The imminent shaketout
One event in the next few weeks will be of immense interest to online marketing industry watchers (and those who invest in shares of companies in this industry)-- ValueClick will announce its Q3 results on November 1.
The company has caught the attention of several analysts recently who seem to be increasingly leaning towards a "buy" recommendation for this company's shares. There have been some doubts raised in other quarters whether the company is overvalued. Probably not.
After completing the acquisition of FastClick last month, it projected a significant increase in its revenues for the year, expecting it to hit close to $300 million in 2005, an indication that the acquisition is fairly accretive. The company's track record of growth via its M&A strategy is quite impressive. ValueClick boasts a sound balance-sheet-- revenues have been growing quite rapidly, it has a profit margin of about 44% (!) and an operating margin of about 22%. No wonder, the company is bullish about its own prospects as are the analysts.
But looking at a wider canvas, the acquisition of FastClick as well as Linkshare's takeover by a Japanese company is symptomatic of impending changes with far greater significance. When this kind of consolidation & shake up happens, it is a sure sign that the industry is maturing and different players look for synergies to complement one another.
The implication for us affiliates is two-fold: on the positive side, we'll progressively have to deal with fewer networks, which would mean significantly lower operational and management overhead. On the negative side, mergers are seldom seamless--- there are bound to be numerous bumps along as the companies try to streamline their product and service offerings. Trust me, that's a painful period and is bound to cause quite some frustration. I guess we'll just have to learn to absorb the bumps, for we are facing the unexpected (one can never be sure what problems are likely to come up when two companies merge) and the inevitable...
Until next time,
Ben Flux
0 Comments:
Post a Comment
<< Home