114.9 million.
DoubleClick stock slumped on the news, closing July 11 at $10.09, its lowest close since January.
Yahoo! also exceeded analysts' diminished expectations, even though it, too, is seeing a massive drop-off in its business year-on-year. The company reported net revenue of $182.2 million vs. almost $273 million in the same period a year ago. Still, the news that the company eked out a pro forma profit-a way of looking at comparable operations year over year-of $8.7 million was better than the break-even quarter that analysts had expected.
The company posted a net loss of approximately $48.5 million, $45.5 million of which was for charges related to restructuring and acquisitions.
Revenue was also slightly higher than the first quarter, when the company reported $180.2 million.
Yahoo! announced results after the market closed July 11; Yahoo! stock traded early July 12 higher, at $17.93, up 5.3%.
While Yahoo! is scrambling to further diversify revenue beyond advertising, predicting business and premium services revenue will account for 20% of the total for the year, it is betting on broadband to be the eventual catalyst toward an online advertising surge. CEO Terry Semel, in his first analysts' call since joining the company in April, said, "I believe online advertising will increase in importance and ultimately get a larger share of companies' overall marketing budgets."
Yahoo! is regrouping and rebuilding in anticipation of a rebound in the market in the middle of 2002, about when DoubleClick executives said they expect to see a real turnaround.